Thankfully it doesn't include broadcast rights, but what's the advantage of Traffic over SUM for CONCACAF?
Kindred spirits? Both are, shall we say, far less repituable than SUM and it is far easier for shenanigans to happen with Traffic than those haughty, law-abiding Americans.
Politics 101. New general secretary Enrique Sanz used to work for Traffic while SUM obviously has ties to the USMNT and therefore Chuck Blazer. http://www.socceramerica.com/article/49389/traffic-regains-concacaf-rights.html Sanz needs his people around him. Working with SUM would have been doable but he knows Traffic and they know him.
So let me understand, SUM (of which Don Gaber is the CEO) is the marketing arm of US Soccer. Is it true that the money made by this company is to be distributed to MLS clubs to offset their losses? Only reason I'm asking is because I thought I read this once an I'm just curious.....
SUM was Garber's idea, a company owned by MLS investors, set up as a separate entity from MLS. SUM also works with USSF, buying the rights to and acting as a promoter for certain non-MLS soccer events (Mexico friendlies on US soil, for example), but are not a part of USSF. The owners of SUM get the profits from those events, since they are the stockholders of the company. I hope this clears it up for you.
Somewhat, thanks! Basically, I want to know if the clubs and/or owners get the profits and use them to line their pockets or to offset league related loses? I.E. the Rapids lost $1.3 million in 2012? https://www.bigsoccer.com/community/threads/rapids-lost-1-3-million-in-2012.1978872/ In other words, would the SUM money go to clubs like the Rapids who claim they lost money in 2012?
SUM was patterned after NFL Properties, a separate corporation created by the NFL in the 1960s to license and merchandise the NFL. http://en.wikipedia.org/wiki/National_Football_League_Properties The difference is that SUM also handles the TV rights and it doesn't just market MLS, it also contracts with other soccer organizations to market and merchandise them in the United States. From the SUM website, " SUM holds the exclusive rights to the most important soccer properties in the region, including: all commercial rights to Major League Soccer; the United States Soccer Federation; promotional and marketing rights to Mexican National Team games played in the United States; and the CONCACAF Gold Cup™. SUM also manages promotional and marketing rights in the United States for Mexico’s most popular sports team, Club Deportivo Guadalajara (Chivas)." Fans had always assumed that these other properties were a lot more valuable to SUM than MLS, but FakeSigi did a report in 2011 that indicated that's not the case. SUM has annual revenue of over $100 million, and 65% of that is generated by it's representation of MLS. https://soccer.fakesigi.com/soccer_united_marketing_revenue.html Again, two thirds of SUM's revenue is MLS related, so the "subsidy" other soccer entities provide to MLS owner's via SUM isn't all that large. One final point, every MLS I/O owns a share in SUM, but they aren't the only shareholders in SUM, so while the ownership overlaps, it is not identical. Portland's pro forma indicated that it would receive a $1.6 million annual distribution from SUM, and assuming they each owned an equal share, every MLS team owner should have received the same amount.
Is that compiled 2011 blog entry the only of data available on this? Does it cite a typical or atypical year? (And are we taking the sources cited by "fakesigi's blog" to be all that accurate and authoritative?) It seems that the business(es) are set up to let SUM be that holding/separate company to operate outside (partially at least) the operational and revenue streams of MLS's (non-TV/marketing) business. Using the blog post and twitter source from fakesigi, do we have any way of knowing if that 65% of SUM's annual revenue "that is generated by its representation of MLS" is all put back into MLS? When the MLSPU is negotiating with MLS on new CBAs (every x number of years), are "MLS tv/media/marketing revenues" on the table? Or since SUM is a separate business, is the MLSPU not capable of fully negotiating based on those "MLS-generated" revenues that SUM earns? What does MLS "get" from SUM, and are all "MLS-based revenues" that SUM generates returned to and solely used by the league (MLS)?
I feel like this is an organizational idea. I think SUM and all of this is all accounting and money moving so as to keep the league more solvent and to keep it going. It is just a money issue. not keeping all your eggs in one basket so to speak.
