News: Monday , June 19, 2017

Discussion in 'MLS: News & Analysis' started by Fiosfan, Jun 19, 2017.

  1. Baysider

    Baysider Member+

    Jul 16, 2004
    Santa Monica
    Club:
    Los Angeles Galaxy
    I'm not surprised by the selling but curious about the buying. Is it just that the stake is worth more to a majority owner than a minority owner ( because of the alignment of incentives) or is it that they don't want to spend the cash all at once and this is a way to annuitize it?
     
  2. jaykoz3

    jaykoz3 Member+

    Dec 25, 2010
    Conshohocken, PA
    Club:
    Philadelphia Union
    Nat'l Team:
    United States
    Could be to be able to give/offer those shares to future Expansion teams (re: new league investor/operators). A stake in SUM is part of the ownership deal of MLS. Or it could be to give increased shares to current owners to help account for the dilution of the current TV contract once teams 24-26 are added.
     
  3. Zoidberg

    Zoidberg Member+

    Jun 23, 2006
    #28 Zoidberg, Jun 19, 2017
    Last edited: Jun 19, 2017
    The buy back is simple. MLS owners are betting that long term values will continue to rise above and beyond the buyout. Pretty safe bet at this point long term.

    Providence feels that the rate of return will slow. There investment was a high risk short term hedge. Job done.

    I can't speak for how MLS owners are breaking down the buyout, or how they will place it on the books, but they simply want full control of their shares back, and control of future cash flow that comes with it. Not unusual for an entity of this type. Long term they will win. For an entertainment business this is a sign of strength.
     
  4. BakedAlaskan

    BakedAlaskan Member+

    Feb 28, 2002
    Ancho-RAGE,Alaska
    Club:
    TSV 1860 München
    Nat'l Team:
    United States
    WHAT!?!
    I . . . I . . . I . . . just can't . . .

    Budweiser Budvar, mmmmight be considered a top notch beer. The Anheuser/Busch Budweiser sucked ass and then when AmBev bought them out, they used cheaper ingredients to make a shitty beer shittier.

    That's like saying something like "I wish that they would bring back New Coke or resurrect Zima".
     
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  5. Curva Nord

    Curva Nord Member

    Mar 29, 2007
    Atlanta, GA
    Club:
    FC Internazionale Milano
    Nat'l Team:
    United States
    No. It notes that their stake was diluted due to six new members become owners. As such, if the sale price was $450 m then the implied value is over $1.8 billion as they owned less than 25%.
     
  6. The Franchise

    The Franchise Member+

    Nov 13, 2014
    Bakersfield, CA
    Club:
    Real Salt Lake
    Nat'l Team:
    United States
    I strongly agree with the Chivas USA part. Diversified risk at a time the league had a small owner base. More field time for developing American players. Efforts to develop youth. And plenty of lessons for current and potential owners on how to do things wrong. I'm sure Uncle Phil liked the rent money, too. The league did end up buying the team back... then selling it to a new group for even more. I wish all my mistakes turned out like this!

    For the equity deal, the question of how good a deal it was is tough to answer without a look at the MLS books. If that infusion of cash allowed investment that caused the whole enterprise to increase in value by more than $300M that would not have happened otherwise, it was a success for the league.
     
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  7. dredgfan

    dredgfan Member+

    MLS
    Nov 5, 2004
    Denver or NOLA
    Club:
    Colorado Rapids
    Nat'l Team:
    United States
    Little boy blue?

    He needed the money.
     
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  8. Zoidberg

    Zoidberg Member+

    Jun 23, 2006
    Bingo...but franchise fees, TAM, academy programs, USL teams, more professional/larger front office staffs do give a lot of very strong hints.

    My only concern is if MLS is counting on a much larger TV deal. That was a long deal....and a deal that played it safe. Barber mentioned recently that they were expecting a big raise in TV dollars when the current FOX deal expires. However, with the rapid speed of viewing change, and with MLS's core demo being in the younger group that is all for and open to that change (the cord cutters), they better be able to capitalize on it.

    Anyway you slice it however things look very positive. Again...in the sport and entertainment industry that is a big deal. Remember when ESPN was the only game in town that mattered and must watch? Things can change fairly quickly.

    This is where Lamar and Phil's will/stubbornness/business savvy to build stadiums and lay down a tangible foundation means so damn much. We should never forget what they did.
     
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  9. Blong

    Blong Member+

    Oct 29, 2002
    Midwest, the real one.
    I'm thinking they might be saved by the aggregate international TV deals, and the broader reach those deals offers to sponsors.

    I wouldn't be surprised if MLS brings in more TV money from the international deals than the US deal.
     
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  10. tigersoccer2005

    tigersoccer2005 Member+

    Dec 1, 2003
    North Bergen, NJ
    Club:
    New York Red Bulls
    Nat'l Team:
    United States
    Chivas had tremendous potential as an investment idea-- if it had worked it would have gotten over bigtime---unfortunately those who ran the franchise mismanaged it into the ground and turned out to have a very small and narrow minded vision for the team rather than the large expansive vision that would have made the team a success in the league. In other words-- Chivas USA: good idea, horrible execution. At one point it seemed as if upper management did everything possible to sabotage the team. I feel bad for the Chivas USA fans--who were some of the most loyal in the league.

    Anyway, since it failed so badly nobody will ever look back and give it a second thought. I feel bad for the Preki managed Chivas USA teams that at one time were some of the best in the league. The tremendous efforts of those guys will always be overshadowed by the clusterbomb that Chivas became in its final years. Also I will never forget Chelis.

