Saturday, June 10, 2006

Fester's Place puts some numbers to the ROI (return on investment) for the Pens new arena

Fester's Place: "So is this a good investment? Given that the debt service on a $290 million dollar arena (assume no cost overruns) works out to be between to be about 21-25 million dollars per year (dependent on interest rate and term lengths, assumes no roll-over of debt), the ROI can be calculated --- 2.1% to 5.7% for the entire project. If the Penguins are the only new revenue and profit stream generators, then this is a horrendous investment. To economically justify a new arena from a social CBA perspective, (disregard who actually pays for it) the argument needs to be made that the new arena will generate two to three times the profit levels that the sales price of the Penguins would imply.
Yes, this is a HORRENDOUS investment -- even if the Pens were to make it.

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