Reasons why MLS owners should invest in Sheffield Wednesday

After some research, I have concluded that of all the English teams, the best one to buy is Sheffield Wednesday. I will explain why.

Reason #1: Stadium capacity of 39,814 seats







Reason #2: Large fanbase in a large city.

The team is averaging 24,453 even though they are horrible. They are 21st place out of 24th team. The city rival of Sheffield United is drawing 1,500 less even though the team is in 2nd place and likely gain an automatic promotion spot.

Despite being at the bottom of the Championship, it is outdrawing these Premiership teams:

Wigan 21,048
Fulham 20,635
Blackburn 20,362
Portsmouth 19,725

Reason #3: It's relatively cheap to own the team and the stadium

For around $12 million, you can own the team and the stadium. The team has a debt of around $39 million. So for around $51 million, you can pay off the entire debt, own the team and the stadium.

RSL owner recently bought a NHL team for $250 million. $51 million is not that much to own this team debt free. Which would be a better option? $55 million for a MLS expansion team ($15 mil) and half the cost of a stadium ($40 mil) or $51 million for Sheffield Wed and its stadium?

Reason #4: Premiership TV revenue is HUGE

Since TV revenue is shared, depending on where you finish in the standing, the team will get anywhere from $35 million to $55 million a year. Of course, the team needs to get promoted first.

Reason #5: The most profitable football league in the world is the Premiership and promotion is worth at least $60 million to the winner.

http://www.deloitte.com/dtt/press_release/0,1014,sid=9078&cid=50613,00.html

Reason #6: Money Transfers and Free Transfers management

Prevent free transfers: For example, Ryan Nelsen going to EPL on free. MLS could transfer him to the MLS-owned team before this happen. MLS could transfer players like Ruiz to this team (provided he agrees) before his contract ran out. In recent years, several notable MLS players went on a free to Europe: Ryan Nelsen, Mathis, Elliot, Bradley.

Also, if the player does well on this team, he might receive offer from big clubs (Barca, Real, AC Milan etc). Thus, higher transfer fees return for MLS.

MLS can also use the bargaining power of this ownership when dealing with clubs in Europe over transfer fees. If MLS feels that a player is undervalued, it doesn't have to sell.

Reason #7: The league becomes more attractive to talents in the region and even to talents in South America or Africa.

Signaling to the talents in the region that MLS could be 'the' destination before the world's richest leage (EPL). Garcia signed with Chivas USA because he thinks that he could go to Europe this way.

Reason #8: Sheffield Wednesday fans would be more interested in MLS

Just like Mariners fans are interested in the development of its AAA farm team, Sheffield Wednesday fans might watch a game or two and see potential talents that might one day play for them.

Reason #9: Many of the most talented MLS players will end up in Europe. Why not make it to this MLS owners owned team.

In the last 2-3 years, these MLS players have went to Europe. And in the next 2-3 years, we can expect about the same number of notable MLS players that will go to Europe like Dempsey, Freddy Adu, Eddie Johnson. Either way, talents wise, MLS will be the same under the Sheffield Wednesday option or the to various teams in Europe option.

Elliot to Fulham (free)
Ryan Nelsen to Blackburn (free)
Mathis to Hannover (free)

McBride to Fulham
Bocanegra to Fulham
Convey to Reading
Damacrus Beasley to PSV
Howard to Man U
Ralph to some Russian team
Gibbs to Feynoord

Reason #10: Diversification

For those that say MLS could use the $50 million instead of investing it elsewhere, I will tell you that MLS owners have many business.es This could be a seperate entity, a part of their diversification.

Also, if they are serious in making money from soccer, invest in the most profitable soccer league in the world (EPL).

Reason #11: Club Value Appreciation

Expect the value of the club to increase by a LOT after promotion to Premiership. If MLS level is = to that of the mid-table Championship, 5-6 of MLS top players will help the team get promoted.

Liverpool is valued at over $344 million. Sheffield Wednesday might be worth at least 1/3 if the 40,000 seats stadium regularly sell out and the team is doing reasonably well (mid-table in Premiership).

Reason #12: Synergy

Touring in the United States. Sheffield Wednesday with around 5-6 well-known American players tour in the U.S. should be successful.

Sheffield Wednesday vs. MLS champ or MLS All-Stars.

Reason #13: Most Sheffield Wednesday fans would welcome this move

The fans are pretty unhappy with the current chairman (majority owner). The fans also want stability and Premiership football. And 24,500 in a 40,000 seats stadium does not provide as good an atmosphere as when the attendance is near capacity.

Reason #14: Sheffield Wednesday is such a cool name.

It is probably among the top 10 best football club names in the world.

 

I will tell you where I get the number.

http://www.squarefootball.net/article/article.asp?aid=872

This article is kinda outdated (2004). However, from the above, you can see that it would take £30 million to do two things:
1) pay off the current directors (owners) like Dave Allen
2) pay off the debt to the bank

In addition, I went to a Sheffield Wednesday Board and ask their fans how much it would cost and if the above article is accurate. The answers are as followed:

£30 million will wipe out all the debts and directors loans etc. then the investor/buyer will need to put money into the team and so will need over £30m but probably not £53m, depends how much is spent on building the team

OR THIS ONE.

No, it will cost £30million altogether. This will pay off the directors loans, buy their shares and pay off the debt to the bank. The problem is No one wants to pay £30 million to sort out other people's mistakes... the current directors won't accept anything less (apparently) and so it's a catch 22 situation

If you pay the debt off, you then have to look at the club turnover, and pump an extra few million in each season for wages and purchases.

