I see two possibilities, then. 1. While the "cheap" owners have the money to move to a new level of players spending, they don't want to do it with personal assets. They ARE willing to do it with this cash infusion. 2. The reporter is full of it. One thing to keep in mind...none of us want MLS to do a Leeds. If it's an experiment on growing interest in advance of the 2014 renegotiation of TV rights that the league can get out of as easily as it got into it, fine. If it's a calculated gamble, um, fine I guess. But if the money is going to be spent on players, the 2014 version of MLS will be alot better than today's version, but there's no guarantee that the 2018 will be any better than today's. The revenues are going to have to justify the spending.
I think the money at least in part is intended to help with the Development Academy System. MLS clubs have been asked to take on a big expense there. This is seed money to help get the investment off the ground.
Would the %25 new owner be more aggressive than SUM, or they just buy it and hoping others do the dirty work for them.
i don't think we can extrapolate any MLS valuations from a SUM valuation. MLS only add's value to SUM through SUM controlling the TV revenue, not in SUM owning any value each team may have. additionally, SUM owns TV rights to many non-MLS soccer broadcasts and game day revenue, including but not limited to (from the company profile): i believe they have a finger in the Mexican national teams US appearances as well.
To be fair, here's what it says: "SUM has considered using this cash infusion to subsidize MLS clubs as they try to convince known soccer stars to come to the league as designated players." That's not the reporter just pulling this from the air IMO. From that, here's what I infer: SUM is the marketing arm of MLS in charge of the national TV and sponsorship deals. SUM thinks it can up these deals if the league has more star power, but there aren't many I/Os willing to fund the DP deals because while it may help the league, the direct benefits to a single I/O taking on that DP contract are typically not sufficient to outweigh the costs. In order to encourage that investment, they are considering a distribution from SUM to the I/Os with the understanding that the money can be used to help offset these DP costs. How they can restrict that distribution to that purpose isn't clear to me. But Garber's comments to Grant Wahl in November, 2009 still stick in my mind, because I think it's the same debate: Link: http://157.166.255.4/vault/article/web/COM1163101/4/index.htm I've quoted it before, but this recent comment from Garber jumped out at me too: Link: http://www.nj.com/redbulls/index.ss...don_garber_has_overseen_growth_of_league.html I'm guessing, of course, but I think all of this is related. I think there is a group convinced they need more star power, and they are talking about using a chunk of this money to fund that in the hope that they can get a big jump in the TV contracts. It's a gamble. It could disappear in a puff of smoke. But if they can jump the TV deals significantly, they'll recoup the money quickly and they could push franchise values up significantly in the process. I agree, but I think it's option 1.
i find it rather amazing-and a testament to the league and where its going- that someone woul dinvest that sum of money into a sport in this economy.
Agreed wrt buying players. That's the hard lesson of the expansion of the NHL from 21 to 30 teams. Teams built the expansion fees into the payroll. When the expansion faucet was turned off, the league almost went belly up. My guess is that the infusion of cash will mostly be used to buy up more sporting properties. MLS has toyed with taking all video production in-house. With enough assets, the league could take over game day production instead of having the broadcasters do it. Combine those two, and I think you begin to see the starting point for an MLS Channel. I think MLS (via SUM) is looking at owning all things spectator sport related with regards to soccer in the U.S. market.
I really think MLS should purchase the assets and players of a Premiership team like Sunderland or Blackburn and transfer them into MLS. This team would instantly contend for the MLS Cup every year and attract TV viewership from the aficionados who want to watch Premiership-quality soccer. In other words, any attempt to quickly attract the so-called aficionados is doomed to failure. Because too many of them are watching for nostalgia's sake and not out of love for the sport.
Maybe, I don't know. It's an odd way to write it. SUM had considered using this cash (but chose not to) SUM is considering using this cash (but hasn't decided) Vs. SUM has considered using cash (in the past to subsidize purchases) The use of "has" seems to imply another situation in the past. The other thing, how much revenue per year does $150 million buy? $15 million? If you want to subsidize DPs, why wouldn't you just spend the $15 million this year and evaluated the question again next year. You don't need to sell part of the company to finance this. And they're not going to spend all $150 million in a year. Can individual owners sell their shares of SUM separately from the rest? If DC and SJ want to cash out, maybe this is one way to do it.
Instead of more star players...I'd settle for more depth. It is cheaper too. I think the money would best be spent on advertisement and and fixing the gap between college soccer an pro soccer.
I find this really strange. None of the MLS owners are wanting for cash if they wanted to sign DP's for their franchises or expand the cap, why sell off a big chunk of one of the consistently profitable parts of MLS just so that cheapskates like Kraft and Chivas USA don't have to put their hands in their pockets? Sure if this was 2004 then I might understand but it's not it's 2011. Do the team owners really need to sell of part of the crown jewels to subsidise those that can't be bothered to spend any money?
