350 Million Dlrs in 9 years????

Re: 350 Million Dlrs on 9 years????

I'm not sure I follow you. Do you mean MLS has lost 350 million dollars over the past 9 years? If thats the case, that ain't bad.

Delta Airlines lost 646 million dollars in the 3rd quarter of this year alone.

Granted, MLS isn't going to bring in the money that one of the world's largest airlines does, but still, when you start a business you expect to loose money for awhile.

 

Re: 350 Million Dlrs on 9 years????

Not to mention that some of the teams are slowly starting to make money. Look at teams like the LA Galaxy who are now one of the few teams starting to be in the black as well as many other teams who are leaving those giant football stadiums and saving money (not to mention also making money) in their SSSs.

 

Re: 350 Million Dlrs on 9 years????

There have been 98 team seasons, so that averages out to $3.5M per team per year.

That number is not so unmanageable or shocking.

 

Re: 350 Million Dlrs on 9 years????

I agree. The NHL would kill for that number. As would many MLB and NBA teams. With the exception of the NFL, i've read most teams in the other leagues lose money. I just read an article where the NJ Nets lost 20 million last year and the NJ Devils lost 30 million. It makes MLS seem to be in really good shape. I dont think most owners of sporting franchises really buy into them with the idea of making a profit. Most are billionaires who just look at it as a really cool toy to have.

 

Re: 350 Million Dlrs on 9 years????

When you hear about major sports teams losing money it's basically a lie. Most MLB teams 'lose money' but their owners make millions through ancillary means. One example I vaguely remember was a baseball owner who also owned some huge bank. He used his bank to get loans to fund a new stadium and while the team was losing $10 Million a year, the bank was making $50 Million a year on interest. It's like how HDC makes Phil a lot of cash for other events, even if the Galaxy isn't super profitable.

 

Re: 350 Million Dlrs on 9 years????

and I hope we all keep in persepective that MLS doesn't owe any bank(s) 350 mill as far as I know. Investors are wealthy and have eaten the losses.

My guesses where some of the losses have gone
1. Stadium rent
2. SI's in the early years
3. Marketing, now cut back
4. Maybe TV time buys

plus some of this expense has probably been covered off the books by SUM World Cup profits, tax write-offs for NFL teams, etc.


Where are we now? Most recent number was a loss of $15 million league wide last year. But prospective owners were told to expect $20 million in losses over 3 years (believe that's not including the expansion/ownership fee). Maybe that's market specific with C'bus and LA losing little to nothing and other markets at various levels. That puts the current annual loss range somewhere between 15-60 million. Adu has been profitable. Adidas is probably a boost. Expansion has helped. So things are looking pretty good, especially with all the SSS's at various stages of development (I will foolishly continue to believe in Harrison and almost believe in Anacostia). Beasley & Convey brought in some good return this year too. I think some of the extra revenue will be funnelled to extra spending (small cap bump, more dev players) and maybe to cover Nike stepping back from p40 (not sure what their contribution there has been recently).

 

Re: 350 Million Dlrs on 9 years????

This could not be helped. All the dealers that MLS hired had to be let go because they decided to abandon the idea of combining MLS with Indian Gambling. 350 million was probably too many anyway.

 

Re: 350 Million Dlrs on 9 years????

Who gave that figure? Come on, until anyone can look at the books, this is just a number. Yeah, MLS lost money, but I doubt anybody really knows other than the owners.

 

Re: 350 Million Dlrs on 9 years????

The losses have slowed considerably since the $250 million figure Sunil brought out in court several years ago. Even if you think MLS was making its books look bad in court for legal reasons, most reports suggest that the bottom line is getting better. The Adidas deal, expansion and talk of a reserve-team system are all tangible signs that the league and its sponsors are quite confident in their future.

Of course, some people thought MLS had already lost $350M two years ago. Sunil said the league had lost $250M through five years, so NATURALLY (note sarcasm), they were losing at a fixed rate of $50M a year that wouldn't change even though the league no longer had start-up costs to worry about.

Answering the question of what the league should do is quite simple -- build or control its venues.

 

Re: 350 Million Dlrs on 9 years????

I have to agree with most of this post. I believe the 350 million number. The key to making money seems to be controlling your own stadium. Deals MLS made with the Rose Bowl and Cottonbowl for instance involved paying rent for the stadium and not getting full revenue from other sources such as concessions and parking.

At some point, ESPN will promote soccer Saturday. Unfortunately MLS is not a high priority on that network. I am not sure if MLS sees any revenue from the TV deal.

