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Hard Profitability

Build, Baby, Build!

#Media & Entertainment #Non-profit
ProHub Comment

This case tests the candidate's ability to balance quantitative financial analysis with qualitative economic considerations. The key challenge is recognizing that despite negative NPV across all locations, the primary objective is economic stimulus, requiring candidates to debate intangible benefits alongside the financials and identify revenue and cost risks.

Estimated Time 36 minutes
Difficulty Hard
Source Wharton
10 / 100
Philadelphia is among the host cities for the FIFA World Cup 2026 to be held in the US. Currently, the MLS team Philadelphia Union plays at the Subaru Park in Chester, PA, and your client, the city council, has turned to you, debating whether to build a new stadium within the city limits in time for the World Cup and whether such a move would help boost a stagnating Philadelphia economy.

Clarifying Information

  1. Primary goal of the Philadelphia city council is to help boost the economy
  2. The city council will proceed with the stadium build if it pays for itself within a 10-year period
  3. The council currently has three sites in mind – Center City (urban, commercial locality), Chinatown (urban, less commercial), and the Philadelphia Sports Complex (city outskirts)
  4. If a suitable site is approved, rezoning is not considered a challenge
  5. Ticket proceeds will not go to the city council, but they will receive a stadium rental fee
  6. Subaru Park was built 20 years ago, with no further information on stadium life available
Mock Interview
Interviewer

Philadelphia is among the host cities for the FIFA World Cup 2026 to be held in the US. Currently, the MLS team Philadelphia Union plays at the Subaru Park in Chester, PA, and your client, the city council, has turned to you, debating whether to build a new stadium within the city limits in time for the World Cup and whether such a move would help boost a stagnating Philadelphia economy.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
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Candidates must evaluate whether Philadelphia should build a new stadium by assessing costs, revenues, and NPV across three locations, while ultimately weighing whether negative financial returns are justified by potential economic growth benefits.

Key Insights:

  1. Framework should cover both direct revenues (rental fees, naming rights, concessions) and indirect revenues (sales tax increases) over a 10-year horizon
  2. All three locations produce negative NPV (-$200M Center City, -$200M Chinatown, -$180M Philadelphia Sports Complex), but Center City maximizes tax revenue increase despite highest costs
  3. Revenue sustainability is at risk due to potential price wars with Subaru Park and dependency on multi-year contracts with Philadelphia Union and national teams
  4. Candidates should identify cost overruns and uncertain revenue flows as key risks, and explore alternatives like renovating existing stadiums
  5. Excellent candidates debate non-financial merits (economic stimulus as intangible benefit) versus financial constraints, demonstrating strategic thinking beyond NPV