Kenford Co. v. County of Erie , 108 A.D.2d 132 ( 1985 )

OPINION OF THE COURT

Doerr, J.

This appeal presents for our review the extent to which plaintiffs may recover damages following defendant’s breach of contract.

In the late 1960s the County of Erie obtained enabling legislation permitting it to finance and construct a sports stadium. Edward Cottrell, a local businessman, put together an assemblage of properties in the Town of Lancaster. Cottrell eventually obtained options to purchase in excess of 700 acres of land, some of which he tried to interest the county in purchasing for the purpose of building a domed stadium facility. Cottrell, who formed plaintiff Kenford Co., Inc., in 1968 (hereinafter Kenford), planned to develop the land surrounding the stadium and he also hoped to acquire a major league baseball franchise to play in the stadium. When Cottrell’s efforts to interest the county in buying his land were unsuccessful, he consulted Judge Roy Hofheinz, who had developed the Houston Astrodome. Hofheinz suggested donating the Lancaster property to the county in exchange for the county permitting Hofheinz and Cottrell to lease or manage the stadium, which was to be built by the county. In May of 1969, Cottrell and Hofheinz formed plaintiff Dome Stadium, Inc. (DSI), which was owned two thirds by Hofheinz and one third by Cottrell. The two also agreed to share the peripheral land development scheme.

In June 1969, the Erie County Legislature passed a resolution authorizing the plan suggested by Hofheinz. Cottrell, as agent for Kenford, thereafter exercised his options on the Lancaster property, paying some $2.6 million for the total assemblage. On August 8,1969, the county, Kenford, and DSI signed a contract by which Kenford agreed to convey 178 acres of land in exchange for the county’s promise to construct a domed stadium facility. The contract further provided that the county would either lease the stadium to DSI for 40 years, or permit DSI to manage the stadium for 20 years in accordance with an attached management agreement, if no acceptable lease could be arranged within three months. Title to the property was duly conveyed, but the parties thereafter failed to agree to lease terms, and the management contract came into being automatically.

The county sought bids on the stadium, but they were $20,000,000 over budget. On August 8,1970, the county legislature voted to abandon the project. Cottrell unsuccessfully sought to obtain substitute funding. Plaintiffs commenced the instant action alleging breach of contract and seeking specific performance or, alternatively, $90,000,000 in damages. Plaintiffs were granted summary judgment on the issue of liability (Kenford Co. v County of Erie, 88 AD2d 758) and a trial was ordered on the issue of damages.¹

The damage trial lasted nine months, consuming over 25,000 pages of transcript. Plaintiffs attempted to prove that the breach caused them to suffer $495,000,000 in damages, including lost profits on a baseball franchise, a theme park, three hotels, an office park, a golf course, and a specialty retail center. Plaintiffs also sought to recover lost profit on the management contract, loss of appreciation in the value of the land surrounding the stadium site, and out-of-pocket expenses incurred in reliance on the contract. The trial court dismissed Kenford’s claims of lost profits on the peripheral land development and the baseball franchise as being too speculative,² but the court submitted the other items of damage to the jury, which awarded DSI lost profits of $25.6 million on the management contract. The jury also awarded Kenford $18,000,000 for its lost appreciation in land value and it granted Kenford over $6,000,000 in out-of-pocket expenses. On appeal, the recoverability of all elements is challenged.

