All of this saddens me. Being originally from Western PA I want to see Hounds succeed. I thought the stadium was awesome and finally gave some credibility to the franchise as a professional organization. They have some quality players now. I just hope the Chapt 11 is more of a strategic business move and that it sets the stage for stability and long term success. I don't think MLS should even be a consideration - certainly not in 5-10 yr plan. Tier 2 or 3 is realistic and with growth in those levels, once everyone realizes MLS is out of reach (or at capacity) the lower levels hopefully wil grow in support and quality. There is enough talent and the way the model is shifting in US soccer, there could be a chance to develop sign and sell young players from the region on to bigger clubs. I think that trend will heat up in next 5-10 yrs dramatically. But you have the soccer pyramid in place and many of the building blocks seem to have been put in place or at least attempted to. There is so much transition in the US soccer landscape. It's very exciting, but there also going to be bumps and growing pains along the way. I hope the momentum continues and the sport continues it's meteoric rise in this country. I hope Pittsburgh gets it sorted out and rides the upward tide and doesn't get washed out.
Alright I flipped through everything. I guess a word of caution is this is the first filing. The plan still has to be voted on and could be rejected. Anyways here's my very long notes. TL;DR- Lot of debt, but the Hounds are going to try to write off most of it through the courts during the reorg. Team + academy costs about $3m to run, only brings in $2m-ish. Projected to start making a profit in 2017. Shallenberger will become 100% owner after reorg. He's also agreed to float the team over the next few years. Massive player payroll cuts coming. General USL stuff- 2013 / current franchise fee- $500k + $50,000 performance security fee. 2014 fee- $750k $35k - $50k annual participation fee. Did not disclose new team fees but indicated it is within reasonable range to the $500k as opposed to $750k. No new team has yet to agree to pay the $750k fee. Franchise agreement lasts for 3 years with 3 year renewals. League can terminate franchise without cause. The USL would permit RAG (Riverhounds Team) to sell its franchise rights if it comes to it as long as the buyer and location are acceptable to the league. The USL indicated that if RAG attempted to sell its franchise rights to an owner in the same market as an existing franchise or prospective franchise, the league would not approve the transaction. PDL team costs about $50k a year to run. USL PRO shares anecdotal information on other team’s sponsorship revenue and payroll information. “We understand the Riverhounds are in the top half of the league for both categories, although the majority of the sponsorship revenue reported for the Riverhounds is recorded on REC (stadium) books.” (Note: Riverhounds payroll is somewhere in the $600k - 670k range in 2014) Current Riverhounds finances- RAG (the team) does not own any real estate. Estimated value of assets is $820,000. Operating cost increased by approx. $650k from 2012-2013. Annual operating loss increased from $180k in 2012 to $400k in 2013. RAG approx $2.4m in the hole as of 2014 due to negative revenue. Liabilities increased from $2.43m in 2012 to $3.62 in 2014. Revenue from 2012 to 2013 increased from $1.3m to $1.6m with academy over 50% of that. 2014 projected revenue to remain $1.6m. Academy revenue up, sponsorship declined. Travel expenses from 2013-2014 increased approx. $100k due to USL PRO travel and Houston preseason. Debit- REC (stadium entity) built stadium with financing through FNB (bank) and Pittsburgh Urban Initiative (CDE) for $8,761,000. Outstanding balance to FNB (lien on all assets of RAG and REC) is approx. $1.3m CDE has 2nd lien against REC for basically all assets and balance of $7.2m Pittsburgh Urban Redevelopment Authority filed statement with State of Pennsylvania listing RAG and debtor and URA as secured creditor. $500,000 loan. RAG disputes the validity of the lien. RAG estimates approx $10.3m in general unsecured claims (majority is CDE lien). RAG borrowed additional $1.1m from Shallenberger Investments after Chapter 11 filing. Shallenberger Investments claims additional $570,724 debt from RAG pre-bankruptcy. Reorg Plans- Take on FNB debt. Take on Shallenberger Investments debt (pre and post bankruptcy). Attempt to discard most of unsecured claims through the courts. Contest URA debt. Terminate equity and holdings of general partners. "Shallenberger and/or Persons or entities owned and controlled by Shallenberger shall receive 100% of the ownership and equity in the Reorganized Debtor." General Projections- 2015: Revenue- $2m | Academy Expenses- $1.27m | Team Expenses- $1.39m ($512 team payroll) | Net (counting other misc expenses)- ($700k) 2016: Revenue- $2.7m | Academy Expenses- $1.46m | Team Expenses- $1.45m ($538k team payroll) | Net- ($284k) 2017: