Originally posted by sbuck143
mrstickball this is good stuff. Thanks for your work!
I have the same question as the MightyPoopster. ROI calculations assume a certain ticket price.
But Poopster it is possible to backsolve what numbers were used.
By my calcs,
100 endzone = $34
100 corner = $34
etc.
mrstick - could you give a sample calc for one of you compounded interest results? i'm having a hard time getting my numbers to match yours. I get a simple interest ROI on expansion of 100corner as 27.2%, but cant figure out how often or by what assumptions you are compounding that.
Hopefully my post above explains that I used the price of $38 for Corner seats to explain the 30.40% simple ROI for Corner seats.
For compound interest, you can get your numbers a few different ways, to explain the value (or lack thereof) of investing in expansion seating early on vs. waiting.
If you do what I've done, and buy your expansion seating before any games, and keep re-investing, garnering alot of "compound interest", by using the just-raised cash from expansion seating, and funneling it into more, and more seating, watching the fans continue to pay for your tickets before the games start (in my league, I've already sold out the first 5 home games in a little over 16hrs, and I've added somewhere near $3m in expansion seating, and that $3m in expansion seating has yielded me about an extra $750k in profits. More than enough, I think, to offset the extra profits from waiting for construction in offseason).
Anyways, back to compound interest: if you "compound" your interest as much as possible before your games start, depending on how many games you have available, your numbers can greatly differ. When I gave estimates on compound interest, it assumed you would earn, and compound interest X number of times (ie, you re-invest in expansion seating 3 times, and sell out 3 times, re-investing earnings each time).
But earlier in the year, you can compound your interest ALOT, and earn huge dividends, as I explained.
Lets look at the "what if" scenario if you purchasing $1m in Expansion, 100 SL seating at the beginning of the year, and what kind of profits you could make should you re-invest each time. By my calculations, you should be able to re-invest your profits about 5 times from $1m on 100 SL and 100 CLB (but we'll use 100 SL for this formula)...So assuming you can get in 8 Home games:
"Day 1": Buy $1,000,000 in SL-100 Seating, Tickets sell at $45/ea. Sell said tickets for a profit of $360,000.
"Day 2": Re-invest $360,000 in more SL-100 expansion seating. Yadda yadda yadda. Sell tickets for $129,000
"Day 3": Re-invest $129,000 in more SL-100 expansion seating. Sell tickets for $46,656
"Day 4": Re-Invest $46,000 in more SL-100 expansion seating. Sell tickets for $16,796
And of course, after these number of trades at $1m, you could keep drilling down, but it couldn't be from your own cash. Sufficive to say, your $1m investment in expansion seating just earned you, by using the profits to sell more seats, $550,800 and added an extra 550 100-SL seats. That'd be the same amount of interest you'd get from the 100-EZ Expansion. Therefore, I can easily say that "buying expansion seating at the beginning of the season is certainly advisable as opposed to waiting till next year", as waiting WILL NOT bring you a better return on investment.
So for everyone wondering: go buy the 100 SL Expansions, and re-invest your earnings, rather than wait. You WILL make more money (as my numbers don't include the profits from concessions).
Again, that's not attempting to say "max out your expansion seating at all costs", because theres only so much you can expand that. But again, if you find yourself short of the $1m needed for Corner Expansion seating, don't feel bad about expanding your 100SL and 1000 CLB seating to max capacity, continuously re-investing your extra profits. Again, if you play your cards right, $2m in expanding both CLB and SL will return you around 50% that year, or $1m - which is pretty good.