Will MLS reach $20 mil in revenue per team (on average) in 10 years time?

Discussion in 'MLS: General' started by pc4th, Feb 10, 2007.

  1. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    The current revenue per team is around $7.3 mil for MLS.

    Some guessworks:

    Sponsorship: $2 mil
    Ticket Revenue: $3.3 mil ($20 x 15 games x 11,000 paid tickets)
    Jersey sponsorship: $0.7 mil
    TV rights: $1.2 mil
    Merchandise: $0.1 mil
    TOTAL: $7.3 mil

    Stadium naming rights are assumed to go directly into paying for the construction of the stadium (HDC, Pizza Hut Park, Toyota Park, BMO Field, Dicks sporting goods, etc....). Also, many teams don't have this revenue stream.

    Major Expenses: Player Salary, Travel, Stadium Construction (debt) Expense, Front office/overhead, youth/reserve league expenses etc.... However, this thread is focus solely on revenue.

    Educated guesses on the average revenue per club:

    Average NHL revenue: $80-90 mil
    Average NBA revenue: $120 mil
    Average MLB revenue: $140 mil
    Average NFL revenue: $200 mil

    Soccer leagues:

    J-league: $10 mil
    Mexican Football League: $25 mil
    La Liga: $80 mil
    EPL: $130 mil


    Will MLS reach $20 mil in revenue per team (on average) in 10 years time?

    If MLS team can get just 1/4 of an average National Hockey team, it would be great. Expect MLS to close the gap on the Mexican Football league within 15-20 years in term of revenue.
     
  2. triplet1

    triplet1 BigSoccer Supporter

    Jul 25, 2006
    Again, the single entity structure makes this tricky because the national TV revenue, national sponsorship revenue and 30% of ticket revenues are retained by MLS, which, in turn, pays most of the player salaries (excluding DP payments over $400,000.) Those numbers won't show up in club revenues for MLS, but do for every other league in the world.

    That said, here are the revenue projections for Kansas City in 2008 had the new stadium been built:

    REVENUES

    Ticket Sales, net $2,873,000 [represents 70% of total ticket sales revenue; assumes 19 home dates at 12,000 paid per game at an average ticket price of $18]

    Sponsorships/broadcast, net $2,050,000 [note, national broadcast and sponsorships dollars retained by MLS]

    Merchandise [Team merchandise sold during games], net $86,000

    Rental Income $945,000 [assumes 6 concerts, 6 other events and 4 other soccer games]

    Luxury Suite Premiums, net $502,000 [assumes 17 suites at net of just under$29,500 each]

    Club Seat Premiums, net $258,000 [assumes 1,000 seats at net of $258 each]

    Concessions, net $1,018,000 [assumes a range of $3.50 to $6.00 per person]

    Catering, net $184,000

    Merchandise, net $45,000 [assumes revenues for non-MLS soccer, non-concert events]

    Parking, net $1,070,000

    Naming Rights, net $800,000

    Total Revenues $9,831,000

    If these numbers are accurate, and assuming the margins in LA are comparable, if the Galaxy reach 25,000+ paid per game and get a lucrative shirt sponsor, they might make it in the next couple years.
     
  3. Juan Luis Guerra

    Juan Luis Guerra Red Card

    Jun 11, 2001
    New York City
    I believe that some MLS teams are seriously losing money.
     
  4. Juan Luis Guerra

    Juan Luis Guerra Red Card

    Jun 11, 2001
    New York City
    I sincerely doubt that teams like Kansas City, Colorado, NYredbulls, and New England are actually making any profit. Even the fact that NE plays in their own "rent free" stadium does not necessarily means they are breaking even or making profit.
     
  5. denver_mugwamp

    denver_mugwamp New Member

    Feb 9, 2003
    Denver, Colorado
    Yes, and I believe the one losing the most money is yours.
     
  6. Juan Luis Guerra

    Juan Luis Guerra Red Card

    Jun 11, 2001
    New York City

    You got that right man. If it was not for our dear RED BULL energized drink, we would probably be drinking RC soda.
     
  7. denver_mugwamp

    denver_mugwamp New Member

    Feb 9, 2003
    Denver, Colorado
    Don't diss RC Cola. I grew up on it. Goes great with a Moon Pie.;)
     
  8. paladius

    paladius Member

    Sep 27, 2003
    Frisco, Texas
    Club:
    FC Dallas
    Nat'l Team:
    United States
    Yes, MLS will hit those numbers in that time frame.

    Why? The league is learning that there are many ways to make a buck...

    Owning your facilities and renting them for concerts...
    Kit sponsorships...
    Stadium naming rights...
    TV deals...
    Youth academies...
    Sales of discovery player contracts...

    Attendance will eventually average 20,000 across the board, but it may take ten years to get there, but that's okay. Paid tickets will be in the 15,000 to 17,500 range, which isn't bad.

    A few more megabucks owners are needed for expansion teams so that we can really fully implement the "Beckham Rule" which will improve the overall appeal of the sport on the pitch, but especially on TV.

    The goal must be: One marquee player per team, no matter what. They don't all have to cost megabucks (Carlos Ruiz), but each team needs that central identity to make them worth watching.:rolleyes:
     
  9. Shopping Cart Man

    Sep 21, 2006
    Jacksonville, FL
    Club:
    DC United
    Nat'l Team:
    United States
    Let's change this a little bit:

    One marquee player IN THEIR PRIME per team, no matter what.

    Also, revenue will be no fun for Los Angeles if they have to foot a 9.5 million dollar bill to foot each year (MLS isn't covering all of His salary).
     
