נושא: Questions & Answers

Theorizing on Arenas ... or "Why You Really Shouldn't Have Build That Monstrosity"

I've considered upgrading the arena for some time thinking I was missing something in the calculation, but I'm pretty sure I'm not, and that it's an awful use of cash... truly awful.

Unless someone can convince me TV rights and Skybox revenue offset the cost of owning larger stadium builds... I'll hold off until the in-game "Maff" is correct and we remember to carry the one.

Take a current section of an arbitrary stadium "Medium Standing 200 seats":

Weekly expenses to own are ... 7 days*(-$840 daily) = (-$5580)
Weekly revenue from 1.5 sell-outs weekly of 1.5*(200 seats)*($400) = $120,000

Projecting a stadium upgrade to say "Medium w/ 450 Seats":

1.5 sell-outs weekly *(250 MORE seats)*($400 per seat) = $150,000 MORE game revenue weekly ... against

7 days *(-$19,160 MORE daily expenses) = (-$134,120) in weekly expenses.

In this example you're laying out $10,000,000 to make an additional $16k weekly ... which means your investment is recouped in just 625 short weeks.

Sorry, did you want ...
Large w/ Seats? That's $18m to lose $12k weekly.
Single Multi? $27.8m to lose $29k weekly.
Double Multi? $50m to make $80k weekly.
Triple Multi? $80m to make $239k weekly.

Other factors to consider:
--"But I play friendlies" ... Fair enough ... your team benefits 50% of the revenue for the 50% of the time you play at home since you split revenue and 50% of 0% when you're away and because your arena doesn't affect attendance.
--"TV Contract went up" ... Super. How many weeks now to pay down that debt?
--"I sell at lot at the shops" ... Do you? How much?
--The Carpark, Scoreboard, Ice Quality, Sound collectively cost an additional $56k daily, or $392k weekly to own at Level 2 only, and cost $42m just to get to that level ...
without those, are you going to be selling out all those games? If you're not selling out, what does that do to your payback?
--What is the cost incurred of extra expenses of stadium repairs at those levels? I don't even want to think about it. The Maintenance center is also not worth investing in but I'll get into that another day.

Yep, the math doesn't appear to make sense.

Oh yeah, don't forget the opportunity cost of income you will not receive during the building of the stadium section.

even if you're math is correct, and for the sake of my argument i'll say that it is, i think you're not considering the tv contract and souvenirs as a big enough factor (i'm referring to the triple multi). my souvenir sales were 60k today, and thats without my triple finished building. in addition, i you're thinking too short term.

i'm not saying you're wrong in saying the costs outweigh the benefits, but i think you're selling the benefits a bit short.

*your math. argh hate myself for typing "you're"

Also, keep in mind that in the real world, money spent on an arena upgrade is not recouped overnight. NHL teams may spend millions on upgrades and not see those costs covered for a few seasons. That's fairly normal.

i think your maths is out somewhere.

Triple Multi - $81.5m
Weekly Costs - 163k*7 = $1.141m
Seats = 2500

League Games /W = 3 at 1/2 home so 1.5 for each team
Friendlies/W = 2-4 at half attendance = 1 or 2
Cup Games/W = 4-2 at 1/2 home = 2 or 1

Assuming 70% (probably low) attendance for league/cup games and 50% for friendlies.

Then 1.5*0.7*2500+2*0.5*2500+1*0.7*2500=5625

At $400 each that $2.25m per week

So $1.109 per week.

Thus after all that, still not great. Over time though it will make money and will provide benefits to those teams that have invested in them.

If your not playing in cup games then it wont be as good as this. If your playing all cup games then it will be better.

more analysis later after some dinner

I just had breakfast.

Back again - honey mustard chicken was goooood.

Ok I have a spreadsheet that does all these calcs for me but here is some output...

A Few Assumptions:
Using Triple Multi
Weeks in Season 16
Ticket Price $400
Full Accessories Bought 10
League/Cup Attend Rate 100%
Friendly Attendance Rate 100%
NC Games Played/S 4
CWC/CL Games/S 10 (no playoffs)

Figures:
Initial Cost $81,500,000

Daily Cost $163,000
Ind Daily Accessory Expense $5,715
Total Daily Accessory Expense $57,150
Total Daily Cost $220,150

Seats 2500

League Games/S 38
League Games (H)/S 19
League Attendance/S 47500
League Attendance/W 2968.75
Playoff Games/S 6
Playoff Games (H)/S 3
Playoff Attendance/S 7500
Playoff Attendance/W 468.75
CL/CWC Cup Games/S 10
CL/CWC Cup Games(H) /S 5
CL/CWC Cup Attendance/S 12500
CL/CWC Cup Attendance/W 781.25
NC Cup Games/S 4
NC Cup Attendance (Your Split)/S 5000
NC Cup Attendance/W 312.5
Friendly Games/S 54
Friendly Attendance (Your Split)/S 67500
Friendly Attendance/W 4218.75

Total Attendance/W 8750
Total Income/W $3,500,000
Net Income/W $3,279,850

Weeks Payback 24.84

The payback on this looks pretty good to me. Especially if after that i am earning that net income per week per stand as thats $26m per week that you could be earning from ticket sales after paying the expenses.

