Originally posted by Mrstickball
"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
Quick point of reference. Profit is not the same thing as revenue. What you indicate up above is that for spending $1M, you gain $360K in Profit. Not true.
You gain $360K in revenue, but you are still in the hole -$640K. In order to gain $360K in profit, you would need to generate $1,360,000 in revenue. According to your model:
1,000 seats for $1M in cost. Sell seats for $45ea. =$45,000/game X 8 games. Revenue = $360,000, with -$640K in costs still unrecovered.
Spend $360K on 360 more seats, to be sold @$45/ea. Revenue generated = $129K, with -$231 unrecovered.
By the end of day 2, you have $671K in costs for the current season still unrecovered. The more seats you add, the deeper the whole gets. It is not a bad investment, since it will ultimately pay for itself in 2-3 seasons (not considereing playoff revenues from ticket sales.) Concessions will help, but season 1 indicated concessions were bought up by at most 35% of the total attendance, at least for my team.
In any event, calling the additional revenues "profit" is entirely incorrect, profit is the positive delta between revenue and costs.