Revenue- $3.5m | Academy Expenses- $1.77m | Team Expenses $1.53m ($565k team payroll) | Net- $130k Future estimated cash flows- RAG plans to substantially increase the size of the academy by leasing additional field space east of Pittsburgh and developing a second Riverhounds Academy. RAG plans to partner with one or more existing club teams as it as done in Pittsburgh with moderate success. Ticket and merch sales expected to grow 15% annually. RAG has one sponsorship contract worth $120k per year in exchange for advertising and logo on front of all Riverhounds jerseys. Contract expires in August 2014. RAG expects to renew contract or find another at a much higher price. Academy payroll for 10 individuals expected to stay the same. Expenses based on current staff level +2 new hires. RAG projects significant reduction in player payroll in 2015 to an amount that is more in line with the league average ($500k range), and then inflationary increases in 2016 and 2017. Most players have 1 year contracts, and several higher-priced players have already expressed their intention to leave the team in 2015. RAG expects travel costs to reduce due to not going to Houston for preseason in 2015, and USL PRO schedule adjustments to reduce travel for all teams. Additional Quotes- “...increasing operational expense obligations against a flattened revenue stream that made it difficult for RAG to operate with a positive cash flow. Overruns in stadium construction and REC inability to produce sufficient operating revenue to meet burdens of construction overruns and daily operation expenses.” Lawsuit from Wilke (et all) in April alleges “Shallenberger engaged in a pattern of self-deatling in obtaining controlling interests in RAG and RAGM and/or refused to authorize RAG to enforce their/Shallenberger’s obligations under the Partnership Interest Purchase Agreement.” A Chapter 11 trust was necessary to protect the interest of creditors and RAG’s estate in general. Shallenberger and RAG filed objections. Court denied Wilke’s motion without prejudice on April 24 2014. Local economy is projected to be stable for the Riverhounds. “Of all the major metropolitan areas in the United States that have professional teams in three of the four major sports (football, basketball, baseball, and hockey), Pittsburgh is the least populated city. Because of the relatively saturated market for sporting events, as well as increasingly available access to nationwide events via television or the internet multiple minor league teams located in Pittsburgh have failed in the past. As outlined in the financial review section below, RAG has struggled to generate sufficient revenues to cover its expenses, due in part to its inability to attract sufficient fan support and sponsors. Pittsburgh lags behind most other large metropolitan areas in the United States in terms of interest in professional soccer. For example, Pittsburgh ranked 49th out of the 56 largest television market in the United States for a recent World Cup match involving the U.S. men’s soccer team. Attendance for Riverhounds games dropped from 3,500 per game in 2013 to approx. 2,700 per game through the first six games of 2014. “ “Overall the outlook for the Professional Sports Franchise Industry-Soccer in which RAG operates in is generally mixed. With the increase in consumer spending and additional disposable income due to improved economic conditions individuals can now spend money on leisure activites such as attending sporting events. In addition, the rising popularity of the MLS should benefit the USL PRO league which is affiliated with the MLS. Lastly the increased participation and popularity of soccer with millennials and the younger generation should provide the opportunity for continued growth into the future. However, RAG faces substantial competition in Pittsburgh from three well-established major league franchises as well as a number of other minor league franchises. The competition for fan support translates not only into reduced opportunity for ticket sales and merchandise sales, but also for sponsorship revenues, as companies may be more likely to spend limited advertising budgets on other local sports teams that they perceive as a better value.” “Historically RAG has not been able to recognize positive income or positive cash flow. RAG’s controlling owner has developed a plan to increase revenues over the next three years while stabilizing expenses in an effort to become solvent. As more fully explained in RAGs Joint Plan, Shallenerger Investments has agreed to fund the projected operating losses of RAG from 2014 to 2016 to maintain RAG as a going concern through 2017, at which time it is projected to become profitable. “
15% annual growth in tix/merchandise is ambitious. $120k (if cash) shirt sponsorship is good for USL Pro. Half million in player expense (does that only include wages or wages + workman's comp + payroll taxes?) would be a good indicator of average player costs for a low-revenue team in division three. Good stuff.
