Quote:
Originally Posted by esquire
I suppose this is really a question for the accountants. Are the Flames' books more like the Jets and Senators (and therefore requiring massive public arena subsidies), or are they more like the Leafs and Rangers (in which case they can pay for it themselves)?
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Important to split teams and arenas.
If an arena can in effect guarantee they'll be occupied 200+ nights a year with sell outs at a facility fee per ticket which recovers capital (and leases to tenants which covers operating), they can be private. A 50 night per year team covering the other 150 nights a year of an arena is really iffy.
So lets say a small market arena needs a non-NHL facility fee of $10 a ticket to maximize non-nhl facility fee revenue. All of a sudden the economics is crazy - the NHL nights need to contribute $70 a ticket!
Numbers just for comparison
Large market: 200 sellout nights * $25 facility fee = $5,000
Small market: 50 NHL sellout nights * $X facility fee + 150 revenue maximization other nights * $10 facility fee - $5,000
You solve for X and you see that it is now $70!
Now, use the argument that the Flames are worth $450 million. Standard valuation gives them positive cash flow of $45 million a year, from tickets, tv rights, merchandising, etc. Tickets are estimated to be 37% of gross revenue for the NHL.
37% of $45 million is $16.65 million. To pay for a $600 million arena, with a 5 year deferral for the construction period, and a $30 year payoff period at 3.014% interest (what the province will lend to municipalities) would be drumroll: $30,527,366.52
So no. The Flames cannot support the cost of an arena.