Wow. This post brought tears to my eyes. The second part should be required reading every time some brainiac on here starts mouthing off about what MLS should do, how their stadiums aren't where I want them to be, I hate the name, why can't those idiots to this, spend on that, buy this, etc. It's called building a business, and that was a very nice summary IMO. Well done. BTW - Come 2008, when their are 14 teams and 8 stadiums in use for 9 teams, I would expect a nice raise in the saalry cap. That is when the union can start saying, "OK, we have done our part, let's start talking about a living wage for all of our players." If 2 or heaven help us, 3 more are built by 2010, they should start demanding IMO. Controling revenue, getting rid of those terrible leases, and controling scheduling alone should warrant a nice bump. Nice post.
I'll make a couple of brief notes: 1) In order to match Scandinavian and general West European cost of living, MLS would probably only have to pay ~ 60 cents on the dollar of the Euro wages. (excepting maybe LA and NY, where it's 75-80%) 2) One of the major reasons, as has been mentioned, for the Yanks to go to the 2nd tier Euro leagues is to use them as a springboard for the bigger leagues and far bigger paychecks. While MLS isn't going to be able to compete with the Big 5-7 nations on the compensation level, it can certainly engage actively with the "European football community", so young US starlets can feel "scouted".
Not that he is an American, but very few people know that Peter Crouch was actually loaned out to a Div 1 side in Sweden in his early 20's I believe.
And how on earth does that apply to anybody that owns an MLS team? These guys have available capital coming out the yin yang, and 5 million either in profits or losses either way from an MLS team would have little to no effect on that situation. Red Bull spent $600 million on marketing last year alone. Marketing, perhaps the dodgiest expenditure in the playbook of a business. Kroenke has access to a pile of money they need special concrete bunkers just to support the weight of it all. Anschutz has made and lost fortunes 100 times usually without batting an eyelash toward his greater wealth. Every time Vergara needs money, he has Chivas Sr. come play in the LA Coliseum and collects from the 50,000 that show up. LaMar Hunt? I don't think we need to discuss how aggressive he can be when it comes to investment ideas, we'll give him a Silver Medal for that one. All of these guys are much wealthier than George Steinbrenner is. And yet Steinbrenner spends a fortune more on players than they do. Why? Because those players are worth more money to Steinbrenner than these are to the MLS guys. And that's the problem: soccer players don't make anybody any money in this country. Soccer stadiums might, but that doesn't change that fact for players.
And their leverage will be what? We suck, no other league in the world will pay us what you already do, but we want more anyway? There's nothing they can do? They can strike, I guess, but the better players will head off to Europe and then the rest will be easily replaced with A-leaguers and college kids. Does it make a dman bit of difference to any fan in this country whether Joey Franchino or Danny Jackson is playing defense for their team? MLS level talent is mostly completely worthless financially. They get paid accordingly...
Hi! I found a link to this forum on a norwegian football site and Im reading with great joy. Its really great to see that there is yanks with love for the only real game and with knowledge even about scandinavian football! What i wanted to add to this discussion was concerning the quarrel about the strength MLS vs the Scandinavian leagues. Some refered to the recently played match USA vs. Norway. I watched the game live and its true, Norway didnt play well and was rightfully beaten by a strong US-side. That striker Dwellman was great in that game. Actually, our nationalteam isnt doing well at all nowadays, even with their best side on the field. But thats another story. American and scandinavian teams do actually play some matches against eachother each year on their trainingcamps in various south-european countries (usually Spain). This year I think the following matches have been played (I can only speak for norwegian clubs): 05.03 Molde (NOR) - Dallas Burn 2-1 07.03 Sandefjord (NOR) - Dallas Burn 0-2 09.03 Stabæk (NOR) - Dallas Burn 2-1 In recent years I know that games against teams like Columbus Crew, MetroStars and San Jose also have been played, and it seems that the teams are very equal, with tight games and no big victories. The US-national team is ranked qute higher than the Norwegian-national team, but u have to face that we usually play against better sides in our Euro- and worldqualifiers than u yanks. In the 90's somewhere (dont remember actually when, it was around World Cup 94) Norway was actually ranked as the 2nd best country in the world, just beaten by Brazil. But I dunno how much u can put into the FIFA-ranking.
