Thanks to Graham Crawford for another excellent financial analysis of the latest stadium news. Hope you don't mind if I add some more questions raised by the document:
A) The Hamilton Tiger-Cats will "pay" $10 million, but up to $2 million of that will not be used towards the construction cost of the stadium - so where is it going?
B) The Ticats' payment is spread out over 10 years. There is a possibility that the team could go belly-up during that period, or go into hard times, and not be able to make the payments. We would be on the hook for the remainder. It's much easier for companies to do this than individuals. So that idea that they are "investing" $8 million is false. It's not an investment - it's a promise to pay $800,000 a year for 10 years - that's all.
C) The "real present" value of those payments over 10 years in today's money is more like $600,000 per year, if I did my math correctly (at 5% interest).
D) Putting aside net present value for the moment: assuming the Ticats make their promised payments, take the city's $300,000 payment to them out of that, you get $500,000 contribution per year (total $5 million) from the team.
E) Now put in the net present value again, and you are down to their "promise" being worth less than $4 million. That's 50% less than they made it sound!
F) Why is the city paying all of the turf replacement costs? $200,000 a year has been allocated for this by the city, but it doesn't seem to be included in the city's top line contribution figures.
G) The city is putting in another $750,000 per year transferred from Ivor Wynne. They say this is to cover the construction costs. So is this money included in the top-line figure for the city's investment or not?
H) How much are the estimated parking revenues? We aren't given a figure for that, but it must be significant, and it all goes to the cats.
I) If we are paying $300,000 a year for operating the stadium, why are we giving up all of the naming rights? I agree that the city should at minimum get a percentage of the naming rights revenue, estimated at $3 to $3.5 million every year - a total of $60 to $70 million dollars over 20 years. That would help close the funding gap.
J) Why do we see the tiger cats yearly contributions tallied up into a big headline number but not the city's? If we use the same formula, the city has just added an additional contribution of $25 million dollars - $1.25 million per year for 20 years.
In this MOU the Ticats promise $8 million. But they get back $60 million, which easily eclipses that. On the other hand, the city promises $25 million more, and gets back nothing.
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