News: Rapids lost $1.3 million in 2012

I was just making a point. Even with the status quo, Seattle is making money hand over fist. There's also reason to believe that the league is more financially successful than some of the owners portray. With the current structure it's difficult to say for sure, but given attendance and ticket prices, the team player expenses seem really low.

 

This may or may not be the place to ask this, but here it goes...

Most of the teams in the league are still losing money and only a handful are truly, actually "in the black", correct?

 

Oh...?

That was the post I replied to, genius. Emphasis added, in case you're too stupid to observe your use of the past tense.

And now, how about those Rapids....?

 

i completely agree. which is why this Colorado news is so interesting. if they lost 1.3M in 2012 and are, with some conservative assumptions, in the bottom 5 in ticket revenue plus not having a jersey sponsor (and likely in the bottom half of other sponsorship income if not having a jersey sponsor is any indication) than very few teams are losing money, maybe as few as 5 or so and probably no more than 8. again with what little we know and can intelligently infer.

which is a much different picture than the league likes to often portray.

and the league's spending on player salaries is pretty low ... we know that the total compensation (base plus bonuses) for all of the players in the league, including DPs, was barely over $90M (according to the MLSPA data).

which if you wanted a 50% salary/revenue ration (very modest in world terms) you'd have to assume the league and total team revenue was only 180M ... which given what we know and can infer seems way too low. i'd suggest that the ratio is more like 25%-33% putting the total revenue of all teams and the league somewhere around $270-360M.

i just don't see how MLS can hope to improve and be a "top league" if it isn't willing to spend 50% of revenue on player expenses. i think that only 2-3 teams in the EPL have a wage/turnover ratio that low ... tho admittedly the EPL isn't exactly the model for fiscal responsibility.

but $92M seems very very low salary expenses in a league with as much revenue (ostensibly) as MLS in 2012.

 

then what were you complaining about? i simply stated that in 2008 seatle couldn't have predicted the situation it would be in TODAY (7x CUSA). what part of that are you objecting to as "100% pure speculation"? there isn't anything speculative about stating in 2008 seattle couldn't have foreseen how successful they would be in 2012 and thus the level of disparity they find themselves in in terms of league contributions? that isn't speculation that is simply saying that Seattle FO isn't psychic ... hardly speculative.

 

It's difficult to say. Based on napkin math, I would say your statement is false. With all these different entities and the basic league structure, it's not unreasonable to assume that most owners are shuffling money around to make it look like they're doing worse than they actually are (for tax reasons and for the union).

If you looked at each team individually and added up the ticket revenue, game day revenue, sponsorship revenue, special events revenue, and TV revenue, then subtracted the costs (stadium loan payments, salaries, travel expenses) I think you'd find most teams breaking even or making money.

 

And MLS has those allowances (within limits).

The 3 DP slots, and how much certain owners can spend of the cash from their own pockets on those "off-budget players" (and the ability to fund deeper, bigger, better youth/academy programs, as well as hiring quality coaching/scouting staffs) are indeed ways that the off-field successful clubs can work to translate their "extra ticket-revenue dollars" (the portion that they keep locally) into on-field power (even within the confines and limits of the single-entity teams).

But the league works because so many more teams are at the 13-15K avg attendance range, and the collective is balanced and supported not only by themselves and each other, but also by those overachievers (the team(s) that can locally average twice the league-wide attendance average).

One can't just look at the Seattle side of the coin. The league, and its observers, need to concern themselves with the "off-field difficulties/struggles" of a handful of teams and not disadvantage that lower third of the ticket revenue table teams competitively on the field, too much.

Simply, what you view as "a fair league" is not the same view as to how MLS internally chooses to specifically operate their single-entity business (as an appropriately "fair league"). Although, their decisions and line-item requirements are open to modification and improvement as they deem appropriate now and in the future.

 

Donnie G said recently that he spent about $20M on youth development this year alone and they hand out about $10M in allocation money a year. Not sure where the Addidas deal fits into that, or the others, but something to consider. Also, Donnie has said that the league has invested over $1B in stadiums and training facilities. There is probably quite a bit of debt there.

If I had to guess, plenty of teams are making money, but are still deep in the red due to debt.

As for the point of this thread, I say that if the Rapids are doing well enough to cut their losses by a million (somehow) that has to be a good sign for the league.