 

Re: 350 Million Dlrs on 9 years????

Well said. In addition you need to realize they've been starting something from scratch, something big. Any and all businesses need startup capital. When you have hundreds of employees from start-up, this will require a lot of cash.

 

Re: 350 Million Dlrs on 9 years????

What makes you think Nike is leaving P-40? Have they said this? I'd assume with the Addidas investment they'd try to spend some more on P-40 to keep their hands in the game. Since P-40 is mostly done through US Soccer, and Nike is their big funder, I don't think Nike is going away.

 

Re: 350 Million Dlrs on 9 years????

This is true about all sports - and the root of most labor disputes that involve in lockouts and/or strikes.

When MLS pays "rent" for the Wizards to use Arrowhead or the Revs to use Gillette - some of that "rent" money is going to Lamar Hunt and Robert Kraft.

Many of MLS's expenses this year for CD Chivas will be paid to AEG.

MLS may be "losing" money, that doesn't mean that the investors of MLS are shelling out big bucks. The primary reason Horowitz stated in bailing in Miami wasn't the losses in Miami, but his share of losses leaguewide - not limited to the three league owned teams at the time.

A large portion of the $350M figure was startup cost, and a not insignificant portion is money being moved from one pocket to another.

Another factor to consider is the value of an MLS franchise. Is DC United worth $10M, how about San Jose? At some point, the value of the MLS franchises will actually grow each year - if they're not already - offsetting operational losses. If a franchise spends $1M a year they don't take in, but the franchise gains $2M in value - does it really "lose" any money?

If the league has spent $350M - how much are Frisco, Crew Stadium, and the HDC worth? What about the players under contract?

MLS has been building equity.

 

Re: 350 Million Dlrs on 9 years????

I was under the impression that a large sum of start up money came from hosting the 1994 World Cup. I know that the USSF made a killing off of the event and that was the impetus to starting MLS. So in that case, the $350 million may not be inflated due to start up costs.

 

Re: 350 Million Dlrs on 9 years????

I don't think any of that money went to MLS. MLS is owned by very wealthy men/families and they use their own capital to fund the league. WC 1994 might have been the impetus to starting MLS, but it certainly hasn't funded it.

 

Re: 350 Million Dlrs on 9 years????

Maybe the league has to get away from the ESPN/ABC and go to a terrestrial network like WB or Fox that will co-promote the product.

As it is, on Saturday afternoons, MLS gets about 1 million homes on ABC even when the games are virtually a secret. With network promotion, it could conceivably do a lot better, especially because it will not do the Dallas/Columbus/Colorado 0:0 draws and instead concentrate on the NY/NJ, Chicago, DCU, Chivas and the Galaxy as its main attraction. That may not be golf or NBA but it would be much cheaper and conceivably could do as well as the arena football or hockey.

And of course, having Eddie Gaven or Danny Szetela do a cameo on "O.C" or "Gilmore Girls" wouldn't hurt the league's image either.

 

Re: 350 Million Dlrs on 9 years????

I think I've read somewhere that MLS actually has to pay to have these games on ABC and ESPN. That's why some refer to it as a soccer infomercial. Please coreect me if I'm wrong.

 

Re: 350 Million Dlrs on 9 years????

I thought Whip was talking about 350 Million Dave Dirs and describing the problem with an overweight America.

 

Re: 350 Million Dlrs on 9 years????

Dave just needs to stop weighing himself and get out of the unhappiest club in America.

 

Re: 350 Million Dlrs on 9 years????

The bottom line is that if the MLS owners did not feel "comfortable" with the losses, there wouldn't be an MLS. And. There lies the difference between WUSA and MLS. We are not privy to the books. But. The results speak for themselves.

El Chapulin Colorado

 

Re: 350 Million Dlrs on 9 years????

IIRC, the current MLS deal on ABC/ESPN is connected to the World Cup and WWC, which SUM bought the rights to.

A case of "Okay, we'll let you televise the World Cup and WWC, but as part of that you also have to broadcast MLS."

 

Re: 350 Million Dlrs on 9 years????

Exactly - and while MLS may be losing money, SUM is massively successful. They made a killing last year with the Womens World Cup, and just as much money earlier this year with the Interliga series. Both of those were cash cows.

www.sumworld.com

 

Re: 350 Million Dlrs on 9 years????

So this part of the business is keeping the league afloat. Maybe MLS will become a tax write-off to SUM.