Add to that the white elephant of the training ground and you're on course to understanding the huge job ahead.

OR THIS ONE.

It won't cost £30millon, that's just the debt.

The board is owned in the region of £6.5million. Given them that back and they'll run for the hills I reckon. The bank will not expected to be paid the whole of their £22.5million. You'd have to pay a bit off and restructure the rest.


Since the team also owns the stadium, if you own the team, you also own the stadium. And according to RichardL, stadium has almost zero value, which make sense. A house that nobody wants to use is almost worthless.

 

You're WRONG. The current debt (May 2005) is £22.65 million according to their SWFC Annual Accounts Released.

http://www.sportnetwork.net/main/s375/st82342.htm

Hmmm, Sheffield Wednesday might be publicly traded becaue privately held company do not publish financial statement. I have to do some research on this one.

 

Ken Bates,the former Chelsea owner, wanted to buy Sheffield Wednesday. He wanted to invest 10 million pounds and was rejected by Dave Allen. The two do not like each other for some reason. Some Sheffield Wednesday fans signed a petition for Ken Bates to be the owner So yes, there are other owners lining up to buy the club.

For whatever reasons, Bates backed out.

Now, why MLS owners (Anschutz, Hunt, Kraft, Vergara, Checkket, MLSE, Kroneke) might want to invest.

The simple answer is that they own Major League Soccer. This is a huge RESOURCE and a COMPETITVE ADVANTAGE.

How good will Sheffield Wednesday be if they have the first pick of players that want to leave the Portugese League, or J-league or MLS?

As I said before, about 2-3 notable MLS players leave the league every year. If MLS owners own Sheffield Wednesday, the team will have the first pick or first look at that player.

Instead of:

Elliot to Fulham (free)
Ryan Nelsen to Blackburn (free)
Mathis to Hannover (free)

McBride to Fulham
Bocanegra to Fulham
Convey to Reading
Damacrus Beasley to PSV
Howard to Man U
Ralph to some Russian team
Gibbs to Feynoord

It would be to Sheffield Wednesday instead (for say half of them) like Howard, Convey, McBride, Ryan Nelsen.

In the next 2-3 years, just as many notable MLS players will leave the league. Why not have Sheffield Wednesday as the first for right of refusal? You can also use Sheffield Wednesday as a bargaining chip, too in negotiating with other clubs.

Dempsey, Eddie Johnson, Freddy Adu are three notable players that will leave in the next 1-2 years.

 

Opps. You are right. I forgot about that.

Why would the EPL or Championship or the FA be against a bunch of businessmen forming a consortium and buying a club that is in a lot of debt?

As long as there is no conflict of interest and the owners pass the 'fit and proper' test, I don't see why the FA would not allow Anschutz, Hunt, Kraft, Vergara, Checkket, MLSE, Kroneke to form a consortium that would buy the team.

This consortium is a seperate entity from MLS so it is not the LEAGUE that is buying the club.

Also, if it is okay for Kraft and Anschutz to team up and buy Liverpool, why can't it be okay for Anschutz, Hunt, Kraft, Vergara, Checkket, MLSE, Kroneke to team up and buy a team?

Would the FA stop a bunch of MFL owners from buying Sheffield Wednesday just because they also own football teams in Mexico? I don't think so.

Free players? Free players transfer into EPL all the time.
However, most of the transfer into Sheffield Wednesday from MLS will be paid transfer, not free.

I said this will prevent free transfers like Ryan Nelsen to BlackBurn or Elliot to Fulham. Why? Because like 1 year before the deal expires, MLS can say "how about a 100% raise?" and you can play in England too. As far as I know, there isn't an EPL/FA rule that say clubs can't transfer players on a FREE.

Also, EPL has a "work permit" rule. It will be difficult to stockpile American players who do not have EU password or a regular NAT player.

 

That's an obstacle but not that big of an obstacle. A lot of MLS players (around 30 players) qualified for work permit or have an EU passport.

Some will, but most will LOVE this. Most hate the current situation. Most hate their current chairman (who is also a majority owner). They want stability. And I believe most would want to play in the Premiership against the like of Man U, Arsenal, Liverpool, Chelsea, and NewCastle instead of other less well-known team in the Championship.

That is true. But all business deal has risks. And I believe that this investment can be profitable.

 

There is a real market competition. The highest bidder wins. If Freddy Adu is offered $10 mil by Chelsea and MLS believe he is only worth $8 mil, they will sell him to Chelsea instead of transferring him to Sheffield Wed for $8 mil.

Oh, MLS will get paid for transfers by the way, just like today.

MLS and Sheffield Wednesday might be own by the same people, but they are seperate business entities. And they will do business as if they are seperate entities. For example, HDC and the Galaxy. Galaxy pays rent to AEG's HDC business entity.

 

You can't force the players but you can tempt them to play. Take Ryan Nelsen for example. You can tell him that he can play in the Premiership with 3 times the wages he would get in MLS.

These players would leave MLS anyway. So they wouldn't be entertaining any Americans.

Elliot to Fulham (free)
Ryan Nelsen to Blackburn (free)
Mathis to Hannover (free)
McBride to Fulham
Bocanegra to Fulham
Convey to Reading
Damacrus Beasley to PSV
Howard to Man U
Ralph to some Russian team
Gibbs to Feynoord