How many more years can MLS continue business as usual?

MLS is averaging almost 16,000 fans a game,that's comparable to the NHL and NBA. We have stable owner's who are commited to the league. MLS has one soccer specific stadium that is turning a profit,and another one being built in Carson CA. If the owners weren't serious about the league they wouldn't be building the Galaxy's new stadium. Keep in mind that MLS averaged almost 16,000 fans a game this season,and that's without the benefit of having the mainstream press promoting the league. Think about it,how often do you hear soccer being talked about on sports radio or on sports television shows,i think MLS is doing fine.

 

losing money is a phantom.

Investing can be considered losing money. For instance, LA may have their most profitable year ever after they get their stadium next year, but technically the cost of building it may mean they can't turn a profit for say 5-10 years.

But it would seem that NE, Columbus, and LA are in a position to be doing well. We need other teams to get into their own stadiums. I do think that if they can increase attendance again next year (which will be hard to do, this year had to have had a boost from the WC) that the league will have to be considered healthy.

For MLS to last every team needs their own stadium and attendance probably needs to increase by about 2500 average.

 

It's really hard to say what's going to happen. I'm almost positive the severe economic downturns of the late 70s and early 80s had a lot to do with the ultimated demise of the NASL.

I don't see that happening here, as both Hunt and Anschutz have diverse business interests and the Krafts seem to have found a way to live with the Revs and the Pats.

But here's what I feel is needed before we can pronounced corners turned, nettles grasped and leagues stabalized:

1. Continued stadium stabilizations. Let's break this down by team:

1. Crew - In a strong position to be profitable. Probably already are at an operating profit.
2. LA - Will be in a position to be profitable.
3. Revs - Who really knows? But as long as they aren't gouged on rent, they also are in a positon to be profitable.
4. Wiz - Same as Revs.
5. Rapids - Have a favorable stadium deal and with continued growth should be profitable.
6. Fire - In 2004, when they move back to Soldier Field under better terms, same as Rapids
7. San Jose - I know nothing about their stadium deal, but if they draw close to their average over the last 5 games of the season next year, they should be on the path to profitability.
8. Dallas - Again, I don't know their stadium deal, but it looks like there still is some momentum for a new stadium there, which will put them on the path to profitability.
9. DC - They pay approx. $60K per match. There are two ways for DC to be profitable. 1. Sell out RFK on a consistent basis. 2. Move to a smaller stadium with more control over the revenue they generate. At this point, #1 is more likely
10. Metro. - They pay approx. $100K for Giants Stadium. They probably are the furthest from profitability at this point, simply because of the massive cost of renting GS. It's be belief they are in the same boat as DC. Either sell out the stadium or move. Sadly, neither option looks likely.

2. New investors/operators, either through existing franchise sales or expansion. Through the rumor mill, we've heard of a numer of possible investors, but the most likely are SVSG (because of their involvement with the Quakes) and Express Sports in OKC.

3. Continued growth in attendence. If the league continues to add approx. 1,000 fans per year to the average attendence, that puts us into a strong position going into the 2006 "pass or play" year. In 2006, we would be pusing 20K per game.

4. Television must be revenue-neutral. Right now, TV is a time buy. If we get to the point where TV is not a time buy, but ESPN (or whomever) keeps ad revenue, then we are definitely in good shape.

5. Sponsors. Quietly, the league and the teams are adding sponsors. While sponsors have left the league, it seems the teams are adding sponsors every year. At least in DC (where I see most of the games) I've noticed lots of new signs over the past two years.

If we can do all that, MLS will survive into the forseeable future.

Sachin

 

How could NE and KC be gouged on rent?

 

Good question. Remember, the teams are different entities than the companies that manage the stadia. It's all money going from one pocket to the other if you Kraft or Hunt, but it's still money leaving the Revs and going to another entitiy. Still a debit on the books.

Don't look at it from the owner's perspective, look at it from the team's perspective.

Sachin

 

OH, please. That is silly. The same logic could be applied to Columbus and LA as well.

 

Adding 1,000 fans a season in New Jersey is going to be close to impossible until they get a new stadium. You can't count on more people coming to see a bad product in a bad environment.