I. LOST PROFITS ON THE PERIPHERAL DEVELOPMENT

In a breach of contract case, the goal of a damage award is to place plaintiff in the position he would have been in absent the breach, no worse but no better (Western Geophysical Co. v Bolt Assoc., 584 F2d 1164, 1172; Barnes v Brown, 130 NY 372, 381; Brown v Lockwood, 76 AD2d 721, 742-743). Only such damages as are the natural and probable result of the breach may be recovered. Ordinarily, plaintiff may not recover for a collateral enterprise upon which he might have embarked, had defendant not breached the contract (Dunn, Recovery of Damages for Lost Profits § 1.16 [2d ed 1981]; Fuchsberg, 9 Encyc NY Law, Damages, § 24; 36 NY Jur 2d, Damages, § 41; see, Czarnikow-Rionda Co. v Federal Sugar Refining Co., 255 NY 33, 41; Chapman v Fargo, 223 NY 32). This rule is derived from the doctrine enunciated in Hadley v Baxendale (156 Eng Rep 145, 151). Under this rule, recovery is limited to such damages as may fairly and reasonably have been in the contemplation of the parties when the contract was made (Kerr S. S. Co. v Radio Corp., 245 NY 284). Thus, damages may not be recovered where the consequences of the breach are remote and indirect. “No one is answerable in law for all the remote consequences of his own acts” (36 NY Jur 2d, Damages, § 13, at 29, citing Hoffman v King, 160 NY 618; Coppola v Kraushaar, 102 App Div 306).

In addition to the foreseeability requirement, to be recoverable “‘damages must be not merely speculative, possible and imaginary, but they must be reasonably certain * * * They may be so uncertain, contingent and imaginary as to be incapable of adequate proof, and then they cannot be recovered because they cannot be proved’ ” (Najjar Indus, v City of New York, 87 AD2d 329, 334, quoting Wakeman v Wheeler & Wilson Mfg. Co., 101 NY 205, 209). Damages may not be awarded on the basis of conjecture and guesswork (Schanbarger v Dott’s Garage, 72 AD2d 882, 883; Schneider v State of New York, 38 AD2d 628). Damages that are uncertain, contingent, or speculative may not be recovered (Broadway Photoplay Co. v World Film Corp., 225 NY 104; Briggs v New York Cent. & Hudson Riv. R. R. Co., 177 NY 59; Rochester Lantern Co. v Stiles & Parker Press Co., 135 NY 209; Wakeman v Wheeler & Wilson Mfg. Co., supra; Hewlett v Caplin, 275 App Div 797, affd 301 NY 591; Strough v Conley, 257 App Div 1057, affd 283 NY 631). It is for the court to determine, in the first instance, whether as a matter of law the damages claimed are too remote to permit recovery (Fifty States Mgt. Corp. v Niagara Permanent Sav. & Loan Assn., 58 AD2d 177; Motif Constr. Corp. v Buffalo Sav. Bank, 50 AD2d 718, 719).

Application of these rules to the instant case leads to the inescapable conclusion that the trial court properly refused to submit to the jury Kenford’s claims pertaining to the peripheral land development and the baseball franchise. Although it was known that Kenford would try to buy a baseball franchise and would try to develop the land surrounding the stadium, it was by no means certain that Kenford would have been successful in doing so or that these enterprises would have thrived. Not all business ventures prove to be profitmaking. Moreover, although Cottrell had ideas for developing the peripheral land, these plans were by no means certain as of August 8, 1969.³ We know of no precedent for holding a defendant liable for profits lost on collateral matters that are as remote and undeveloped as the plans involved herein (cf. Contemporary Mission v Famous Music Corp., 557 F2d 918 [permitting plaintiff to recover for lost sales on a record following defendant’s breach of contract to promote the record, but denying lost profits on a proposed concert tour, etc.]). The office buildings, golf course, and theme park for which plaintiff now seeks lost profits were nothing more than visions at the time the parties entered into the contract. No specific plans had been drawn for any of these ventures. The proposed baseball franchise was equally speculative. It was by no means certain that Cottrell would have been able to purchase a baseball franchise since such a purchase would have required approval of a percentage of league owners. Moreover, it is completely speculative to say that the franchise would have been a profitable one.

