IMHO, MLS can be profitable at average attendance of 16,675. Here is why: Revenues: 16,675 x $20 average ticket x 15 games = $5,002,500 Costs: $1,750,000 salary cap, $1,000,000 league overhead, $1,500,000 in stadium costs ($100,000 per game) and $750,000 in misc. expenses Profit of $2,500. Teams with their own stadiums could break even at 14,000 (assuming stadium costs of $700,000). This analysis ignores all other sources of income. What do you think?
considering you are forgetting that some teams already have a solid chunk of the in stadium revenue... and they don't make money... you're off
Many have tried. There is no magic attendance number. It's dollars in versus dollars out, and, try as we may, our estimates cannot help us reach the conclusion that any particular number is the "magic" number.
In the past, yes, in huge numbers they did. I believe now they that the owners follow the rules as close to the letter as they can. I think it is your misc expenses that is way way off. For example, local TV time buys are not cheap. No way to say for sure though so your guess is as good as anyones. Andy
The salary cap you included doesn't include benefits or payroll taxes (e.g., unemployment, social security, medicare), so it is too low. While you've identified some major cost areas, the miscellaneous category includes a lot of things and if you break it out, it is likely too low. Consider travel-related expenses for away games, the costs of spring training, the salary, benefits, and payroll taxes for each team's management and sales staff (this includes the GM, sales staff, and coaches), the office rent, insurance, advertising expenses, production costs for broadcasts in some markets.
Medical Insurance and all associated costs with physical injuries I would guess is roughly equal to a teams salary cap. Doctors, therapists, massage therpaists, operations, rehab, medical accessories (crutches, etc..) not to mention the insurance payments is a huge amount of money.
Consider that $133,875 of your misc. fund will be spent on payroll taxes alone (and just for players). Most head coaches make around $150-$200k plus 2 assistants. (Bradley arguably more than Andrulis or Nicol) Hell, Wrongen made $200k a year in DC. So, lets say, total coaches = $300k + payroll tax on that ($23k). You're at $450k already and you haven't traveled anywhere or paid a front office person. Of course, your revenue assumption doesn't include any advertising revenue, which is significant. Read the Rose Bowl - Galaxy agreement for some more insight on the costs vs. revenues in most stadiums. http://www.ci.pasadena.ca.us/councilagendas/2001agendas/feb_05_01/5a2.pdf
Thanks for the link. This document (and the included financials) show how necessary soccer-specific stadiums are.
This is a nice post - and a pretty common sense way to refute the notions that MLS has lost 50, 100 or 500 million bucks since inception. Personally, I don't think you are too far off - but let's, if we can, consider some other source of revenues and costs. Cost side: Coaches Front office (okay paid for $750K) Travel Pre-season expenses w/ no revenues ESPN time buys local TV & radio time buys Insurance (I'll bet this is a fairly large figure) Doctors Fringe bennies Marketing (perhaps paid for by MLS HQ) Revenue side: Corporate sponsorships of the league
Damn it all - hit the return when I heard the boss come by. Revenue: League sponsorships Team sponsorships (I think the average must be $1,000,000 by now) Concessions Parking MLS Merchandise MLS Shootout
So, what is the revenue vs expenses on the time buy? Does it make money or is it a way to get the sponsors on board? It seems to me I heard that in an early year MLS got $5 million for TV
Just want to expand the list above. Revenues: 1.) Corporate League Sponsors (Pepsi, Bud, Honda, yahoo, etc.) - this is a large number 2.) Corporate League Partners (ADT, Panasonic, etc.) 3.) Team sponsorships (I think the average must be $1,000,000 by now) - YahooEspanol/SanJose 4.) Team uniform/shoe sponsors + MLS/Puma soccerball 5.) Transfer fees - Howard to ManchesterU should bring in a more than $1 million 6.) Concessions 7.) Parking 8.) MLS Merchandise - MLSGear should also bring in a few $100Ks 9.) MLS Shootout - MLS probably gets $24.50 (50% of the $49) per subscriber 10.) Stadium advertising - (close to $500,000 per year for LA at RoseBowl (see link above)) 11.) Stadium naming rights for SSS - huge for LA 12.) Copyrights to MLS games (which could be very lucrative in the future) 13.) MLS publications http://www.mlsnet.com/special/publications/index.html 14.) MLS and team credit cards (from MBNA) 15.) Website and newsletter advertising Again, I believe that with average attendance of 16,675, MLS can break even. I know there are many team and league expenses, but there are also many revenue streams (15 listed above but am sure that I missed many others).
The very first deal was for $5 million a year if they achieved certain ratings points. They never got close and I remember Sonny Kraft in a meeting that was mentioned in article saying that the league never even saw 6 figures from the original deal. Andy