 

True... good point. But we already know the Crew are close to break even and the stadium is well on its way, and has an operating profit already. The revenue model for LA is different, and I suspect the Galaxy make up only a small portion of the revenue.

Try to think of it this way. Imagine that the team is a stand-alone business entitiy, and the stadium is another. The team has to pay the stadium for the right to use the facilities. I'm willing to bet that if you open up the Revs or the Wiz books, they have a line item marked "Stadium Rental", just the same way DC or Chicago do.

Take this one step further. Let's say, for the sake of arguement, someone comes forward to buy the Crew, but NOT Crew Stadium. Crew Stadium would charge the new owner rent, probably at the same rate as they were charging MLS/HSG.

Why does the stadium charge the team rent? Because that's good business for the team owner. He can write off the losses the team incurs against the profits the stadium achieves. The point I was trying to make is that teams must be profitable, as well as the stadia they play in. Stadia won't be profitable on the basis of soccer matches alone, which is why they have concerts, football games, lacrosse, etc.

If this is too hard for you, let me know. I'll type slower.

I'm not talking about each team, but the league as a whole. If LA has anywhere near the same bump the Crew got with their new stadium, then they should be averaging around 22K, which is 4K-5K more than they averaged this season. Chicago should be about the same as this past season and DC should rebound slightly, let's say about 2,000 people per game. Let's say San Jose ups their average to 12K and KC to 13K and Dallas stays essentially flat. I'm not saying all this will happen, but it's entirely possible and very probable.

Sachin

Sachin

 

Now you're being a jerk. For the purposes of this discussion, which is abouit MLS viability, we do not need to concern ourselves with how much rent the owner charges his own team to play in his own stadium.

By your silly logic, it makes no difference if more stadia are built because the owner of the stadium will capture all the benefits instead of the club. The actual value of the club will be remain the same. Nevermind that they'll be the same entity because they could be split up at some future point.

If you could possibly think about this for a second (I imagine you may be typing to fast for yourself, actually), our concern is MLS viabliity. The league is not going to die because Kraft's Revs are "gouged on rent" by Kraft's stadium.

 

Come 2006. kiss your ass good bye. America "USA" and soccer don,t mix too good. We hate soccer for no good reason,it is in our system. Look at Boreball playoffs,they pack him in like they give a free car with each ticket, and our playoffs we can,t get any network to show case our league. I give MLS till 2006.....

 

Is anybody sure that Hunt owns the stadium in KC?

http://www.chiefszone.com/arrowhead/

 

Well a couple of new teams would be nice! I lost my team but if another city gets one I will be happy. We had contraction while the other leagues didn't!!!!
I think things will be a lot better for the image of MLS if 2 new teams come about; and with the completion of the LA stadium. We have to try and win some gains in the media also. Their ignorence helps slow the growth I think!

 

What are you talking about????? The stadium rent is crucial for the longterm viability of the teams. How on earth can the Metrostars make a profit if they pay 100K for each game?????????

That is the point. It is another crucial expense when considering the viability of the league.

Now for your point about the owner v. team. What is important is whether or not the teams themselves make a profit. If Crew Stadium has other events...those go directly to Hunts pocket. But there are other expenses. How much does it cost to open up the stadium, and to run it? Isn't that an expense?

 

It's better if he doesn't, when he has -total control over the dates, and all revenue inside the stadium up to some amount.

See, stadiums are seldom owned by the franchise owner because it's a taxable asset. It's more profitable to have the government (City, County, Development Corp. or stadium authority or whatever) own it, and you pay miniscule rent through a contracted relationship.

Take the Baseball Park in Arlington TX. Hicks doesn't own it, he pays 3 million a year in rent to the City, and they split maintenance somehow. So in the first 12 hours of opening day, he makes a year's worth of rent, and pockets the rest over 161.5 games. He gets a tax rebate on the City sales tax, and the property itself is not his, so it's not taxable. But he controls every revuenue stream in it related to baseball.

That's why public and private money are the rule in stadiums. The public equity goes in in tax-exempt bonds for construction, and get paid back by using 2 percent of stadium revenue. The other 98 percent go to the guy who owns the management contract. Invesco's the same way. Gillette is the same way (I assume, don't know if it's party municipal but I expect it is).