In the back of my mind I have pondered whether MLS might have to give up some equity to pull this off. Remember, MLS, LLC has two classes of shares, one held by the I/Os and the other held by non I/Os (as a remnant of the early structure of the league when the idea was for the league itself to operate the teams). If the TV deal was big enough, MLS could also offer these shares of MLS, LLC to a network. My understanding is that this class of equity wouldn't give the TV network a vote in most league governance decisions, but it would let them participate in the upside.
Didn't the tv deal with the AFL that NBC did just before it went out of business have something similar to this? Also, I think NBC invested in the XFL as well, which also shortly went out of business. Are there any examples of where this relationship has worked? It seems like it would be beneficial.
Ah, the San Diego conundrum. FWIW, I think "papering the house" still goes on to some extent. Kenn reported in his blog earlier this season that the Fire noted ticket sales were up, despite the fact that the Fire's announced attendance was down significantly. The only conclusion I think you can draw from that statement is that the Fire were giving away fewer freebies earlier this season. So even now I don't think for a minute that announced attendance represents paid attendance (and I don't think most fans think that either). But it's also true that we can see pretty full stadiums now with our own eyes, and it stands to reason that teams have little reason to give away tickets they can sell, so I do think paid attendance is up, especially in newer markets and places like Kansas City. We also have some pretty good financial information now that we didn't have in 2006 in the form of several stadium feasibility studies that serve as a Rosetta stone. Portland and Kansas City, in particular, were done with input from the teams, but under the direction of governmental bodies -- meaning the consultants who provided them couldn't simply make up the numbers. I've mentioned in the past that I worked with one of those firms fairly closely on an arena feasibility study several years ago, and my own experience suggests to me that the numbers are a reasonable projection. Finally, don't forget a lot of the sponsorship data now finds it's way into the media, so there are ways to confirm some of this. But the most compelling evidence I can give you is that MLS itself now indicates that the league has moved beyond concerns over survival. (Garber made that point to Grant Wahl in a 2010 interview, but others have reiterated it since). MLS is doing well financially. Which isn't to say all teams are sharing that success equally, even if they have SSS. Teams with good shirt deals and stadium namings rights are getting millions more in revenue than teams like Columbus, and that's a concern. But enough teams are doing well enough that it works. As for your point about the CBA, I'm not sure how much financial information was shared, but even so I think the MLS players union is in a uniquely difficult position compared to other players unions in the United States because MLS is unique in that the best players in the world play elsewhere. Think about it, if the players got MLS to lift the cap and embrace free agency, many would have simply negotiated their own pink slips -- if forced to pay significantly more, especially to the sixty odd percent of domestic players that make up MLS rosters, it stands to reason MLS would simply go into the international marketplace and by better players than those available domestically. That's why I think the players concentrated more on job security and benefits -- health care and working conditions -- and accepted lower pay increases because that provided the greatest benefit to the rank and file who had to vote on this CBA.
On a league basis, it hasn't worked in the United States to my knowledge, but again most new leagues in the United States fail, so I'm not sure what conclusions could be drawn from that. If you look at individual teams, however, there are several examples of media companies or their owners owning teams, both in the United States and elsewhere (notably Mexico). If you think about it, it's a marriage that makes sense.
Ding Ding we have a winner lol. Thats what I believe some of these players making $212,000 that we see, should not be making that and they were probably behind closed doors told as such. Be lucky what you have now. Owners lawyers say if were gonna spend extra it won't be on you when I can bring in some young columbian or SA stud who would jump at the chance top make 250,000 US a year plus the extra I can pay him by releasing your contract.
If most fans realize this point (and I hope they do) why does every single revenue calculation on these boards always use the tickets distributed number instead of some smaller number? None us know what the smaller number would be, but league wide 5% would probably be safe I think.
I am not disagreeing with you per say. I think that thought process likely did go through the players discussions to some degree. However it does lead to the obvious conundrum of how do you break the cycle? Kind of humorous to think that come 2014 the owners might be saying "we want to pay you significantly more money", and the players might be saying "no, just a small raise please". I think the combined American infrastructure might self combust
Still only 8 international (trade-able) spots per team. So I doubt it that the MLS player union is afraid of any CAP increase. Now, I am sure that the entity that owns MLS is good at hiding income from the players union. I believe some one made a case wit Colorado where the team "owner" controls 5 or 6 distinct conpanies around the actual club, so finding the money/income is like a game of finding the ball inside the cups.
And MLS can easily decide to change this rule. Make it 10, 12, or just eliminate it entirely. A very easy and quick way to improve the quality of the league.