I disagree voros. Thats' why a union is there. A mass strike would cause unwanted publicity and grief. If someone were to pick up the story, see the growth of MLS, and then analyze player wages it would be a very effective, and embarrassing tool that could be used versus MLS. I'm looking at it from a point of view of wages here, and what the union can do about it here. Do not underestimate the neg publicity card. Think of how many ways the mainstream could goof on MLS on this one. Really bad for the image. A few years ago, you are right on, but over the next 2 or 3 things will change.
Yet, it would have an affect on possible new investors, wouldn't it? Each entity has to be able to stand alone, and be accounted for alone in a business, is the key kpaulson statement. Since MLS is building form the ground up, without the benfit of TV money, which drives all other major sports, the balance sheet becomes even more important for new investors, cities, politicians, taxpayers, etc., in order for them to be able to quantify/sell if there is a reason to step up, with this still unsure investment. When the initial platform is secure, and certain revenues are secure, then you can start to move forward and take those risks. (Not that far away either IMO) You are looking at it from the point of view that everyone is a sugar daddy, and all new investors will do the same. You also create expectations from new communities that all investors should be willing to foot all the costs, and run the team at a loss for their benefit and for the owners simple love of the game. Maybe I am reading you wrong. Maybe it's my job that makes me think this way, but this is how you build something new in order to give it a chance to last. MLS owners are replcing negative streams with positive one step at a time. The wage issue is a natural one that will follow. Always does.
I guess this is our fundamental disagreement. You believe that "risk analysis" stops applying to small business ventures of large entities. I believe that large entities will apply the same analysis to every venture underneath their umbrella. IF they do not, how do they decide to allocate their (admitedly) large resources among their many ventures? You're right that Anschutz and co. are rich, but, to paraphrase the Notorious B.I.G., "Mo Money, Mo Problems", or perhaps better said "Mo Assets, Mo Demands on Your Capital". Many of Aschutz's assets require capital to maintain. Obviously, he's got surplus-- which explains how he can invest in an ultra-risky investment that has never succeeded (aka pro soccer in the US)-- but that surplus is limited before even Uncle Phil has to start worrying about the effect on his other ventures. What if Uncle Phil allowed all his lieutenants to spend as much of his capital as they thought necessary for risky investments? What would happen to his fortune then? Hell, more importantly, what would happen to those lieutenants? Yeah, uncle Phil may personally not care about losing $5m, but you can bet that a lieutenant that loses most of his budget isn't going to be a rising star in AEG. Actually, part of the reason those players are worth more money is because all the money they generate goes into George's pocket-- rather than the stadium authority. It's pretty easy to see how stadium ownership will make MLS owners more like George. In fact, it's almost axiomatic. How can disagree with this?
The entire argument assumes that at some point, a more talented league is more attractive to more fans. If you are correct, and the MLS talent level (after the cream is skimmed) has no value, does not make the league more attractive to fans, etc, then no, the current players won't have any leverage (and, frankly, shouldn't). But the pool of players available to MLS is not limited to the current pool of players. I think the assumption would be that as the amount of money flowing in payroll increases, the level or talent will rise, meaning the worthless cloggers you refer to will be replaced by those who can actually play the game.
That too. This next 3 years will have many of the same problems, but the structure for real growth and change is now there. Finalaize that intial structure, then take the next step in wages and players. Thsi is what MLS clearly seems to be doing. Now, if this doesn't change in the next 3 years, do you think RB, and Jose V won't start making noise? From what I understand AEG already wanted to be able to to sign a high profile player, but Hunt argued against for now. 2008 seems like the natural target date. Even hacks, when organized properly, can cause a lot of problems people. Don't forget that.
Signing marquee players comes up every so often, in 2000 there was the discussion about zidane, beckham has been tossed about (not literally). It's not as simple as Hunt says no, from what I know. It's whether or not it makes sense to break away from the strategic plan, and everyone ends up agreeing that long term health is best assured in other ways.
I got ay, and I understand, I was just pointing out that 2008 makes sense to start to think in this manner. You have the stadiums, more control over revenue, venues to fill, more aggressive owners, hopefully more owners by then, etc. If there is a point in time where I see signing bigger name players as being possibly viable, this is where it "may" start.