Player payroll does not include workers comp insurance, but it does include the coaches salary. It doesn't say anything about taxes. I wish I had a better idea of what it was this year, but they put it on the books weird (combined academy payroll and pro team payroll). I can only estimate based on last year's numbers. Additionally it looks like they spent $300 - $350k in 2012 when they were at the high school, which is probably a good indication on what the smaller teams in the league spend. Also the general projections above don't include debt from creditors. For instance in 2015 they are expected to be at a $700k loss, but are also expecting to borrow $715k from Shallenberger Investments so on the whole the season comes out more or less a wash. I just listed the pure operation profit / loss. The income statements and projections are really interesting, especially since you can compare the cost and revenue when they were in a high school stadium to now.
It also doesn't mention that the Hounds spun the Academy separate from the Club. Probably because the Academy is profitable, club isn't. Tuffy is going to screw the minority owners know by getting 100% (Google another current lawsuit against the club in regards to that). Doesn't mention that Justin Evans found out that others on staff, supposedly below him, were being paid for more than he was. In reality, the club really only exists to provide credibility to the Academy. You can argue that all you want but it's true. The academy is profitable, very profitable...and mainly because the players are coaches (as well as players) and that lends more likelihood that a soccer mom will sign her kid up.
According to these documents the Academy is part of the Riverhounds Acquisitions Group (RAG) which is the same group that owns the team. We've always known the Academy is their bread and butter, but it's tough to say exactly how profitable it has been in the past due to them combining things like payroll of the team with the payroll of the Academy. The valuation analysis does show the Academy itself brought in $775k and $828k of revenue in 2012 and 2013 respectively, and is expected to bring in $1.1m in 2014. However, they project it will operate at a loss of $671k in 2014, though again this is partly due to them combining the payroll of all RAG entities (including the pro team) with the Academy payroll. Starting in 2015 they're actually keeping the academy and pro team finances separate (or at least they are in their projections). They expect the Academy to run at a loss of $133k in 2015 before turning a profit of $8k in 2016, and of $287k in 2017. I imagine the projected loss for next year is partly due to the planned expansion mentioned above.
They'll have to seek FO approval. Don't want to rock the boat at all. You can't criticize the Hounds. It's not allowed. Everything is shiny and happy.
God forbid we try to have a working relationship with the team and stay positive during a bad year. We've been critical of them at times, but constantly pissing in the team's cheerios is no way for us to grow our numbers. It's called a supporters group after all. Eddie, if you have issues with the direction the group is going or decisions we make then by all means talk to us. You're a member. You have all of our contact information. We'll gladly have a conversation with you and take your views under consideration. But taking swipes at us on message boards or complaining to other members instead of the people who actually make the decisions isn't going to accomplish anything. Yes you created the Steel Army as you like to remind everyone, and we appreciate it and all the work you did in the early days. It does not make you the god king of the group. We haven't heard a single complaint this year from anyone regarding anything. So we're going to keep on doing what we're doing. Yeah we'll go over it during the off season. It's a good lead in to talk about the direction of the club over the next few seasons after reflecting on this year. Also, in my opinion, right now it's not the most important thing with the team trying to claw their way into the playoffs. I don't really want to get into this giant downer of a subject when we want to keep up the energy through these last three games. Plus the plan still needs to be voted on and could change, so I rather wait a little to make sure this is actually what will happen.
You haven't heard a complaint because there is no one but kool-aid drinking cult members at matches anymore. There's no group anymore. It's a fan club now. A mouthpiece of the club. A publicity tool. I am no longer part of it or want to be associated. As far as I am concerned the Hounds don't exist. The Hounds are pathetic and the Steel Army is spineless lemmings. You can pretend like I am the only one who feels that way but you all have pissed all over nearly as many people as the Hounds have. It's not just me. It's a sizable portion of the soccer community in the city is disgusted by the club and the SA. I don't hide from my views from anyone. I've never pretended to be something I'm not. I speak my views, that makes the people who want to don't want to rock the boat uncomfortable. I don't care. I feel awful that all my time and energy I put into starting the SA has been wasted and thrown away. I feel even worse for Espo. The SA is only concerned with one thing, their own egos. Tifos are all about ego. Having bullhorns when no one is singing is pathetic. Long as there is a camera or reporter around, that's all that matters to the Steel Army. It's one thing to work in conjunction with a club, it's another thing to be their mouthpiece.
