The Catch All CBA (Collective Bargaining Agreement) Thread

Per tempofreesoccer


Yes it's a rough estimate, but it sure brings up a lot of questions. Just what exactly is the league spending all that money on?

 

I'll go one step further jond -- looking at this all again for some of the posts in this tread, I'm not sure that the league money (national TV money, the national sponsorship money and shared revenue) is even in the Forbes numbers. I once was pretty sure it was, but the DC United projections look very similar to the Forbes numbers for the typical MLS team and they don't include it. Since the TV money and the sponsorship money appears to be booked at SUM and then divided between the SUM shareholders and the league, it wouldn't actually show up on a team's income statement.

 

Well this is getting to be pretty unbelievable. I've never seen such questionable accounting on this scale, publicly and repeatedly.

I can't really think of how any of this makes sense, and I've been keeping up to date on the entire debate on it in this thread and your thread in the YBTD forum for months. It doesn't even come across as stretching the truth. It comes across as a bold-faced lie. Maybe it is, maybe it isn't, MLS keeps everything close to the chest but it sure doesn't look good.

Opens up a number of questions.

 

The Garber comment is so out there I don't know how to interpret it. DC United assumed league-average revenue numbers on a per-person basis, then multiplied it by a projected attendance that is well within typical league norms. After subtracting well-above-league-average costs for expenses, including stadium financing, if I remember correctly they show a very manageable loss (that quickly becomes a profit). That can't scale to current teams losing an aggregate of $100mm. If anything, it scales to a profitable league.

I can't help but think that besides the accounting fiction going on here, Garber is continuing down the path blazed earlier by a prominent blowhard north of the border (though not for long), who claimed the league was losing money because of investments. That's not an expense. Unless they are writing down (and writing off) their academies and their stadiums and their practice fields, these are assets they have purchased and should not be counted against revenues.

 

DC United's EBITDA is projected to be $4.553m it's first year in the new stadium. According to the report, it's debt service burden would be among the highest of any MLS team, but it's still positive after that at $688k. The coverage ratio gets very thin by 2022 (1.05), but improves dramatically to 1.59 by 2025. (That's why the point about removing the capital call was made IMO).

So, yes, for teams in SSS with comparable stadium income, I can't see how they can be losing $5m a year on average if these numbers are anywhere close to accurate. He's got to be counting depreciation to generate the loss or there's something that doesn't make sense that we're missing.

Or it simply isn't true.

 

From the report

(it's not a direct quote from Garber but the reporter's interpretation of what Garber said.)

None of these things are really about EBITDA. I expect the $100 million is a completely bad number since it likely reflects investment spending without properly annualizing it, but you don't want to use the EBITDA numbers either when evaluating it.

 

True, but even if you count debt service if the debt levels in the CSL study are correct, they can't be making these kinds of losses. Honestly, I find it had to believe the bonds could have been sold in the first place if they were making these kinds of losses.

 

I don't think it's a real number, but it's clear that the Don is including also sorts of things we don't include and my guess is the truth is somewhere in the middle. For example, the Galaxy a putting in a new Jumbotron in Stubhub and they're not going to need to raise debt to do that. My concern is that Garber is expensing that, as Matt says. On the other hand, it is a real cost and is something EBITDA leaves out.

 

This makes much more sense to me than free agency. I think getting traded must be a pretty strange experience for a foreign player.

 

and then throw in an extra DP to keep the rich teams happy. A grand bargain that makes everyone happy except the bigsoccer fan!

Actually, I'm fine with DPs but paying the players at the bottom more does little to help the game (although I appreciate that the extra money makes a bigger deal to them than it does to the richer players)

 

Maybe the Don has a huge salary

 

We have heard previously that a substantial portion of the SUM sale money was actually reinvested into the league. That will be reported as a loss.

There is really only one big ticket item that I think can contribute that level of loss. Transfer money. I think the transfer money spent lately can easily reach 30m or even 60m. Wikipedia lists about 40 non-free transfers from abroad and we know that MB came for 10m. The question is how much of this was paid by the clubs and how much came from the league.

 

The thing with these numbers is none of them are from an audited document. Meaning it would be super easy and perfectly leagal to cook the books to say what ever you want them to say. Things like a new stadium should be considered a captiol expense and accrued through the life of the asset. However if you want to raise expenses you could put it into a few years. Also it would be easy to hide revenue through umbrella orgainzations looking at you SUM especialy for things like merchandise and other media revenue. And if you own the stadium you could have another enity collecting reveue for other events such as concerts while at the same time puting the cost of the stadium all on the club. Non Audit financial informating is not worth the paper its printed on. You can hire a Sophmore Undergrad Business Major from a degree mill to cook those number to say what ever you want.

The best indicator of the finacial health of the league is the franchise fees being paid. 100mil New York, 70mil Atlanta, Somthing in that neighbor hood for Orlando, and I am sure alot for LA 2. You simply do not attract that kind of venture capitol with out a solid numbers to show future profitablity. People like Author Blank dont get where they are by chasing bubbles. Below is my basic math for cash flow for a MLS team.

Salary 5 mil
Youth Acadamy 1.5mil
Payment on $100mil stadium at 40 years 3% 4.2 mil
Coaching 1 mil
Adminstrative 5 mil
Taxes and mis 5 mil
Total 21.7mil

Tickets 19k per a game 17 home games $65 average 14.5 mil
National TV 3.1 mil
Local TV 1.2 mil
Other Game Day 3 mil
Merchandise 2 mil
Misc (other events at stadium) 1 Mil
Total 24.8 mil

This would be around $3.1 mil profit average per a team. And I think my numbers are conservative at that

 

Does Forbes count any of the Expansion fee revenues in their calculation?

 

And you could argue at that it is a long term capitol brand marketing expense.

 

I don't believe so.

 

I forget the exact numbers but if you look at Forbes report they would show about an average of $2.5 mil profit per a team minus Chivas.

 

Poeple keep mentioning the DC United documents/study that were submitted to the DC council. Anyone got a link to them?

 

Those studies, and the Portland one, were conducted by CPAs, right? And CPAs are licensed in a similar manner to lawyers, and they lose their license if they commit certain kinds of fraud.

So if you have a choice between believing a CPA firm that would go out of business if it gets caught lying to sell a deal, and provides data to back up its conclusions, OR

believing a commish who is about to embark on labor negotiations, and provides precisely zero documentation to back up his assertion,

the choice is easy. Anyone believing the commish is just a fool.

I follow politics alot. And politicians lie alot, especially when they can get away with it. It's up to journos to challenge them...not be a dick about it, but just challenge them. And political journalism is typically the worst journalism there is because journos only care about access. They act as a herd on what they'll challenge and what they won't, and it makes following politics a real job sometimes.



I loves me some Don Garber, but my God, it's just insulting to my intelligence this bullshit that he's shoveling. How many people were on the panel? And not one of them asked "what about the Forbes evaluations? What about the DC and Portland stadium studies? What about increasing franchise values?"

I mean, Don's trying to tell us that MLS is like an S&M parlor, where you have to pay money to get punished with more financial losses!!!

 

I was using league average to get 19k. And guessing the average cost for the whole league

 

20 milion a year 20 teams right now so that would 1mil a year