Agree No business in their right mind will tell their employees how much its making. They will let on as much as they percieve they have to to keep peace. Why would they freely give up extra cash they could pocket? Thats why since the beginning of the Beckham-era i've felt that the league has recouped most if not all major losses. Key word is major . Every major Pro sports entity and especially soccer always operate with some sort of normal losses. It was funny to hear the league is broke apologist say the league doesn't have the money to do this or that only to see them turn around and circumvent some rule to allow more spending w/o significantly increasing the cap. If you could hide money from someone if they thought you were bankrupt or currently didn't have it wouldn't you? Even the other Major pro sports are doing this and they have plenty of money to dole around. So you know MLS is doing this. These owners are trying to build a warchest.
It's all back of the napkin stuff anyway, so it's within the table talk margin of error IMO. Besides, both the KC and Portland studies used about 12,000 tickets paid per game, and even if the percentage of tickets sold hasn't changed since the San Diego Union Tribune story (about 70%), which isn't likely given the expansion teams IMO, based on the announced attendance the numbers pencil out even if a good percentage are still comps. Remember too the "rule of thirds" I mentioned earlier -- that is, ideally only about a third of revenue should be "match day", and even within the "match day" category that takes in a lot of stuff besides ticket sales. Look at Portland's study again. With the SUM distribution they projected revenues of about $15.5 million annually during their first five years give or take (depending on the year). Of that revenue, just over $4 million came from general admission ticket sales (after MLS got its cut). Put another way, there are teams that get more from their shirt sponsor than Portland was projecting from ticket sales. It's one revenue stream. It's not even the majority of revenue for most teams at that. I think Big Soccer posters initially looked at it as a proxy for profitability so they could reassure themselves (or fret) about the league's likelihood of survival, but it was never that simple nor that accurate. Now, I understand why people focus on attendance, in large part it's sooooooo obvious it's hard to ignore when you see a swath of empty seats. It was interesting to read Brian Lewis' comments in another thread on how attendance can even impact media coverage, so fans aren't alone in looking at the number (and a nice crowd helps as a TV background too IMO), but if MLS relied on general admission ticket sales alone, it would have closed up a long time ago. Attendance is important -- its a prerequisite really -- but MLS won't fundamentally change based on small movements in the average general attendance numbers. TV, now that's something else.
Indeed -- and even more to the point, if they dropped the salary cap and essentially gave the players free agency, what's the point of collective bargaining? There's not much left to fight about.
Revenues, it is always revenues. Shit, Italy and Spain don't have a caps, and they went on strike this year for different reasons.
Agreed that may be a way for the league to keep the CAP low, tell the players that if they increase the CAP they will open up more foreign spots, maybe the union would agree on a lower cap in exchange.
And very different labor relations historically. In the context of the United States, a CBA is a get out of jail free card with respect to anti-trust liability for imposing a salary cap. If the owners were ever to give that up unilaterally, and there's a lot less to talk about (or, from the league's standpoint, worry about in terms of antitrust issues). If they had real free agency, I wouldn't expect MLS players to strike over thier health plan. For purposes of this discussion though, I don't think you can infer from the terms of the CBA that MLS isn't doing well -- I think there are other issues involved and MLS is doing just fine.
And In general I agree with you. In fact buried on BS are several posts I have made regarding the same structure of a league minimum with a hard cap - thus getting rid of the DP concept. That being said, I think most owners are doing ok with the ancillary income that a SSS brings; but team operations are likely still in the red. As I and others have said int he past, the TV money truly is the golden egg for any sort of appreciable jump in expenditure. Consider that even the 5 million number is substantially below almost the entire leagues spending now.
You make good points but the cap is set for now until the new CBA. Im referring to then not so much now.
http://www.sportsbusinessdaily.com/.../12/Leagues-and-Governing-Bodies/MLS-SUM.aspx I believe this is being done with the intent and purpose of making a better product so the networks do their share and making a better product by investing bigger TV money. I said earlier in my post that NBC probaly said we will initially invest but if you want us to invest larger you gotta show the goods. This move while vague in nature, like most things MLS Financial related strengthens my belief to what is really going on behind the scenes.
Was wondering how u guys think the league will do with the SUM money how will they split it use 50% toward the players salary and the owners pocket the rest thoughts?
arent the naming rights to certain stadiums coming up? Galaxy was getting $70 Million for 10 years?... You would think those will increase as well
I have been thinking about this too. They are clearly in 3rd place behind the long time encomebant Disney, and the new guys COMCAST which have the key piece of Telemundo. If they do decide to bid, should make for a very interesting time.