a. Calculate the difference in the number of seats between each of the current NHL venues in Canada and the MTS Centre — commissioner Gary Bettman has said that plays capacity

a. Calculate the difference in the number of seats between each of the current NHL venues in Canada and the MTS Centre.

b. NHL commissioner Gary Bettman has said that the NHL plays to 93% to 94% capacity. Suppose Rexall Place sold 93% of its seats during a regular-season game. Calculate the number of seats sold and compare that number to a potential sold-out game at the MTS Centre.

c. Assume there are 41 home games, and that the average price of an NHL ticket in Winnipeg is $75. If variable costs are 60% of revenue and the fixed cost is assumed to be the cost of the arena plus the cost of purchasing back the Coyotes for $165 million, calculate when the MTS Centre would break even if it only hosted NHL hockey games from the date of purchase on.

SOLUTION

a. MTS Centre capacity for hockey games is 15 015 seats

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		Difference	%
Rogers Arena	18 630 seats	+ 3615	3615/15 015 = 0.2408 or 24.08% more
Pengrowth Saddledome	19 289 seats	+ 4274	4274/15 015 = 0.2846 or 28.46% more
Rexall Place	16 839 seats	+ 1824	1824/15 015 = 0.1215 or 12.15% more
Air Canada Centre	18 819 seats	+3804	3804/15 015 = 0.2533 or 25.33% more
Bell Centre	21 273 seats	+6258	6258/15 015 = 0.4168 or 41.68% more
Scotiabank Place	19 153 seats	+4138	4138/15 015 = 0.2756 or 27.56% more
b.

	At 93% capacity	At 100% capacity
A. Total seats capacity	15 015	15 015
B. Number of seats sold	13 964	15 015
C. Total revenue per game (B × $75)	$1 047 300	$1 126 125
D. Total annual revenues per season (41 × C)	$42 939 300	$46 171 125
E. Less variable costs (60% of revenue)	$25 763 580	$27 702 675
F. Total annual contribution margin per year	$17 175 720	$ 18 468 450
G. Number of years required to break even	($133 500 000 + 165 000	($133 500 000 + 165
	000) / 17 175 720	000 000) / 18 468 450
	= 17.38 years	= 16.16 years