 

And to think, the Rapids even managed to do that with MLS extending the season window in 2012 and playing more games in the colder weeks (that the league had not previously scheduled within).

 

I think we are mixing things up here. There are things that the league is responsible for financially and that is what Allez RSL was trying to delineate.

When the Don says they invested $20m a year in development, I think very little of that came from the league itself. I think most of that cost is handled by the local teams.

For example I don't think the league paid for the awesome development center Toronto just built, I think the owners of Toronto FC paid for it.

 

I imagine stadium debt is under the company that owns the stadium and not under the Rapids.

This is pretty good, because even if the Rapids show that they are losing money, I imagine most of the other companies the operator has around the Rapids probably make profits.

So the over all holdings company may actually be making good money.

 

I get the impression that it's mostly the middle America legacy teams that are losing money. However, generally speaking I think what you're saying is correct.

But keep in mind, Colorado is only losing money from soccer operations. It makes money on the stadium.

The thing is, they needed the soccer team first to get the stadium (actually I think the city owns the stadium, and these guys operate it). The team is like a "loss leader" for the benefit of owning the stadium.

I think something like this holds true for many of the legacy teams in my view.

 

Just to clear up the capital call -- I too once thought the capital call noted in the Portland study was the amortized expansion fee, but another poster pointed me to the the lesser known 2008 San Jose study prepared by SportsEconomics LLC which says on page 16:

"Each year, the league has a capital call, which provides funding for the league office, but mainly for player salaries."

http://www3.sanjoseca.gov/clerk/CommitteeAgenda/CED/022508/CEDC022508_4datt2.pdf

So I think it's pretty clear the capital call does fund the salaries. Keep in mind too that when you count all 30 players, Garber has said the typical salary budget funded by the league is closer to $3.5 - $4m per team, so the capital call doesn't cover all of the player cost.

 

I question this number as others have pointed out due to corporate structure. Correct me if I am wrong but dont they pay to have their games on Altitude? It seems to me that there is a bunch of hollywood accounting going on here and it makes more sense to run the team at a loss.

 

Well, that sucks; could we lose the team IF (and I know its still a big if) Kroenke sold the team?

 

There's no real way to clean this thread up without gutting it, but it IS possible to focus on thread topics sometimes. Just sayin'.

The first thing I got from the number is that all Colorado needs to be profitable is a jersey sponsor.

 

I don't get the question? Do you mean lose in terms of moving the team which I think would need league approval first? Every team runs that minor risk I guess.

Outside of that, if someone spends money to buy your team, why would you then lose the team?

I am missing something here.

 

I think this is exactly what moved NE from a small loss to a small gain.

 

That's what I meant, yes.

 

Every team runs that slight risk but it is mitigated because the league could force (to a point,if they wanted) for the team to be sold to a local owner instead. If no local owner is around and the current owner threatens to fold the club the league could either step in a run the team or allow it to be moved.

Hell, you don't even need to be sold to lose your team. Ask the SJ fans (or the Miami and Tampa fans for that matter).

 

Maybe all they need is to move some of the other revenues from other holding companies onto the Rapids holding company.

But realistically, Rapids holdings could lose money every year until eternity and perhaps the owner operator would not care if he is turning bigger profits on the other holdings around the rapids.

 

Without access to actual detailed financials with real segment reporting (not just a catch-all audited financial package), it's hard to evaluate how/if KSE is doing with the team itself, which you could sort of use as a proxy for other teams base-case soccer operations and then figure out how they are doing from the venue.

It wouldn't surprise me if most teams lose money from soccer operations (narrowly defined) but make it up from the venue profits for the SSS clubs.

 

True, the buildings themselves (stadia and facilities) are locally handled but we don't really know what the Don means when he refers to that $20M, insofar as who paid it. Is he referring to only Academy players? Gen Addidas + Academy? Coaching/youth scouts? Don't know...but it is a number to keep in mind. As for the $1B, I was just attempting to point out that that represents a helluva lot of debt to be taken into consideration when trying to figure out whether teams/league is in the red. I assume each I/O is responsible for their debt and we may not have exact numbers per team so, back of napkin math it ($1B/19) and you might have an idea of the debt each team is carrying, roughly.