Cool! Thank you! Therefore, if that is the case, does the $1.6 mil in profit offset the $1.3 in losses for the Rapids or is that $1.3 a figure not included? Basically, are they losing $1.3 or do they factor in the $1.6 that they make from SUM and if its factored in, does that mean they aren't losing but are making $300k, or no?
It's hard to tell. If you look at Portland, I think they present it "correctly", meaning they calculate the operating profit (or loss) of the team first, then they add in the SUM distribution and subtract the amount of the capital call. I don't know if Colorado included the SUM distribution or not in that $1.3m loss, but my guess is that is the operating loss without the SUM distribution or the capital call included. The SUM distribution also seems a bit low. Keep in mind the I/Os don't own all of SUM since they sold a quarter of it and they have other shareholders besides that I believe, but with $100 million flowing into SUM, even before the sale of a chunck of SUM to Providence the Portland numbers projected that the I/Os were only getting $30.4m of that leaguewide. Now, again, there are other shareholders, employees and taxes to pay, and I'm sure they retain a good chuck of the cash in the corporation too, but still if these numbers are correct less than a third of SUM's revenue finds its way to the I/Os.
Looking back at this, I do think it is worth trying to analyze the "value" of certain content that SUM controls. Revenue is a good measure of "value" -- but revenue alone does not account for the cost of doing business or the needed investments to earn those revenues. I don't think anyone here would know the financial details of the "other soccer properties" (the non-MLS ones) that SUM controls, but I would suspect that the revenue/investment ratio is much larger in those (less-frequent, one-off) events (like MexNT friendlies and WFC-type club friendlies) than would be the revenue/investment ratio attained within and for the ongoing business and operations of MLS (each season). Those other (non-MLS) soccer properties that SUM controls/markets have huge value to the overall business (for those who control/own the businesses), because MLS is operating and has the infrastructure in place to (rather easily) support those additional money-maker special events for SUM, without much additional staffing or resources needed (other than the cost of getting foreign clubs to agree to come and play the games). That's the value that is added to those SUM special events by MLS's existence and business infrastructure, and the success that the league has had for 17-years in helping to build up the appetite for additional soccer (non-MLS) matches and events from which SUM can and does earn revenue in the MLS market.
To build on this thought, the amount of ways this could be reported is as numerous as the volumes of tax law in this country. Technical there is no "correct" way to report this SUM distribution. SUM is independent with its own set of investors and the distribution could technical go straight to the investor with no path to the club. What I don't know, is if the distribution to the clubs is a payment out of SUM or actual profit sharing. Meaning, do they pay MLS franchises as part of their mission which is independent to the profit sharing the investors may take at the end of a given year OR is that distribution actually the investors profit that most rill through the club.
I guess I would view this as a distinction without a difference. If the Stan Kroenke were to "line his pockets" with his SUM money, the cash to cover the Rapids' losses would come right back out of those same pockets. Whether or not he chooses to apply the SUM money to the Rapids' books relies on which way would yield the most advantageous tax benefit. I would imagine that how the other owners handle this varies, depending on their varied situations. The point has been made that there is a difference between a team losing money and an owner losing money. This is a perfect illustration of that point.
Yeah ok. I'm just thinking even though they may be losing money in some areas , they are also making it back in others. Therefore, if that is the case, they aren't really losing money in the long run.
Yes, books are kept for the "most advantageous tax benefit" (for the individual owners/investors) and those books are likely also kept in specific ways for the most-beneficial stance from which MLS would be able to best negotiate CBA's with the MLSPU.
Oh yeah. I would venture that the ownership groups that own stadiums, are likely not losing much money or are making money despite the fact the "team operations" are in the red.
Correct. This is why MLS has been able to attract investors and get them to write checks in the tens of millions to join up. It's also why you don't hear about any of them being in any hurry to get out. Plus, in that Rapids thread the point has been made that Kroenke has other sources of revenue that derive from his ownership of the Rapids, but may not be reflected in the Rapids' P/L. SUM is just one of those.
Got it. Kind of like the MLS wiki page and how they haven't talked about or updated their profitability page in almost 4 years!
When you consider the fact that sports franchises basically accrue value at greater than the rate of inflation, they almost never really lose money in the long run.