If a sizable portion of the soccer community doesn't like the Steel Army it's funny how we haven't heard anything. You'd think they would make their thoughts heard so we could, I don't know, possibly act on them. Unless you're talking about all the folks at Pipers who never come to Hounds games anyways because their too busy with the EPL and third division soccer is below them. In that case whatever. The team and the SA have chased that rabbit for so long with no result that it's time to focus on people who actually do care. I can count on one hand the number of people who don't come to games anymore for one reason or the other. I have to use a spreadsheet now to count how much the SA has grown in the last two years. If some of you want to go grumble in the corner and occasionally reappear to yell at us then by all means, but doing that isn't going to change anything. We're going to be over here having some fun. Don't let the door hit you on the way out.
@Vesty I believe you mentioned in an earlier post that they (the club) is filing regular financials with the court - have you seen those? If so, what do those look like?
Enjoy the Dippin Dots! Maybe next time Tuffy takes the SA "Leadership" out to dinner, you all can share Dippin Dots together and sing Kumbaya!
2014 projected revenue to remain $1.6m. Academy revenue up, sponsorship declined. 2015: Revenue- $2m | Academy Expenses- $1.27m | Team Expenses- $1.39m ($512 team payroll) | Net (counting other misc expenses)- ($700k) 2016: Revenue- $2.7m | Academy Expenses- $1.46m | Team Expenses- $1.45m ($538k team payroll) | Net- ($284k) 2017: Revenue- $3.5m | Academy Expenses- $1.77m | Team Expenses $1.53m ($565k team payroll) | Net- $130k RAG projects significant reduction in player payroll in 2015 to an amount that is more in line with the league average ($500k range), and then inflationary increases in 2016 and 2017. Most players have 1 year contracts, and several higher-priced players have already expressed their intention to leave the team in 2015. RAG has one sponsorship contract worth $120k per year in exchange for advertising and logo on front of all Riverhounds jerseys. Contract expires in August 2014. RAG expects to renew contract or find another at a much higher price. So I pulled out some of the key items above from the earlier post and if this were my first choice team it would scare the pants off of me as a fan. Some general observations: 1) Based on the available data (hinted at above but very much out of date now), home crowd sizes have plummeted from 3,300 to 2,600 based on a dozen home matches in 2014. This is more than a 20% reduction which makes sense once the shine of the new stadium rubs off - though it's surprising how quickly this dropped as you normally get a couple of year's honeymoon period. This suggests performances have a huge influence - more on that shortly. 2) Given the drop in attendance and therefore gate receipts, where is the 2014 revenue (projected to be unchanged from 2013 when almost every match wasn't capacity) coming from given sponsorship has also declined per the post above? Is there a breakdown available with some itemization? Is any of this ground sharing related perhaps? 2b) What is the attendance expectation that supports the revenue projections and what is the implication for ticket prices because when prices go up, sales go down, especially if the product isn't there which right now it barely is, though playoffs are still a possibility thanks to some decent form of late. 3) What is the rationale for a jump in revenues of 25% for next season, 35% the next season and another 30% the year after that? Is there a big tv deal with escalation clauses coming down the road? General sponsorship deals tend to be multi year and locked in. They don't skyrocket year on year and that assumes a deal can be found in the first place. 4) An expectation of a massive increase in shirt deal - based on what? Is there a going rate published anywhere? I know MLS comes in much higher but it is a night and day product to USL Pro so not any sort of basis for comparison. Based on other post it seems the current deal is fair and the hounds are not an above average USL pro team at this time or really, at any time 4b) Even if this deal were doubled this would account for perhaps, 7% growth on current revenues which still leaves a massive revenue hole. 4c) We're pretty much done with August so any word yet on a new deal? Every month without, is a minimum of 10k lost revenue based on current deal that will need to be made up. What is the expected value used in the projections? 