Well... First of all it's not like you can compare the MLS to something like "Scandinavia". Ther are big differences between the Scandinavian countries, both in style of play, weather and pitch quality, player wages and club economy/expenses, taxes and living expenses ..and so I could go on. But if I should highlight a few interesting points : 1) Ther are some ppl in this thread talking about the difference in league quality and if "Scandinavia" in this sense is more of a "stepping stone" to the top 6 leagues in Europe in compare with MLS.. The answer to this question you will not find in a direct comparison of style of play or league quality, but more in the fact of how much talent each leagues produce/how many players that actually is found to be interesting or good enough to sign by the foreign clubs in the top 6 leagues. I'm quite sure that you'll find some bias from the managements in the top clubs in Europe, who I'm sure will rather like to present a new Brazilian, French, Dutch, Danish or Swedish player for that matter to their supporters, rather than investing in a unknown American or Canadian talent. This is just how it is. At times ther are some strange transfers going on from Sweden and Denmark to e.g. Italy. Transfers that looks more like the clubs in Italy just sign a player to show that they are actively doing something on the transfer market rather than looking at the actual quality of the player they sign. But besides this bias you still have too look at how many player who move abroad from the different leagues to get some understanding of the talent/quality of players in the leagues. Talent/Player quality and league quality is btw not quite the same thing. The Danish league e.g. is known to be a 'Development League' that produce lots of talents who move abroad every season, but it's a small league of only 12 teams and it very much suffer in the EC because the many transfers each season are making the teams highly unreliable/unstable in the EC... I do not know how many players who move from the MLS to Europe every season ?, but if you look at Scandinavia, then the fact is that very few players from the Norwegian league move abroad to the top 6 leagues in Europe. I guess ther perhaps also is some bias against the Norwegian league players in some part of Europe (like Italy, Spain, France), while Norwegian league players more often move to English clubs. Though it seems in very small numbers at the moment. Fairly many Swedish league players seem to move more or less everywhere, but at the moment not in all that great numbers to the top 6 leagues. It's quite different with Danish league players, who seem to be quite popular to sign. Especially the Dutch league and German Bundesliga clubs always seem to be signing Danish league players in fairly great numbers.. as also written : https://www.bigsoccer.com/forum/showpost.php?p=7813789&postcount=34 This fact is ofcause good for the Danish NT but not so good for the stability of the Danish league clubs... It's btw also good for the USMNT that as many young American talents as possible move abroad. It doesnt really matter that much if the league they move to is all that much better than the MLS, since it's just as much the experience of moving abroad that make the players mature faster and make them stronger and more ready to play international games... 2) Taxes and wages... The wage and tax level in Scandinavian differ very much. When it comes to foreign soccer players, then the wages are low and taxes high in Sweden, while it's the opposite in Denmark... Norway is probably somwhere in between, with wages at around the same level as in Denmark, but with the income taxes and living expenses being higher. If your a foreign player earning €95K or more in Denmark your income tax is 25%... 3) Club turnovers... Also differ very much from country to country and club to club, but in general, Danish clubs got the biggest turnovers and use more money on wages, while the Norwegian clubs seem to get more money to spend on transfers through player sponsorships. Except for Malmø FF then the Swedish clubs seem to trail very much behind financially in almost every department. Just to give you a clue of the differences, then the by far richest club in Scandinavia FC København (FC Copenhagen) known as FCK produced a turnover in 2004/05 of €60 million, Net Profit 2004/05 was €5 million, Net capital 2004/05 was €70.7 million and the total assets/value of FCK (including the value of Parken Stadium) was just around €157.2 million last season. In compare Brøndby produced a turnover of around €20.7 million in 2005 and Norwegian Rosenborg produced a budget of just around €15 million in 2005 (Of this figure the VIP and Sponsor income was just around €6.7m)... If you look at the FCK turnover/budget then of the €60m figure the VIP and Sponsor income was just around €11m... Entrance, ticket fees, television fees and price money €16.4m... Merchandise €2.8m... Rent of Parken stadium (e.g. to the Danish NT and other events) €4.4m... The rest of the income/turnover was (besides transfer fees) other kinds of sales that has nothing to do with soccer, like lease of investment properties, conference centre etc. .
Great stuff Ceres. I think we understand that "Scandanavia" is, in reality, comprised of very different markets. It's just that, for our very limited purposes here, we've noticed many of the same type of MLS players (we'll call them the middle class) heading to Scandanavian countries. Obviously, the reasons we cite for these moves will apply to any particular Scandanavian countries to a greater or lesser extent. That's why it's so helpful to hear from people in each country so that we can move from generalizations to specifics.
That makes no sense at all. If, theoretically it did all go to the stadium authority, then not making that money would cause George to have to pay the money out of his own pocket to the stadium authority. It's all one big pile, and regardless of the individual balance sheets of the parts, five million lost is five million lost, and five million made is five million made. Baseball players generate revenues in this country, soccer players don't. That's all there is to it. One of the reasons for that is MLS' incentiveless structure.