All fair points, but I still think that's what it says. Here's where I get stuck though: even if SUM distributes the money to the I/Os, but how can SUM influence how they spend it? Yes, there is undoubtedly a lot of cross pollination, but I don't think SUM can mandate the I/Os use this distribution to buy designated players. Strongly suggest? Sure. But I don't see how SUM could prevent owners -- especially those least inclined to sign DPs now -- from just keeping the distribution. Now, Andy's right, SUM could also keep the money in the corporation and use that cash to purchase assets, although there isn't any indication they are considering that. That they could control, however, and it might be smart to do that. But if they spend it on designated players, those players better move the ratings needle enough to prompt the broadcasters to write a big check in 2014 -- the owners will never recoup the money if they don't and this spending blip will be short lived IMO. As for your last point, I would hope they wouldn't cash individual I/Os out of SUM. Personally, I think it's smart to keep the ownership of MLS, LLC and SUM, LLC -- at least with respect to the I/Os -- aligned.
This is generally how I feel too. Let's say the $150M invested on/in some fixed assets will generate about $10M in annual income. Divided by 20 teams, it's $500K per squad. My hope is that it will all go to the direct cap increase to ~ $3.2M. One could play with the payrolls further by making the DP (or, at least, the first DP) entirely off-the-books. That would allow clubs to have a "name" and a very solid roster beside him. Let's figure the bottom of the roster accounts for about $300K in salaries. If so, the club's starters might account for $2.5M+ or about $250K per starter. Now, take out 3-4 NCAA/MLS draft types averaging $100K and you could end up with 4-5 foreign players in the $400K-$500K range and those should be significantly superior to the likes of Solli or Lekic.
Now's the perfect time to do it. "This economy" doesn't apply to the globally wealthy folks who have their money in one of PEP's funds. High-end luxury goods purchases in the past year are WAY up, for example. And, as the article points out, they aren't investing in a sports franchise or even just a league (nat. team friendlies hedge against that), but rather in the dominant media company for broadcasting high-level soccer played within the U.S. That's Providence's specialty. What's comforting about this is that these guys know they have to show their investors profits, and they will no doubt take some board control. My own theory is that this is all about getting demonstrably better than the Mexican League--which is why Garber's tone has changed in the past couple years about CCL, etc., and why the league has put a higher priority on it. Superliga fizzled because no one recognized it as a legit competition--that was their first pass--but the allure of all those eyeballs in the U.S. watching Mexican League and knowing that offering a demonstrably better product could pull even some of them away has to be tremendous. As do the demographics. PEP's thinking is two-parts "Hey, look at all those people watching El Tri friendlies in the U.S." and one-part "Hey, what if we could offer them a better product than the Mexican League?" Garber and SUM have been trying to work this Rubik's Cube of their MLS side of the business on their own for awhile without much success. Let's hope this input (as well as just dollars) from major media investors will help.
This could be an interesting use of any additional funds; providing the owners don't want to realize a little profit. Controlling production is not only a large marketing step forward but also allows them to control the product they distribute via network outlets, thus giving them a leg up on negotiations. While may want better players and more depth (me too, me too) something along these lines may be a better investment - leading to longer term impacts on player expenditure and resulting quality.
You're committing the same fallacy that many BigSoccer posters do, assuming that its just Kraft and Chivas who don't want to spend money (or some other set of 1-2 owners). Clearly it must be a majority or close to a majority of owners that don't want to spend money, otherwise the rules would have already been changed to allow them to spend money. If it was really only 3-4 owners against spending money, that's 14 owners that do want to spend money, easily enough to change the rules. I think in reality its 3-4 owners that really want to spend significantly more money, 3-4 owners that don't want to spend any more than they absolutely have to, and 10 or so owners that fall in the middle.
Fair enough triplet, but I still think it is more editorial than reporting; and there is nothing wrong with that. Nor does it mean there is not an element of truth to the options. However, it reads more like a list of possibilities and past ideas as opposed to any confirmation of possible plans for a cash infusion. I still would be surprised if they moved this cash straight to salaries. For several reasons ranging from a one time $5 million per team pay-out doesn't do much over a typical four year contract (and then it is gone) to the CBA provides a salary structure that I think owners would like to keep in place until a TV deal is clear. If the owners don't want the cash, I do see some interesting investment opportunities from media (as mentioned here) to an infusion in academy programs.
Deep Pocket Spenders: 1. RedBulls 2. Galaxy 3. Sporting KC 4. Sounders FC 5. Fire Going with the flow: 6. Toronto FC 7. White Caps 8. Montreal 9. Timbers 10. Chivas USA 11. Dynamo 12. Rapids FC 13. DC United 14. Union FC 15. Real Salt Lake Stick to the budget: 16. FC Dallas 17. Crew 18. Earthquakes 19. Revolution
It'd take a helluva lot more than $150M to solve that problem. And only because you'd have to contend with the NCAA at some point. That thing changes about as quickly as tectonic plates. You can either work with them or try to go 'round them. The second one is far, far more expensive and, quite possibly, impossible to do at this date.
Just a guess, but it seems that AEG is willing to write the check but it is believed that Brenner and Oscar may not be quite so willing until the stadium is online. At least, that is the guess. Tough when you've got 3 owners.