5) A 'significant' reduction in player expenses. Okay, I know there isn't a perfect correlation between teams that spend and teams that win, but let's be realistic here, the more you spend, the bigger the names of players (HUGELY important for the academy), the better the team and the more success. It's generally a rule that has some application it would be daft to ignore or assume doesn't apply in this case because that is a house built on sand. I fail to see how a 'significant reduction' will lead to sponsors paying more, the academy attracting more through star power and fans willing to reach deeper in their pockets. This is more likely to result in revenue reductions than the sort of gains that are being suggested here. 6) More and more MLS teams will be adding teams to the league following the Galaxy II model. These teams see this as a sunk cost and like the galaxy will run them at a loss. They can absorb the costs but it will screw the financial model for the standalone teams like the hounds. This is highly unlikely to result in positive financial experiences. 7) If the revenue does spike as suggested then it is highly unlikely that player wages will see an inflationary average increase. This is naive in the extreme. Football wages move in one direction generally and fairly quickly. If the revenues are ramping up it is because of success and players will expect to be paid accordingly and the fans will expect money to be spent on wages and increasing the size of the squad or they will vote with their wallets. Estimating double digit revenue growth and single digit cost growth is a recipe for financial ruin. There are also references to loans coming in from the owner which will add to the debt (unless it is waived) but I would be terrified that this is a ticking time bomb waiting to go off. If it is ever called, game over. Even the loss of annual loans on the projections shared above would be enough to put the hounds on life support. When I look at financial projections I like to see prudency and strong support for any growth projections. What has been shared so far is wholly inadequate and worse, overly optimistic. It feels as though it is based on a best case scenario with a lot of wishful thinking by someone who doesn't fully grasp the world of professional soccer. The number of things that would have to break right for this to be realized is fairly staggering. A doubling of revenue in 3 years whilst slashing payroll with limited investment in company assets - sorry, but if the hounds were public, shares would be getting dumped yesterday on the release of such a projection. Scary and bleak is my reading of this. YMMV.
You're over thinking this, I haven't looked at the documents and have no interest to do so, but the primary question will be if they can turn a profit once they get rid of their unsecured debt and to what extent they can manipulate their secured debt/existing contracts. I don't know these things, but looking at their regular financials should give you a clue as to how things are going - especially since they have been in bankruptcy for a while at this point. So even if their income projections are off, as long as they exceed their debt payments going forward they will get out of bankruptcy ok. Bankruptcy like this is usually just an attempt to get rid of bad debt from a business that is otherwise viable. Anyway, I like this trend of academies creating teams and hope these guys the best of luck getting through this.
The whole goal is create a plan that justifies approval of the bankruptcy filing. That then allows them to wipe the slate clean (and of course screwing lots of people out of hundreds of thousands of dollars...). Back in March on this thread there were quite a few posts that questioned the purchase, filing, and inevitability of this. FWIW - in my opinion, the numbers are pie in the sky and I predict they will never get close to achieving them, but in this case, the end (no old debt) will justify the means (a BS bankruptcy filing).
If 10 mins of reading a post and 20 mins throwing down some initial questions is over thinking it then I guess I am guilty. If I were a fan then I would be asking these questions. More importantly if I am a bankruptcy court I am asking these questions but I guess they assume that these questions won't be addressed because poking holes is not more than a 30 minute job. I have always felt in my 30 years watching football that the fans should be front and centre and that fans have a right to question what is coming out of the clubs. In this case it seems that the club is relying on continued unquestioning faith in their plan even if it is based on smoke and mirrors. You have the right to assume everything will be just fine and I have the right to question otherwise. I am a big fan of football in the US and have made financial commitments to more than one club, including the Hounds because I want it to thrive here. I believe in the academies as a pipeline too. What I don't believe is that you can prop up an academy on flimsy financial assumptions from a parent that is making a systematic loss year on year. Especially when MLS clubs are throwing their own youth system into the league and outperforming standalone clubs without ever needing to make money. Call it overthinking but to not think at all is a lot worse IMO.
It seems the model thus far has been to prop up the pro team with fees from the academy. Is the academy expansion to the east the Academy at Connellsville that already has been publicized, or are they adding another partner like Century United?