II. LOSS OF APPRECIATION IN PERIPHERAL LAND VALUES

There is no dispute that Kenford suffered a monetary loss in land appreciation as a result of defendant’s breach of contract. Defendant’s own expert admitted that construction of the dome would have caused the peripheral land to appreciate in value fourfold. Nor can it be doubted that both parties contemplated this appreciation, since the contract itself states that the county expected to receive increased property taxes from the peripheral lands purchased by Cottrell and/or Kenford.⁴ Unlike Kenford’s specific development plans, which were remote and uncertain at the time of contracting, the purchase of the land was a completed fact of which the county had full notice. Also, while it was uncertain whether any particular development scheme would prove profitable, there was no possibility of the land depreciating in value. Thus, damage was certain. It is well settled in New York that in a breach of contract case a plaintiff may recover not only losses sustained, but also gains prevented (Lieberman v Templar Motor Co., 236 NY 139; Witherbee v Meyer, 155 NY 446; Wakeman v Wheeler & Wilson Mfg. Co., 101 NY 205, supra), and where damage is certain, recovery will not be denied because the amount is uncertain; the breaching party bears the risk of the uncertainty created by his breach (Bigelow v RKO Radio Pictures, 327 US 251, 264-265; Story Parchment Co. v Paterson Parchment Paper Co., 282 US 555; Lee v Seagram & Sons, 552 F2d 447, 455-456; Berley Indus. v City of New York, 45 NY2d 683, 687; Spitz v Lesser, 302 NY 490,494; Wakeman v Wheeler & Wilson Mfg. Co., supra, p 209). In our view, Kenford’s loss was both foreseeable and certain, and plaintiff is entitled to recover for its loss.⁵

Nevertheless, we conclude that the award of damages on this issue must be reversed because it was based on improper appraisal evidence. Plaintiff’s appraiser valued the land as of projected completion dates ranging from 1973 to 1979 and based his estimates on the assumption that the property was improved with the specific items that we now find speculative as a matter of law, i.e., theme park, office buildings, and golf course. Plaintiff should have produced appraisal testimony indicating what the land would have been worth as raw acreage immediately following construction of the stadium. Any further appreciation to the land resulting from theme parks and the like makes the evidence of value too speculative to permit recovery. We conclude that a new trial is warranted on this issue because the experts were in agreement that plaintiff suffered some loss, and because the motion to strike plaintiff’s evidence was made after both sides had rested. Moreover, had the trial court correctly granted the motion, plaintiff could have moved to reopen the case to present proper proof. On this view of the record, we find a new trial appropriate (see, Borne Chem. Co. v Dictrow, 85 AD2d 646, 650-651 [granting a new trial where the parties and the court misunderstood the law]).

Upon retrial, the proper measure of damages will be the value of the land as raw acreage following construction of the dome less the value of the land when purchased. The parties’ experts may develop a preconstruction estimate of value using familiar principles of valuation, notably the market data approach. The sales price of the subject property may be the best evidence of value (Grant Co. v Srogi, 52 NY2d 496, 511), particularly the early sales before it was widely known that Cottrell was acquiring an assemblage. A postconstruction estimate of value may similarly be derived by using the market data approach. The experts may rely on the appreciation experienced by lands surrounding other major developments in western New York as well as in other similar metropolitan areas. We stress, however, that as nearly as possible, the comparables to be relied upon should be large parcels of raw acreage.⁶ The objective, after all, is simply to ascertain fair market value, i.e., what a willing buyer would pay a willing seller for the property (Grant Co. v Srogi, supra, p 510), viewing the property exactly as it was in the early 1970s, except assuming that it was located on the periphery of a domed stadium.⁷

III. LOST PROFITS ON THE MANAGEMENT CONTRACT

The issue of DSI’s lost profits on the management contract involves two questions: whether an unestablished business may recover lost profits in New York and, if so, whether plaintiff’s proof was adequate.