    Will LA FC turn out to be what Chivas could have been?
     
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  11. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    Right it was raising cash without the messiness of making a cash call. They paid off the Vergaras, they implemented the USSF-DA academy teams, they vastly expanded the league scouting apparatus, and finally they pumped a significant amount of money into player salaries.

    Both moves were good moves.
     
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  12. ElJefe

    ElJefe Moderator
    Staff Member

    Feb 16, 1999
    Colorful Colorado
    Club:
    FC Dallas
    Nat'l Team:
    United States
    People have a bad habit of judging decisions the league and its teams made in 2002 and 2003 and 2004 and 2005 from the perspective of the league as it is in 2017.

    To be honest, people forget (or don't even know) that Chivas USA was thought to be a much better idea than putting a team in friggin' Salt Lake City. I mean, do people even like soccer there?
     
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  13. asoc

    asoc Member+

    Sep 28, 2007
    Tacoma
    I have long argued with people that Chivas USA helped lay the foundation for what we have now with expansion teams. Thankfully they did enough to help push MLS over the tipping point so by the time Chivas USA was in shambles the league was already moving forward with or without them. RSL was picking up steam right when Chivas USA was falling off.
     
  14. Andy_B

    Andy_B Member+

    Feb 2, 1999
    Nat'l Team:
    United States
    so where did the league come up with $450m in cash? Did they have to make a cash call to each owner in SUM?
     
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  15. ManiacalClown

    ManiacalClown Member+

    Jun 27, 2003
    South Jersey
    Club:
    Chicago Fire
    Nat'l Team:
    United States
    About that...

    http://www.nj.com/entertainment/index.ssf/2017/06/which_iconic_90s_drink_is_making_a_comeback.html
     
  16. BakedAlaskan

    BakedAlaskan Member+

    Feb 28, 2002
    Ancho-RAGE,Alaska
    Club:
    TSV 1860 München
    Nat'l Team:
    United States
    These are the probably the same people whining about Beckham's Miami team. I apologize for that if you're an anti-Beckham.

    Sure, he went on loans we didn't want, stayed longer than we wanted, seemed disinterested in the league at times, but what his signing did for MLS cannot be truly measured. Toronto's season ticket sales for their first season were respectable . . . then Beckham signed and they sold out. Suddenly, more people with big money were interested in buying into soccer. Stadium deals seemed to meet less and less obstruction in the political arena.

    I can forgive his crappy city choice, years of delays, lame neighborhood with no parking and I wouldn't even bitch if he sold out his interest for a huge profit two years later knowing where we were in 2002 and 2005.
     
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  17. Zoidberg

    Zoidberg Member+

    Jun 23, 2006
    Yup, all entertainment industries are global if they want to be big time now.

    The international gate has never been more important for Hollywood. MLS is one of those "interest" leagues around the world. The fact that it plays outside of the usual league dates is quite honestly a business plus.

    Capitalizing on that worldwide audience, while getting enough folks to pay legitimately, is a worldwide concern. Talk about still trying to figure it out. A worry for all.
     
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  18. Zoidberg

    Zoidberg Member+

    Jun 23, 2006
    Andy....I simply can't stress enough how many eyeballs were placed on the product because of Providence's investment....and subsequent success.
    Game changer. MLS became an option where it was never even a second thought. Fees went up quickly for a reason.

    I know it won't resonate here for most in internet land, but this was as big as Adidas sponsoring the league after contraction.

    To think of what has been accomplished since contraction, 15/16 years, is incredible.

    It's why us old farts get "pissy";) now and then with youngins, and for me, our previous manipulative piece of garbage coach who prayed on the young naive ones. This has been one hell of a success story...until u come here.:p
     
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  19. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    Or maybe they took out a loan. They've got at least that much coming in as expansion fees over the next few years.
     
  20. ElJefe

    ElJefe Moderator
    Staff Member

    Feb 16, 1999
    Colorful Colorado
    Club:
    FC Dallas
    Nat'l Team:
    United States
    And that's how we got The Great Wall.
     
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  21. Andy_B

    Andy_B Member+

    Feb 2, 1999
    Nat'l Team:
    United States
    The expansion fees make sense.

    Maybe they have been planning this for a while and instead of distributing the recent expansion fees to the owners, they simply saved them at the league level.

    However the fees can't be everything. The expansion fees are shared by the MLS owners. But we know that there are non MLS owners in SUM, so they would have had to chip in something to cover their share that would not be covered by the expansion fees.
     
  22. Honore de Ballsac

    Oct 28, 2005
    France.
    [​IMG]
     
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  23. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    I didn't know that. Can you provide a link? I know that when SUM started there were non-SUM owners in MLS. In fact SUM was started by HSG and AEG. Kraft Soccer retained an option to buy in, which was exercised. I have never heard of any non-MLS I/O having any piece of SUM except for the piece the league just bought back. I'd be interested in any information otherwise.

    When SUM was formed there were at least two non-I/O investors in MLS that did not get pieces of SUM. Ken Horowitz and a Japanese firm (name escapes me, begins with a D or Dr?). I don't think either of them have a piece of the action anymore, but I could be wrong. I believe their stakes were steadily eroded by giving up shares in lieu of cash calls.

    As far as I know MLS/SUM ownership now maps 1:1 per team/share.
     
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  24. JasonMa

    JasonMa Member+

    Mar 20, 2000
    Arvada, CO
    Club:
    Colorado Rapids
    Nat'l Team:
    United States
    I didn't realize all the non-I/Os had been bought out at this point.
     
  25. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    The Japanese might still be around. I believe Horowitz is gone.
     

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