Except studying the issue and working in it and on it for years, what really has a huge influence on attendance is how hard you work to sell tickets. How many resources you devote to it, how many man hours, how many telephone calls, how much money is devoted to sales and marketing tools. Performance is a hard-to-ensure thing. But some clubs think they don't have to work as hard once they improve their stadium situation. When the truth is, after a very short honeymoon period, you have to work as hard or harder than ever. Even clubs that have had good performances in the immediate aftermath of a new stadium have seen attendance declines. The idea that if you win you draw just like that is really not always true. The bolded part is also not always true and not quite so simplistic. Anyone who estimates the economic impact of something or is attempting to attract investors or appease a bankruptcy court usually gets figures like this from the Department Of Numbers I Pulled Out Of My Ass. Unlikely. Very true. I think you have misunderstood the actual definition of "sunk cost." That would be a past cost that has already been incurred and cannot be recovered. Any MLS team that is considering adding a team to USL Pro cannot, by definition, have incurred that expense yet. They may see it as "the cost of doing business," which is different. They may see it as a long-term investment, which is also different. If Galaxy II helps younger players contribute to the Galaxy first team more quickly than they might have otherwise, it's likely worth the cost to them (and they have more resources than most). If another MLS team develops players on its D3 team which it then can transfer for a fee to an overseas club, that's a more tangible ROI. I don't see how the Galaxy or Real Salt Lake or Dallas' o-and-o teams impact the other teams, actually. If a D3 team is relevant in its market and involved in its community, if it makes the effort to sell and market its product and devote the resources necessary to provide a quality entertainment experience with the bonus of not being beholden to running out a bunch of U23s in the name of player development, there's no reason its financial model has to get screwed by LA's desire to develop players for its first team. I don't disagree. That is, unfortunately, the world in which we live. And that is why soccer (especially at the lower levels) has struggled mightily over time. Too many people are either too optimistic and too eager to bolt when their pipe dreams don't come to fruition immediately or just clueless from the jump.
Sorry man, wasn't trying to insult you. Just saying that surviving bankruptcy successfully is different than thinking the team is in great shape. I think there are two things you are talking about - 1. the bankruptcy legal proceedings and 2. criticizing the team. Critique of the team, love it. No one to sit back and just accept what they tell you. This is legal stuff, bankruptcy court is fundamentally different than civil and criminal court in that this is a court of equity. What this means is not about holes so much, because the court and the parties involved all know there are holes or the Riverhounds wouldn't be in bankruptcy court, but more about can we manage these holes. In most courts we see the opposing parties are looking for a winner and a loser - contract dispute, criminal cases. Here, usually no one wins if the "bankrupt" parties to get through bankruptcy, as a result all involved, even the creditors, want to push the bankrupt party through as long as they get as much $$$ as they can out of the party. If the party fails to successfully re-organize than no one gets anything. Who wants an empty stadium with no team? I agree with you 100%. Would never disagree with this point. I was only saying the court looks at something different than just the projections. The financials they are supposed to file with the court can be used as evidence of what has been happening so that you don't have to rely just on the projections. You may disagree, but this is why you need pro/rel, so teams at these levels have an incentive to invest in the teams/youth programs/academies. But this is a whole other issue.
Yeah they've been filing monthly reports with expected and actuals. They look about as expected as far as I can tell for a team in bankruptcy. They've cut back on costs in some area, but things like ticket revenue is way down from what they expected which negates their cost cutting. In general they have to borrow money every month, but some months it's less than others. If there's anything specific you're wondering let me know . I'll touch on all your points later tonight when I have the paperwork in front of me. They do itemize the expected revenue (to some extent) which will help explain a little where they think they money will come from.