A. Per Se Rule v Rule of Evidence

We begin our analysis by noting that we found no case from a New York State court permitting a recovery of lost profits to a new business. The seminal case on the subject is Cramer v Grand Rapids Show Case Co. (223 NY 63). The defendant in Cramer breached its contract to deliver furniture to plaintiffs thereby preventing the latter from opening their ladies clothing store in a timely fashion. In reversing an award of lost profits, the court noted that evidence of plaintiffs’ subsequent profit, earned after they were able to open their store, was insufficient proof of what their lost profits would have been had defendant not breached the contract. The court did not establish a per se rule of nonrecovery of lost profits; the court merely stated that, as an evidentiary matter, a new business would almost never be able to establish sufficient proof to recover lost profits. New York has thus been characterized as having a per se rule of nonrecoverability of lost profits to a new business (Manniello v Dea, 92 AD2d 426 429; Dunn, Recovery of Damages for Lost Profits § 4.1 [2d ed 1981]; see also, 36 NY Jur 2d, Damages, § 110 [noting that profits earned after the breach are considered too remote to be admissible and that this evidentiary rule precludes recovery for lost profits to a new business]; and see, Miller v Lasdon, 78 AD2d 628 [concurring opinion noting that the court could almost take judicial notice that there is no way to establish satisfactorily that an untried business will be profitable and in a given amount]).

In juxtaposition to the New York State cases, there are several Federal cases in New York permitting new businesses to recover lost profits. The key case was Perma Research & Dev. Co. v Singer Co. (402 F Supp 881, affd 542 F2d 111, cert denied 429 US 987). In Perma Research, the court cited Cramer v Grand Rapids Show Case Co. (supra) for the proposition that lost profits in a new venture are not ordinarily recoverable, but then went on to hold that lost profits may be awarded if plaintiff establishes three elements: that the lost profits are the direct and proximate result of the breach; that profits were contemplated by the parties; and that there is a rational basis on which to calculate the lost profits (Perma Research & Dev. Co. v Singer Co., supra, p 893). The first two criteria reflect the lost profits test applicable to establish businesses as enunciated in Witherbee v Meyer (155 NY 446, 449-450, supra). What the court did in Perma Research, in essence, was to add a third requirement for new businesses by requiring them to establish some rational basis on which to calculate the lost profits. By so holding, the court converted the Cramer rule of nonrecoverability into a rule of evidence. This is precisely the observation made by the author of the lost profits treatise (Dunn, id., § 4.2 [observing that the original rule precluding all recovery of lost profits to new businesses has given way to rule of evidence permitting such profits if an adequate measure can be found]). The Perma Research test has been subsequently employed in the Second Circuit (Lexington Prods. v B.D. Communications, 677 F2d 251, 253; Western Geophysical Co. v Bolt Assoc., 584 F2d 1164, 1172, supra; Contemporary Mission v Famous Music Corp., 557 F2d 918, 926, supra; see also, For Children v Graphics Intl., 352 F Supp 1280, 1284 [upon which the Perma Research case relied]).

Although the issue was not directly raised, we gave tacit approval to the rule as enunciated by the Federal courts in our recent decision in Whitmier & Ferris Co. v Buffalo Structural Steel Corp. (104 AD2d 277). The plaintiff in Whitmier was not a new business, but a tenant not yet in possession. Nevertheless, the rationale for precluding recovery to tenants not in possession was the same justification for denying recovery to new businesses — lack of any certain basis for measuring lost profits (see, Whitmier & Ferris Co. v Buffalo Structural Steel Corp., supra, p 284 [Moule, J., dissenting]). The majority agreed with the view expressed in the dissent that a per se rule of nonrecoverability should give way to a rule of evidence permitting recovery of lost profits if there is some rational basis on which to calculate such an award. In accordance with our view expressed in Whitmier & Ferris Co., we now hold that there is no per se rule precluding a new business from recovering lost profits and we adopt the test employed by the Second Circuit Court of Appeals in Perma Research & Dev. Co. v Singer Co. (supra).

