Question

The Cowboys have decided to build the stadium on their own for $650M of upfront cash. What is the 30-year present value of this investment? Assume the following:
Stadium construction is completed for the start of the 2004 Season. The Team borrows and spends the entire $650M in 2004. The Team's borrowing rate is 6.5%. Ticket prices increase by 1% per year after an initial increase that is consistent with new stadiums league wide. Naming rights will be sold for 30 years at the same annual rate as the highest in the league (straight line over the 30 years). PSLs will be sold similar to that of the Tennessee Titans. The new stadium will have 350 luxury suites equally divided amongst 8-seat crown 1, 10 seat crown II, 14 seat Crown II, 16 seat Crown I and 20 seat Crown II (anticipated annual lease increase 3x for all suites).
Assume Texas Stadium was fully depreciated and expenses to operate the stadium are 30% greater than at Texas Stadium.
Assume all future CBA’s do not impact operating margin.
Based on information given in the case you may make any and all assumptions in your answer including, but not limited to, % of seats sold, concessions revenue, operating expenses, present value etc.

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Ticket Revenue
Based on page 15 of the case, an increase of 48.6% will be applied to the average Cowboys ticket price for 2003 to arrive
at an aver ticket price for the new stadium. Estimated attendance for the new stadium will be calculated based on the increase
of 26.8% noted for other NFL teams on page 15.

2003 Average ticket price (A) 53,06
Increase percentage 0,468
Estimated dollar increase (B) 24,83
Estimate first year average ticket price (A + B) 77,89...

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