Quote:
Originally Posted by GGG
I think the other interesting point is that you want a 10% discount NPV. If you accept that you just want to break even rather than have a return on invenstment what do the numbers come out to. So an NPV using a 3% would give an interesting bench point.
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10% is a pretty standard downtown Calgary capital hurdle for today. It was 15% as early as three years ago. I doubt prominent Calgarians would be that much different on their own holdings as they have access to investments that suggest it should actually be much higher.
Quote:
Originally Posted by GGG
I think you do kind of rig the numbers to get the outcome. Basically you are saying that the 30% number gives the owners an 10% NPV so lets use it. Then if you use any other proposal with more ownership spending it forcasts as a loss.
From a negotiating position I suspect the flames initial offer is much richer for them so making a % assumption of outside revenue enough to give them a 15% or 20% discount rate would be interesting. If 10% is there hill to die on then they won't start negotiationis there.
The other piece is using 600 million as a cost number is high. 550 million is the current figure being used including saddle dome demolition and land. That would also push the break even point down as well.
As others have said 3 years instead of 5 years.
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Don't think anything is rigged. The model was run to solve for an unknown using a possible outcome of zero profit on 10% NPV, which to me is a logical starting point.
I'm happy to run any version of the non hockey related revenue though.
Have seen cost over runs on the building suggesting $600M on a few occasions.