Yeah the valuation report cites poor performance on the field as part of the reason for the reduced attendance. And as Kenn mentioned advertising and ticket selling also plays a seemingly huge role. The Hounds spend $64,000 in marketing in 2013. Adds on radio and in the paper and what not. They've barely spent $20,000 in 2014. In a city with so many sports teams you need to keep yourself in people's minds, and they sure failed at that this year. Starting in 2015 and beyond they've budgeted at least $60,000, so in theory that should help boost attendance some. Revenue compared to last year (rounded)- Code: 2013 2014 Academies......829k........1m Camps..........n/a........98k Tickets........426k.......415k Merch..........n/a........72k Sponsors......284k........12k Other.........104k........n/a Total........1.6m.........1.6m The Academy has and continues to keep the team afloat. Also the merchandise increase can't be overstated enough. They went from almost nothing under a tent to a permanent team store with a ton of stuff, some of it pretty decent quality. There's also a pretty decent margin on it all too. They don't give attendance number projections, but dollar wise they project 550k in 2015, 633k in 2016, and 728k in 2017. They project $75k of each year to be suite sales. I have no idea what they're doing now, but it can't be much based on how empty the suites look from our section each game. Even with that, and inflation, unless every game is a sell out I don't see how they hit those numbers. I've heard they aren't planning on raising ticket prices next year (though I could see concession prices going up. They're crazy low for sports) The only thing I can think of is if they expect there to be more than 14 home games (plus USOC though those games don't draw enough to really effect anything in my opinion). Projected revenue for next 3 years (rounded)- Code: 2015 2016 2017 Academies......1.0m........1.3m.......1.8m Camps..........100k........125k.......166k Tickets........550k........633k.......728k Merch...........88k........101k.......116k Sponsors.......250k........500k.......600k Total..........2.0m........2.7m.......3.4m So it looks like they are banking on the Academy and sponsorship. Since they're planning on a major expansion with the academy I think those numbers are probably about right. The sponsorship for 2015 seems ok (about the same as 2013), but idk about the 2016 and 2017 numbers. It looks like the bankruptcy killed a lot of sponsorship contracts this year so it's tough to compare it. It looks like only 2 or 3 are actually carrying over per the plan. All the other ones would need new contracts and renegotiated. I suppose it's possible they signed some of the old ones before the stadium and so didn't get the "best value" out of them, but still, it's a big jump. The other thing to note is I believe they combine the sponsorship revenue of the pro team with the academy, so with the academy expanding there's an opportunity to expand sponsorship revenue in that area. Unfortunately I have no idea why the expect to be able to get more for the shirt sponsor, and I have no idea what the current situation or what value they used in their projections. The impression I get is they polled other teams around the league. If so I could see teams like Orlando and Sacramento skewing those numbers. The problem is they did spend big this year (and probably over spent on some guys) and sucked. From my understanding there was like 3 different people spending on different players without much thought for team chemistry or team needs. Really the star power for the Hounds is what the team makes of who they have. The players who spend a lot of time at the academy and with the kids have bigger star presence than a dude from England they signed for big bucks. You see it at the games, they flock the guys they know, and buy their jerseys more than any other. While it's a significant reduction of payroll compared to what they're spending now, but the report said it would lower close to league average. You can still be competitive with league average. I'm sure teams like Harrisburg and Rochester aren't breaking the bank and they're in the playoffs almost every year. The Hounds just need to start spending wisely and stop having so many cooks in the kitchen. When it's all said and done it looks like the team will owe Tuffy approx $2, 2.5 million. Tuffy makes his money in construction, specifically linked to the gas boom over the last decade or so. If that industry collapses locally yeah it'll be bad for him and the team, but that's the risk they've forced themselves to have to take to get through this. I don't know if they could find anyone else to bankroll the team for the next two years. From my interactions with him and from this paperwork Tuffy comes across as a hard nose businessman who takes no gruff. If all this bankruptcy and ownership fighting hasn't scared him off by now I don't see him bailing. These projections were put together by an independent group that analyzed the local economy, soccer in the US in general, and the USL PRO. So it's not just some wishful owner pulling numbers completely out of his ass. The optimist in me thinks they know what they're doing. That said I do agree some of it is probably best case scenario and probably won't hit, but other parts (like the academy) seem reasonable based on what I've seen. In the end we'll see what happens. The important part for us is there will still be a team for the next three years. Personally I tend to care more of what happens on the field than in the office. And hey if in three years this ends up blowing up in their face, well, it was a hell of a ride.