And unless there's a change in the marginal revenue product per player, there's no reason for them to be any more viable then than they are now. The money's there, the incentives aren't, and the stadiums won't change the incentives.
And it's a faulty assumption unless there is some change to the current levels of incentives to spend on players. A player worth two wins more than Marshall Leonard over 32 games will continue to be worth more to European teams than he will be to American ones, all other things equal. European protectionism helps (at least when it comes to non-EU players), but the trend appears to be getting further and further away from that. In order for MLS teams to compete for such a player they have to willingly and consciously choose to lose money on the transaction. I don't know why they would choose to do that for any length of time.
It makes perfect sense and it is obviously correct. It's almost certainly my fault, but you don't understand it. Bear with me through an example. Imagine that having to send a portion of stadium revenues to the stadium authority is like a tax, ok? Now, let's imagine two investors. One of them is tax-exempt. The other must pay taxes. The asset that they are both considering is a revenue stream of $10 million. Which investor can pay more for this revenue stream? Obviously, it is worth more to the tax exempt investor-- he can actually get $10 million out of it. The investor that must pay taxes (i.e. the costs of not owning a stadium) will not pay the same amount for the exact same asset. Now, you're certainly correct that baseball players generate more revenue than soccer players. But it should be clear that, at whatever level you generate revenue, an investor that doesn't need to "pay taxes" will pay more for you. Jeter is worth more to an investor who actually gets the revenue generated by the sale of his jerseys. Donovan is worth more than to an investor who actually gets the (much smaller) revenue generated by the sale of his jerseys.
Well, we disagree, but we will find out fairly soon now. Stadiums are the avenue towards break even and eventual growth. With the extra rev, and stability, it would make sense to try and upgrade your product when you are trying to maximize that new facilty, in an atmosphere and arena which will be more pleasing to the customer. The incentive part will grow as the game and infrastructure grows. I would be inclined to believe that when there is a more stable enviroment, and the league situation is fairly secure, that there will be a greater push by some owners to create more incentives. It's inevitable. The question can be, how much, and how quick, and that could be a stumbling point for some time. I see that issue and agree it could be a problem. I just can't see owners like RB, Jorge and even Phil standing pat when the league enters secure zone. That's what I see happening and I believe that is the current model and goal of MLS owners. Again, it shouldn't be that long before we find out. 2008, 2009, 2010 - it's close. I will keep the faith in this business plan, mainly because it's one I work with constantly, until the time comes where I can say these guys aren't following through. Why? They could have bailed out a while ago and folded the league again and didn't. They recommitted with a plan. I see them carrying it out. To not take it to the next level when econmically feasible just isn't in the make up of people like this. We will see shortly.
The trend in american sports is to make the relationship between success on the field and success on the balance sheet as tehuos as posisble (the NFL model). That is almost exactly the model MLS has now. Why would they change it?
It's not exactly that. The leased stadiums have a different cost-revenue structure than the fully owned ones. Having said that, marginal profits per marginal revenue dollar must be considerably higher on the owned units, so much so, that MLS may end up justifiyng its raison d'être just by being a tenant for when the rock concerts and the monster truck rallies aren't in town.
Plus the advantage of full parking revenue, concession revenue, naming rights revenue...It's a signficant initial investment, but it does change the model completely. I think. Anyone have numbers on how the Crew's fortunes changed post stadium?
Quite simply because MLS is not yet considered a finished or higher end commodity. People like this do not stay for the long haul to maintain a minimalist environment when the ship starts to generate steam. In the US I doubt we will ever see the free wheeling we see in Europe, but thye will not stand pat either. You must remember Rommul that if MLS keeps a cap system, but is able to get average payroll to 6 or 7 million a year, not impossible to imagine in 10 years, how many leagues will have more money to spend? Not many at all if you look team by team throughout the world. Add the modern facilities, luxury of living here, etc, and the league will be in excellent shape. I truely see where you and Voros are coming from, but again, even with this sytem, there is greast room for growth. There will be room for higher end signings, and the markert will dictate it, as the product becomes more finished and stable. Again, IMO, you don't commit like this just to stop at also ran. Just doesn't happen.
Just had a little time to read most of what I've missed while traveling and there are a lot of good views. A lot of chicken and egg stuff. The great thing again IMO is that we will not have to wait that long to find out. Should be interesting.