B. Application of the Perma Test

The first two Perma Research criteria are easily met. The county’s failure to build the stadium was clearly the proximate cause of any loss of profits stemming from the management contract and it is unquestionable that profits by DSI from the management contract were contemplated by the parties. We conclude, however, that plaintiff has failed to establish a rational basis upon which lost profits may be calculated.⁸

Profit, of course, involves two variables — income less expenses. The management contract provided that DSI would receive 11% of gross revenues from major events (i.e., professional baseball and football) and 89% of gross revenues on “open time” events. The contract further provided that DSI would do the negotiating for all contracts, but that major event contracts would be between the performer and the county while open time events would be between the performer and DSI. To establish its lost profits, plaintiff called an expert who prepared a series of projections based on the experience of other domed facilities as well as an analysis of the market in the Buffalo area. The expert opined that the facility would hold 10 professional football games a year, as well as 42 open time events including three consumer shows, six high school football games, five circuses and seven musical or entertainment events. The expert then developed an average ticket price per event, which was multiplied by his estimate of anticipated attendance. The expert also developed an approximation of what each person would spend on parking and concessions. These figures were then computed to arrive at an anticipated revenue stream. The expert also gave his opinion of what the expenses of running the operation would be. He used a flat figure for salaries and then estimated that other expenses, such as advertising and legal fees, would be a percentage of gross revenue. His projected expenses were then subtracted from his projected revenue to arrive at a before-tax net income figure. One sheet summarizing the foregoing information was prepared for each of the 20 years of the management contract. The expert’s opinion of net profit for each year ranged from just under $1,000,000 for the first year to over $4,000,000 in the 20th year. Based upon these projections of net income, the jury found lost profits totaling over $28,000,000, which the court reduced to $25.6 million after applying a formula to arrive at present value.

The issue is whether the figures supplied by the expert are sufficient, as a matter of law, upon which to base an award of lost profits. Once again, we find a decided split between the New York State cases and the Federal cases. Several Federal cases have permitted statistical analyses to support an award of lost profits to a new business. Significantly, however, all of those cases involved only a royalty payment or the sale of a single product.⁹ The common thread running through those cases is that only one variable was involved, i.e., how many of the product would have been sold. Thus it was certain that plaintiff would have made money and the only uncertainty was the amount. The instant case, by contrast, is filled with conjecture. The expert had to estimate, first, how many, if any, events would be held at the stadium; how many people would attend each event; and how much each person would spend on parking and concessions. Additionally, and even more compelling, the expert also had to estimate all expense items. Highly significant in our view is that the expert assumed that various expenses would be a percentage of gross revenue, such as advertising. In short, the expert was assuming the fact to be proved, to wit, that revenues would exceed expenses. It is not inconceivable that DSI could have ended up spending more promoting events than it took in as receipts (Broadway Photoplay Co. v World Film Corp., 225 NY 104, 107-108, supra; Bernstein v Meech, 130 NY 354; Moss v Tompkins, 69 Hun 288, affd 144 NY 659).

