Quote:
Originally Posted by Ducay
This is precisely the "layman" approach I am talking about. Its not about billionaires wanting to pay as little as possible (well, yes it is) but it is all about returns. If M.Edwards could get 15% return on the 1/3 deal, he'd be all over it. Heck, I'd imagine just to be the "good guy" or get the project moving, he'd take a deal that gets him a return equal to some kind of personal WACC or a low risk investment. Sure, they could be holding out for a return higher than they should, but they've set their return at a certain level and are holding out for something in that range.
These guys have more money than they will ever need and the bad press isn't worth it if they were really trying to get insanely greedy. They live for the reputation at this point.
So yes, they have enough money to fund it, but why would they if they are going to earn peanuts on their investment? Can't blame them if they could use that same money to get better returns invested elsewhere.
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This is good. I totally see that POV. Let's say they are making $18M/year at the dome. They would like a new arena. But, if they have to front $300M (just making up a number) to make $25M/year (just making up a number) and have the value of the franchise appreciate by, say $30M, the deal makes no sense, as they could do much, much better investing the $300M elsewhere. Quite aside from who is paying for what, the ROI has to make some financial sense. Is there a magic number which makes sense for everyone? Not sure, given where sports economics may be heading... Will be interesting to see.