  10. Eliezar

    Eliezar Member+

    Jan 27, 2002
    Houston
    Club:
    12 de Octubre
    Nat'l Team:
    United States
    Eh, I'm not buying the marquee player in their prime thing.

    A Zidane or Beckham today is better than a Rosicky or a Lahm in their prime really. How many people would be rushing out for season tickets for those guys? And I think Zidane and Beckham today would impact the quality of play more than many players in their prime.
     
  11. PJohnson

    PJohnson Member+

    DC United
    Dec 16, 2004
    South Dakota
    Club:
    DC United
    Nat'l Team:
    United States
    NO. Not $20 million per club. Although there will be a couple of clubs that reach that figure. For example, I think LA Galaxy will hit that number this year if they get the right shirt sponsor. And New York and DC will have a chance once they move into the new 25,000 seat stadiums. But the teams that are building 20,000 seat stadiums have no chance unless they expand. Or unless TV revenue increased dramatically.

    Example: The Chicago Fire have a 20,000 seat stadium. If they can sell it out for 18 home matches at an average ticket price of $25 the total revenue would be $9 million. Granted, they could raise ticket prices. And probably would if they are averaging sell outs. So maybe they can get to $10 million in ticket revenue. But they would still have to find another $10 million. And other stadium revenues, merchandising, and shirt sponosorship are not going to get you there.

    The good news is that MLS clubs have operating expenses believed to be less than $8 million per club. Which means the outlook for league profitablity look very good.
     
  12. MtMike

    MtMike Member+

    Nov 18, 1999
    the 417
    Club:
    Sporting Kansas City
    Nat'l Team:
    United States

    Yeah, but there's such a bad aftertaste, you practically have to scrap a film off your teeth after you drink the stuff.
     
  13. triplet1

    triplet1 BigSoccer Supporter

    Jul 25, 2006
    No question this is true. If Garber's comments before last season are accurate, only the Galaxy and FC Dallas actually made money, but several others playing in SSS, including Columbus, are "close" to running in the black.

    Keep in mind though, when "revenues" are listed per club on something like the Deloitte "Rich List", it refers to gross revenues, not net revenues. Even clubs listed among the 20 richest in the world can, and do, lose huge amounts of money on an annual basis (see Chelsea).

    Still, if you are making an "apples to apples" revenues comparison of worldwide clubs and you include all ticket revenue and a pro rata share of national TV and sponsorship revenues (retained by the league to pay salaries but retained by clubs in other leagues), I think many MLS teams that control revenue from their own stadiums are not that far away from $20 million in gross revenues now -- stadium revenue streams alone are worth between $4 and $5 million in the Kansas City projections.
     
  14. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    Now? I doubt it except for L.A. this season. Though LA will have a $10 mil bill for Beckham salary.

    I don't think Chicago and Dallas reach $12 mil gross revenue yet. In that K.C. projection, it's $9.8 mil in net revenue for 2008 season with a stadium.

    Net revenue is not that different from gross revenue in that KC projection. For parking, just take gross revenue minus the attendant personnel salary. Same with ticket revenue, minus the ticket booth personnel, ushers etc...

    Anyway, this thread is about the average club. If an average MLS club (in the middle of the pack) can hit $20 mil a year in revenue by 2017, it would be great.
     
  15. triplet1

    triplet1 BigSoccer Supporter

    Jul 25, 2006
    Yes, but again, if you are trying to gage MLS revenues at a club level in order to compare them to other clubs in other parts of the world, you have to adjust for the single entity and plug back in those revenues MLS clubs ship to the league that otherwise would generally be retained by the clubs.

    For example, if every team received a pro rata share of the $20 million in national TV contracts (freely acknowledging there are many different formulas worldwide for how TV revenues are allocated, if they are allocated at all), that adds $1.5 million to the KC totals. My guess is some partial sharing of the national merchandising would add again as much. Next, plug back in that 1.3 million of ticket revenue packed off to the league office, and you would have another $4.5 of revenue at the club level, even with the KC numbers. (Finally, remember that the KC study was before MLS changed the rules on shirt sponsorship ads, so those revenues are not included either.)

    Again, if you are trying to make a comparison to clubs in other leagues, an MLS team in a SSS that really gets 12,000 paying customers per match (and many don't) is generating the equivalent of $14 or $15 million in revenues. If Galaxy can double that at 24,000, or get huge dollars for the shirt sponsorship, they would hit the $20 million mark, or very close to it. You are correct though, only the Galaxy currently draw enough paid fans to do it.
     
  16. wolfp10

    wolfp10 Member

    Sep 25, 2005
    Another thing to consider...

    as MLS teams move into SSS which they either own or manage, MLS teams now receive revenue from non-soccer events.

    For example, under the proposed plan for San Jose, the Quakes would get 50% of non-soccer and non-SJSU events, such as concerts, trade shows, etc. The financial details of RSL's stadium showed them relying heavily on revenue from non-soccer events to turn a profit.
     
  17. flippin269

    flippin269 Member+

    Aug 3, 2003
    Houston
    Club:
    Houston Dynamo
    Nat'l Team:
    United States
    I say yes, we'll get to 20 Mil rev. Maybe even in 5 years.

    I think LA Galaxy will get there within the next 2 years...
     
  18. falvo

    falvo Member+

    Mar 27, 2005
    San Jose & Florence
    Club:
    San Jose Earthquakes
    Nat'l Team:
    Italy
    Very interesting, thanks for posting. How or did you get these figures? I wonder how much the MLS will get for TV rights from other nations in games when Beckham plays? You would tend to think they should capitalize his presence and make quite a profit. I read that even China has to start paying $30.00 for EPL match packages. You would wonder how many would buy Galaxy matches?
     

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