The cases from New York State courts are even more restrictive than the Federal cases, since they have precluded projections even in the context of a royalty case (see, e.g., Freund v Washington Sq. Press, 34 NY2d 379 [royalties on a book are too speculative]; Spitz v Lesser, 302 NY 490, supra [loss of royalties is limited to the minimum amount stated in the contract]; see also, Wakeman v Wheeler & Wilson Mfg. Co., 101 NY 205, supra [opinion testimony as to how many sewing machines could have been sold is inadmissible]). Moreover, not only have the New York State cases excluded evidence of projections to justify lost profits, but New York cases have even excluded proof of plaintiff’s own subsequent profits (Cramer v Grand Rapids Show Case Co., supra).¹⁰ Although we agree with the view expressed in a recent law review article that lost profits are too often denied because of “an arbitrary disregard of possibly relevant evidence other than a history of past profits” (Comment, Remedies — Lost Profits as Contract Damages for an Unestablished Business: The New Business Rule Becomes Outdated, 56 NC L Rev 693, 695 [1978]), and while we recognize the increasing acceptance of expert opinion in statistical projections (see, e.g., Espana v United States, 616 F2d 41, 44 [mortality tables]; De Long v County of Erie, 89 AD2d 376, affd 60 NY2d 296 [expert opinion of a homemaker’s services]), the projections used in the instant case simply involve too many variables to permit them to support an award of lost profits. Although a breaching party bears the risk of any uncertainty as to the amount of damage (Plant Planners v Pollock, 60 NY2d 779; Spitz v Lesser, supra, p 494), plaintiff must first establish that he has, in fact, suffered lost profits (see, Wade Lupe Constr. Co. v B & J Roofing Co., 84 AD2d 615, affd 55 NY2d 993; Robert Brian Assoc. v Loews Theatres, 71 AD2d 584 [no proof that profit would have been made]; cf. Brady v Erlanger, 188 App Div 728 [history of past profits sufficient to project future lost profits]). We find plaintiff’s projections insufficient as a matter of law to support an award of lost profits.¹¹

IV. OUT-OF-POCKET EXPENSES

Lastly, defendant seeks reversal of the $6,000,000 awarded Kenford as reliance and mitigation damages. It is well settled, of course, that a party may not recover both the expense of performing his side of the contract and the profit to be received under it, since “an award of lost profits * * * will make plaintiff whole” (R & I Elec, v Neuman, 66 AD2d 836, 837; see also, Schultz & Son v Nelson, 256 NY 473; Oswego Falls Pulp & Paper Co. v Stecher Lithographic Co., 215 NY 98; Borden v Chesterfield Farms, 27 AD2d 165). By contrast, a party may recover mitigation expenses in addition to lost profit, because mitigation expenses would not have been incurred had defendant not breached the contract, and hence there is no double recovery. We view all damages awarded after the date of breach (Aug. 8, 1970) as mitigation damages properly submitted to the jury, and accordingly we affirm the jury’s finding of mitigation damages of $6,160,030.46. The jury’s finding of expenses prior to that date ($6,218.17 and $636,502.34), however, is reversed, and the matter remitted for a new trial. Upon retrial, plaintiff’s proof should not include any sums expended for land acquisition expenses (i.e., brokerage commissions, recording fees, etc.), or for interest paid on the mortgages, since these sums would have been paid even without the breach and since plaintiff will be compensated for these sums by being awarded loss of appreciation of land value. Only expenses incurred as preparatory to the aborted management agreement, for which no lost profits are recoverable, may be awarded.

Accordingly, the judgment should be modified and the matter remitted for further proceedings in accordance with this opinion.¹²

1 . Thereafter, plaintiffs were granted permission to increase their ad damnum clause to $495,000,000 (Kenford Co. v County of Erie, 93 AD2d 998), but a motion to change venue was denied (97 AD2d 982).

2 . Technically, the court refused to submit these matters to the jury on the ground that various “conditions” to the admissibility of the evidence had not been met. Plaintiff’s counsel noted that in striking testimony the court was, in effect, granting a directed verdict as to those claims. We agree that this is what the court did and treat the appeal as if it had dismissed the claims outright rather than merely striking testimony.

3 . For example, Cottrell’s testimony revealed that, as of the contract date, there had been no feasibility study for a theme park and his experts had not yet inspected the golf course site.

4 . The contract obligated the parties to attempt to negotiate a lease calling for $63.75 million in revenues over 40 years, the revenues to be derived from, inter alia, “increased real property taxes * * * generated by the peripheral lands and development thereof (peripheral lands shall mean those lands presently owned, contracted for or hereafter acquired by Edward H. Cottrell or Kenford)”.

