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Road work ahead

February 7, 2012 - Rob Weaver
A proposed contract would pay consultant KPMG Corporate Finance $2.85 million to study whether Ohio should lease its toll road. Now, $2.85 million seems like a lot of money to most Ohioans, and for one simple reason: It is. But John Kasich, before becoming governor, was managing director for Lehman Brothers' investment banking division in Columbus. While most of us are used to dealing with zeroes when handling our own money, he’s used to dealing with numbers preceded by a dollar sign and followed by a bunch of zeroes -- all to the left of the decimal point. And, when you put it in perspective, the contract begins to make sense. First, let’s look at the numbers. Indiana signed a $3.8 billion, 75-year lease for its 157-mile toll road in 2006. Maybe Ohio can’t get that much per mile, even though our turnpike is every bit as scenic as Indiana’s. Let’s say, for sake of discussion, Ohio is offered $2.5 billion for our 241-mile version. Now, let’s lop off some zeroes to come up with numbers the average person can comprehend. It’s difficult to wrap your mind around paying $2,850,000 to analyze a financial arrangement worth maybe $2,500,000,000. Instead, imagine paying $28.50 to review a deal worth $25,000. Now it makes sense, right? You can’t argue that analyzing options for the Ohio Turnpike doesn’t make financial sense. If nothing else, it would mean a $2.85 million contract for KPMG Corporate Finance.

 
 

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