QUOTE="Vesty, post: 31002686, member: 103099"]Yeah the valuation report cites poor performance on the field as part of the reason for the reduced attendance. And as Kenn mentioned advertising and ticket selling also plays a seemingly huge role. The Hounds spend $64,000 in marketing in 2013. Adds on radio and in the paper and what not. They've barely spent $20,000 in 2014. In a city with so many sports teams you need to keep yourself in people's minds, and they sure failed at that this year. Starting in 2015 and beyond they've budgeted at least $60,000, so in theory that should help boost attendance some. Revenue compared to last year (rounded)- Code: 2013 2014 Academies......829k........1m Camps..........n/a........98k Tickets........426k.......415k Merch..........n/a........72k Sponsors......284k........12k Other.........104k........n/a Total........1.6m.........1.6m The Academy has and continues to keep the team afloat. Also the merchandise increase can't be overstated enough. They went from almost nothing under a tent to a permanent team store with a ton of stuff, some of it pretty decent quality. There's also a pretty decent margin on it all too. They don't give attendance number projections, but dollar wise they project 550k in 2015, 633k in 2016, and 728k in 2017. They project $75k of each year to be suite sales. I have no idea what they're doing now, but it can't be much based on how empty the suites look from our section each game. Even with that, and inflation, unless every game is a sell out I don't see how they hit those numbers. I've heard they aren't planning on raising ticket prices next year (though I could see concession prices going up. They're crazy low for sports) The only thing I can think of is if they expect there to be more than 14 home games (plus USOC though those games don't draw enough to really effect anything in my opinion). Projected revenue for next 3 years (rounded)- Code: 2015 2016 2017 Academies......1.0m........1.3m.......1.8m Camps..........100k........125k.......166k Tickets........550k........633k.......728k Merch...........88k........101k.......116k Sponsors.......250k........500k.......600k Total..........2.0m........2.7m.......3.4m So it looks like they are banking on the Academy and sponsorship. Since they're planning on a major expansion with the academy I think those numbers are probably about right. The sponsorship for 2015 seems ok (about the same as 2013), but idk about the 2016 and 2017 numbers. It looks like the bankruptcy killed a lot of sponsorship contracts this year so it's tough to compare it. It looks like only 2 or 3 are actually carrying over per the plan. All the other ones would need new contracts and renegotiated. I suppose it's possible they signed some of the old ones before the stadium and so didn't get the "best value" out of them, but still, it's a big jump. The other thing to note is I believe they combine the sponsorship revenue of the pro team with the academy, so with the academy expanding there's an opportunity to expand sponsorship revenue in that area. Unfortunately I have no idea why the expect to be able to get more for the shirt sponsor, and I have no idea what the current situation or what value they used in their projections. The impression I get is they polled other teams around the league. If so I could see teams like Orlando and Sacramento skewing those numbers. The problem is they did spend big this year (and probably over spent on some guys) and sucked. From my understanding there was like 3 different people spending on different players without much thought for team chemistry or team needs. Really the star power for the Hounds is what the team makes of who they have. The players who spend a lot of time at the academy and with the kids have bigger star presence than a dude from England they signed for big bucks. You see it at the games, they flock the guys they know, and buy their jerseys more than any other. While it's a significant reduction of payroll compared to what they're spending now, but the report said it would lower close to league average. You can still be competitive with league average. I'm sure teams like Harrisburg and Rochester aren't breaking the bank and they're in the playoffs almost every year. The Hounds just need to start spending wisely and stop having so many cooks in the kitchen. When it's all said and done it looks like the team will owe Tuffy approx $2, 2.5 million. Tuffy makes his money in construction, specifically linked to the gas boom over the last decade or so. If that industry collapses locally yeah it'll be bad for him and the team, but that's the risk they've forced themselves to have to take to get through this. I don't know if they could find anyone else to bankroll the team for the next two years. From my interactions with him and from this paperwork Tuffy comes across as a hard nose businessman who takes no gruff. If all this bankruptcy and ownership fighting hasn't scared him off by now I don't see him bailing. These projections were put together by an independent group that analyzed the local economy, soccer in the US in general, and the USL PRO. So it's not just some wishful owner pulling numbers completely out of his ass. The optimist in me thinks they know what they're doing. That said I do agree some of it is probably best case scenario and probably won't hit, but other parts (like the academy) seem reasonable based on what I've seen. In the end we'll see what happens. The important part for us is there will still be a team for the next three years. Personally I tend to care more of what happens on the field than in the office. And hey if in three years this ends up blowing up in their face, well, it was a hell of a ride.[/QUOTE] Were there any updates from the hearing yesterday?
As long as they devote the resources to following up those ad buys. Because telling someone there's a game is not the same thing as selling them a ticket to the game. It's a first step. But only a first step. Which is fine and fair, but the two are so intertwined now that you can't help but pay some attention. Because without the latter, the former doesn't happen.