5 . We disagree with the view espoused in the dissenting opinion suggesting that the court take this opportunity to adopt the disproportionate recovery test suggested by the Restatement (Second) of Contracts. Were we to agree that the rule should be adopted, we would not apply it so as to deny plaintiff a recovery of its loss of appreciation in land value in the instant case. The Restatement, itself, notes that a court should limit damages that are otherwise recoverable only if there is “an extreme disproportion” between the loss and the benefit to be derived by defendant under the contract (Restatement [Second] of Contracts § 351 comment f). Thus, for example, one breaching a contract to deliver machinery should not be responsible for plaintiff’s subsequent lost profits, which are greatly in excess of the consideration defendant would have derived from full performance (Restatement [Second] of Contracts § 351 comment f, illustration 17). This analysis has no application to the facts at hand, since a recovery of a few million dollars is not out of proportion to the benefit defendant would have derived from performance of the contract. Defendant was given title to 178 acres of land and would have had the opportunity to realize substantial income from both stadium operations and increased tax revenues. Defendant has not obtained these benefits only because defendant chose to breach the contract. The proper test is not what defendant actually derived from the contract, but what benefit it would have derived from performance (Fuller & Perdue, The Reliance Interest in Contract Damages: 1, 46 Yale LJ 52, 88, n 58 [1936]; dissent, infra, n 5).

We also reject the argument that there is no reason to treat lost appreciation in land value differently from lost profits on the theme park, etc. The principal reason for denying lost profits on the latter is that there is no way of knowing whether these proposed ventures would have been profitable, and thus plaintiffs’ proof cannot meet the certainty requirement of the lost profits test ('Wakeman v Wheeler & Wilson Mfg. Co., 101 NY 205, 217; see infra, n 8). Loss of appreciation in land value, by contrast, was conceded by defendant.

We also find unpersuasive the dissenters’ reasoning that county officials did not “contemplate” the liability now at issue because, had they done so, they would have inserted a standard clause limiting their liability (see infra, dissenting opn, ns 2, 7). It is speculative to say that such a clause would have been proposed and more speculative to assume that plaintiffs would have agreed to it. For example, on the summary judgment motion, Special Term noted that the county desired to insert a cost limitation in the contract, but plaintiffs refused to agree to that term.

Finally, we know of no legal support for the suggestion implicit in the dissent that a party who enters into an allegedly improvident contract should, perforce, be rescued from its own incaution. Such a bailout is particularly inappropriate in the case at bar where both parties to the contract were sophisticated entities represented by counsel and the dealings were at arm’s length.

6 . For example, plaintiff’s expert relied on small parcels and valued the land on a square foot basis rather than an acreage basis, resulting in an inflated estimate of value.

7 . We note that the county’s expert used proper methodology by developing a preconstruction value based on comparable sales in the area during the late 1960s. He also developed a postconstruction value by examining the experience of other local properties that surrounded major western New York developments such as Rich Stadium and the SUNY campus. Using this data he arrived at a preconstruction value of $1,100 per acre and a postconstruction value of $4,400, indicating lost appreciation of some $3,300 per acre (a total of approximately $1,815,000 for the 550-acre parcel).

8 . Although we have already resolved plaintiff’s claims with respect to theme parks and the like, we note that lost profits from those ventures would not be recoverable even had they been within the parties’ contemplation, due to the absence of any rational basis for calculating the loss.

