I don't think there's much risk of this either. Without the primary tenant, the stadium isn't nearly as valuable, and anyone buying the team can use that leverage.
If you use the Portland study as something of a Rosetta stone, you can see where the Rapids may be falling short, at least on the revenue side. Portland projected general admission ticket sales of about $6m, with the team retaining $4m after the league took it's cut. The most helpful economic tidbit posted here of the past year was Jasonma's find that the Rapids average ticket price was just over $20 (as I recall). Assume Colorado is actually selling about 14,750 per game (meaning some, but minimal freebies). That's just over $5m gross, or $3.3m for the team. In other words, even though they are selling more tickets than Portland projected, they're probably $750,000 to $1m under the Portland number because they have a lower average ticket price. Next, sponserships. Here Portland shows a gross number of just over $5m, including $1m annually in stadium naming rights. Here the Rapids did pretty well, as the Dick reportedly generates $2m a year. But the lack of a jersey sponser really hurts, as has been pointed out by others, and despite the advantage in stadium naming rights dollars my guess is Colorado struggles to hit $5m in gross sponsership money. Finally, Portland generates additional money from its stadium, including $1.6m+ from the sale of club seats and suites, $500,000+ from concessions, $1.4m+ from rental and $1.7m+ from exhibitions. Let's call it $5.5m. Here's where the Rapids corporate structure could make a real difference -- why does this stadium related money go? Does it go to the team, or the stadium? We don't know.
That's what makes this so aggravating. It's really hard to determine which revenues and which costs go into this million dollar loss. It seems like a really tantalizing window into MLS club financials, but ends up being more or less useless.
I saw this tidbit today that is tangentially related to this topic. Great article by the way, well worth the read Owning in MLS, owning the future http://soccernet.espn.go.com/blog/_/name/relegationzone/id/559?cc=5901 Heinemann (KC owner) confides Sporting is "a year or two" away from being a positive cash flow business. "Sponsorship and our commercial rights are still not where they need to be," he declares.
my guess is that while their attendance/ticket revenue is quite good they don't have the sponsorship dollars (stadium/kit/other) to offset the stadium payments. only having 2M in sponsorship a year vs 5-7.5M (which is possible for the most popular teams, which SKC now is) makes a big difference especially when your bottom line is likely being hit by a substantial stadium debt payment each year (even tho they didn't pay for the whole stadium themselves).
SKC does not get money for the naming rights to LSP correct? I thought I read somewhere that they're agreement with LiveStrong is similar to what Barcelona has/had with UNICEF: The club is donating money to the charity, and is giving the charity free advertisement on their Kit/Stadium.
Honestly, if nothing much has changed with the Rapids, that's probably good news for the league--because it could mean that the league capital calls are lower than they were last year. Remember, all league expenses are fungible in the end. If the MLS head office is spending money, that money has to come from the teams, and anything not covered in revenue-sharing revenue is rolled into the capital call. So if MLS is making more money from national sponsorship, national TV, other teams' revenue-sharing payments, expansion fees, etc., it needs to ask the Rapids for less in the capital call, which makes the Rapids' financials look better even if their business stays the same otherwise.
That's not the way they do business. Calling it right now: the Rapids won't get a jersey sponsor until Kroenke sets up AltiJerseyMarketingCorp and the "Rapids" enter an agreement with them to locate and negotiate a sponsorship deal. Subsequently, the Rapids will "pay" AltiJerseyMarketingCorp a flat rate of $1,000,000 per year (plus incentives) to act as their sales agent, the jersey deal will generate $600K per year, and the "Rapids" will "lose" another $400K per year. More actually, once they pass on the league's share. Making money in MLS is tough business.
that is correct. I am unsure if they consider the money given to Charity as an expense or if they table it differently when trying to figure out cash flow data.
Just a heads up for OleGunnar, at tonight's end-of-year business meeting, Joe Roth stated that the Sounders where 9th in the league in average ticket price. This meeting will likely be posted on the team's website if you are inclined to spend an hour and half on such things.
cool. i don't know if that means i've underestimated other team's ticket prices or overestimated theirs? the sounders tickets don't seem cheap comparing them to other teams ... not as expensive as the Galaxy but certainly not the cheapest. i will definitely watch it tho ... maybe he was trying to put some spin on complaints of the team's tickets being too expensive?