Now before people complain. I know some of those assumptions are not very realistic. So my spreadsheet also does some sensitivity analysis.

Lets say 0 NC or CWC/CL games and only 70% attendance for league and 50% for friendly.

Then paypack is 45.16 weeks. A lot longer but still less than a year. NetIncome also drops to $1.8m per week so total for 8 stands would be $14.4m/week income from ticket sales.

If anyone spots anything wrong with this please let me know where... Thanx.

hehe - just realised that initial cost should be higher as had to buy the accessories. Also if buying a skybox then should include income from this.

If a mod could delete the above then ill redo it with these included and also try to include the carpark etc into the equation.

OK redone and spreadsheet updated - also picked up a mistake on daily vs weekly expenses..

Assumptions:
I have done this study with 8 full Triple Multis and full arena upgrades and accessories assuming that if you have this then you would have 100% attendance. My figures at the moment do not include souvenir sales as i dont have any figures on these to go off (if you have some figures please let me know).

Figures:
Stand Level 9 (Triple Multis)
Stand Size (Max, Min) Max
Number of Accessories 10
Car Park Level 5
Scoreboard Level 5
Ice Quality Level 5
Lighting and Sound Level 5
Weeks in Season 16
Ticket Price $400
League/Cup Attendance Rate 100%
Friendly Attendance Rate 100%

Initial Cost /Stand $81,500,000
Ind Initial Cost /Accessory $2,857,500
Total Initial Cost of Accessories $28,575,000
Total Initial Cost /Stand $110,075,000
Total Initial Cost 8 Stands $880,600,000
Total Initial Cost Carpark $30,000,000
Total Initial Cost Scoreboard $60,000,000
Total Initial Cost Ice Quality $60,000,000
Total Initial Cost Lighting and Sound $60,000,000
Total Initial Cost of Arena Upgrades $210,000,000
Total Initial Cost $1,090,600,000

Daily Cost /Stand $163,000
Ind Daily Accessory Expense $5,715
Total Daily Accessory Expense $57,150
Total Daily Cost $220,150
Total Weekly Cost /Stand $1,541,050
Total Weekly Cost 8 Stands $12,328,400
Weekly Cost Carpark $20,000
Weekly Cost Scoreboard $40,000
Weekly Cost Ice Quality $40,000
Weekly Cost Lighting and Sound $40,000
Total Weekly Cost of Arena Upgrades $140,000
Total Weekly Cost $12,468,400

Seats 2500

League Games/S 38
League Games (H)/S 19
League Attendance/S 47500
League Attendance/W 2968.75
Playoff Games/S 6
Playoff Games (H)/S 3
Playoff Attendance/S 7500
Playoff Attendance/W 468.75
CL/CWC Cup Games/S 10
CL/CWC Cup Games(H) /S 5
CL/CWC Cup Attendance/S 12500
CL/CWC Cup Attendance/W 781.25
NC Cup Games/S 4
NC Cup Attendance (Your Split)/S 5000
NC Cup Attendance/W 312.5
Friendly Games/S 54
Friendly Attendance (Your Split)/S 67500
Friendly Attendance/W 4218.75

Total Attendance /W /Stand 8750
Total Attendance /W /8 Stands 70000
Total Income /W /8 Stands $28,000,000
Total Income /W /Skybox $350,000
Total Income /W /8 Skyboxes $2,800,000
Net Income/W $18,331,600

Weeks Payback 59.49

Payback nowhere near as good as i first calculated due to error in last calcs. Also if you change the assumption of attendance rate you will blow the payback period out quite significantly.

It becomes 150.81 weeks at 70%/50% attendance for league/friendlies.

These will reduce by a small amount if souvenir income is included (maybe by 2-10 weeks depending on how much income is recieved and how large the payback period is without it)

If anyone wants some numbers posted for other arena configs then just let me know and please provide the data in the first section (stand level through to attendance rates) that you would like used.

As one ppm year has only 16 weeks, 45.16 weeks is almost 3 full seasons.

Which isn't too bad really. As i said earlier, an NHL team may take 3 or more seasons to pay off upgrades to their facilities, so this is fairly accurate.