9 . See, Lexington Prods, v B.D. Communications (677 F2d 251 [plaintiff granted defendant an exclusive license to sell its dusting brush in return for royalties and defendant was obligated to spend a certain sum in TV advertising; defendant failed to spend the required sums and plaintiff was permitted to offer proof that, had the required sums been spent, sales of plaintiff’s brushes would have increased in proportion to the amount spent]); Contemporary Mission v Famous Music Corp. (557 F2d 918 [plaintiff granted defendant an exclusive right to distribute plaintiff’s record in return for royalties and defendant thereafter breached; the court permitted plaintiff to use a statistical analysis to estimate how many records could have been sold had defendant continued to promote the record]); Perma Research & Dev. Co. v Singer Co. (402 F Supp 881, affd 542 F2d 111 [defendant breached its agreement to use its best efforts to market plaintiff’s patented device; plaintiff was permitted to use sales projections to establish how many of the devices would have been sold, but the court noted that the sales projections were prepared at the request of defendant prior to entering into the contract and thus were not prepared “with an eye to litigation”]); For Children v Graphics Intl. (352 F Supp 1280 [plaintiff permitted to project that 75% of its books would have been sold]). The projections permitted in Federal cases involving established business similarly involved a royalty arrangement (Bloor v Falstaff Brewing Corp., 454 F Supp 258, affd 601 F2d 609); an exclusive distributorship (Autowest v Peugeot, 434 F2d 556); or the lost profit on an old business less the investment return derived from the sale of the business (Lee v Seagram & Sons, 552 F2d 447). None of these cases permit a plaintiff to project both revenues and expenses of an unestablished business.

10 . The treatise on lost profits suggests several ways in which a plaintiff might establish lost profits. These methods include: plaintiff’s prior experience; plaintiff’s subsequent experience; plaintiff’s experience at other locations; the comparable experience of others; defendant’s subsequent profits; and industry averages (Dunn, Recovery of Damages for Lost Profits §§ 5.5-5.10 [2d ed 1981]). Not all methods would be available in all cases. In the instant case, the dome was never built, and the plaintiff did not before or after engage in the management business. Nor is this type of contract narrow enough to permit of an industry average. Plaintiff’s only recourse, therefore, is to rely on the comparable experience of others. Unfortunately, this method is not particularly reliable under the facts herein because of the wide divergence of variables between stadium facilities in different cities. We agree with the view expressed by the Seventh Circuit approving of the comparable business approach (also known as the yardstick measure), but noting that “ ‘the business used as a standard must be as nearly identical to the plaintiffs as possible’ ” (Cates v Morgan Portable Bldg. Corp., 591 F2d 17, 22, n 7, quoting Lehrman v Gulf Oil, 500 F2d 659, 667).

11 . We have considered the cases cited to us from other jurisdictions but find that, even under the holdings of those cases, the instant award of lost profits could not be sustained (see, Kreedman & Co. v Meyers Bros. Parking-Western Corp., 58 Cal App 3d 173, 130 Cal Rptr 41 [parking garage operator was permitted lost profits after developer failed to construct garage, but court noted that lessee was experienced in the business and the operation of a parking garage is a relatively simple operation with sufficiently few decisions to make the prediction of profits reasonably possible]; Smith Dev. Corp. v Bilow Enters., 112 RI 203, 308 A2d 477 [allowing a McDonald’s restaurant lost profits based on the experience of other McDonald’s restaurants in the area; the court noted the high degree of similarity among restaurants in this franchise]; see also, Riley v General Mills, 226 F Supp 780 [permitting recovery of loss of commissions on insurance policies]; Sandler v Lawn-A-Mat Chem. & Equip. Corp., 141 NJ Super 437, 358 A2d 805 [breach of a distributorship agreement]). Of these cases, only two involved projections of expenses, and in these cases (involving the McDonald’s restaurant and the parking garage) there was a high degree of similarity between the business not constructed and the business from which data was derived.

The instant case is more analogous to those cases denying recovery to a new business (China Doll Rest, v Schweiger, 119 Ariz 315, 580 P2d 776 [a restaurant]; Evergreen Amusement Corp. v Milstead, 206 Md 610,112 A2d 901 [drive-in theater]; Albin Elevator Co. v Pavlica, 649 P2d 187 [Wyo] [wheat farm]).

12 . We feel compelled to note that the court is unanimous in its determination of all major issues raised on this appeal, save one — the recoverability of Kenford’s lost appreciation in land value.