If spin is the goal there's plenty of room for it. The Sounders essentially have a two-tiered pricing system where original season ticket holders pay substantially less than people who bought in later on. I don't know how many originals are still buying season tickets but my guess is it's enough to bring the avg "real" price of a ticket in most sections down substantially.
did he say they had the 9th highest "average SEASON TICKET prices" or "average ticket prices"? because those are two different things. and either way the Portland study had the Timbers 2011 target for average ticket price at $33. and the Sounders tickets are more expensive than the Timbers. so not sure how on earth they get 9th ... even just looking at the range of season ticket prices (from 2012, i haven't compiled the data for 2013 yet) i can't find 8 teams with higher prices. anyway, i'll listen to the meeting if it is made available but i still have some doubt about the claim that overall average ticket price (both SSH and regular tickets) would see SSFC at 9th most expensive ... maybe 5th but i don't see how they'd be any lower than that.
The data is old now, but the Houston Chronicle compiled average ticekt prices for all U.S. major leagues, including MLS, back in 2007. Here it is again: MLS 1. Los Angeles Galaxy $32.50 2. Toronto FC $30.29 3. D. C. United $29 T4. Chicago Fire $24 T4. New England Revolution $24* League average $22.47 6. New York Red Bulls $21.83 7. Houston Dynamo $20.50 8. Chivas USA $19.40 T9. FC Dallas $18.50 T9. Columbus Crew $18.50* 11. Real Salt Lake $18.25 12. Colorado Rapids $17.90 13. Kansas City Wizards $17.50 Source: MLS teams * Estimate (team declined to provide data Note the Crew's ticket price was estimated, but in a 2008 story the Columbus Dispatch reported that the Crew budgeted ticket revenue of about $197,000 per game based on paid attendance of 10,875, which would be just over $18 per ticket. Finally, with Jasonma's information, it appears the Rapids have managed to increase their average ticket price from $17.90 to just over $20 over the six year period between 2007 and 2012. Links: http://www.chron.com/sports/article/2007-average-ticket-prices-ranked-by-league-1787658.php http://www.dispatch.com/content/stories/sports/2008/07/17/crew17.ART_ART_07-17-08_C1_O2AP95Q.html
Again, my information was season tickets only. It does not factor in 5-game packages, walk ups, or freebies.
======== That is a great article. What KC did should be required reading for DAL, COL, CHIVAS, NE. Get an owner who really believes. Right stadium, a proper rebrand if needed, connect with supporters (PDX also). Just think what the league would be like if these 4 teams were on KC-PDX level and DC got a stadium and NYC2 comes in with one. We would have a league to really be proud of beyond where I am already. A lot of hard work in 17 years is showing fruit.
======= A lot of reading in this thread, but a couple questions. >How much does Dicks pay for the stadium naming deal ? How many years was it for and how many years left? Will Dicks renew ? >If the stadium fields and complex make a profit, how much would you think that would be? >Compared to other teams and their jersey deals, how much could COL reasonable expect for such a deal? --- I would also ask these questions of DAL,Chivas & NE
20 years starting in 2007. Total amount was never revealed, but sources put it at about $2 million/year, which was apparently one of the larger deals in MLS at that time. Team President Tim Hinchey has said he's aiming for around the MLS average of $2.5 million/year.
So would the simple act of getting a jersey deal take them from a loss to break even or profit? Or is that too simple of a statement or expectation? Assuming the underlying income from DSG and the surrounding fields/complex is covering the majority of the big costs, plus the fact we know ticket sales are very important in MLS until the TV money gets better.
Hinchey has said pretty much that. He also said that its not a requirement, but a jersey sponsor would go a long way towards signing a DP. So the Rapids may still show a loss in that scenario.
You can see his thinking -- in modern MLS, a jersey sponser is critical to profitability for most teams. If the avearge shirt deal is worth $2.5M a team, you can see what a huge difference that makes to the bottom line. Put it this way, the Rapids would have to sell 10,500 more tickets per game at $20 apiece to generate $2.5M in ticket revenue (after giving MLS its cut).