Is $10 mil expansion fee a bargain?

Yes. That is why checketts was quick to throw down that nonrefundable 1 million dollars. I think you will start to see more of this.

 

If you would like a long answer to this question just send me a nonrefundable check for $500.. I'll post details later.

 

I think $10 mil is definitely a steal. But that's just me. I think you'll find some hidden costs in the requirement (except for certain cities) of a SSS.

 

Good point. I think the business savy side of professional sports will start to get interested in soccer as the teams get into the black. As more investor groups can make money on professional soccer, more will want to. This will also bring more creative marketing and other positives to the league.

 

I agree Bonji, but I have wondered why teams didnt see the opportunity earlier. Ten million is chump change to a lot of these investors. Even an MLS team in a poor situation (e.g. the Metro's or DC) will only cost the investor 5 million in losses over the course of the year (which is also being subsidized by the other owners). I think the main reason investors held off for a while is the lack of ability to turn a profit due to the Single Entity structure. It's been talked about millions of times before, but owners couldnt make cash year to year b/c they had to pay for the other poor teams.

To answer pc4th's original question: based on the market's potential, the value of a franchise in this league could potentialy be in the NBA range in 15-20 years. So it is definetly a steal.

 

Look at what MLB and NBA teams sold for 20 years ago. You have to start somewhere. Part of the appeal of owning a sports team is the potential for it to skyrocket in value whether or not it shown an operating profit. Pricing these early MLS teams too high could damage that potential, and scare potential investors away.

MLS isn't using these expansion fees to make money anyway. Not yet. The fees are just there to prove that a potential investor is serious.

 

Phoenix Suns bought by a group led by Jerry Colangelo for $44 million dollars (after a drug scandel and with a poor arena situation) in the late 80's ('87?)and he sold the team a few weeks ago for $401 million. That I'm sure looks like a good move to most. Also allowed him to bring in the Diamondbacks (he headed a group for that team too).

But lets be real, there is little chance that soccer will grow THAT much. But if you put down $10 million for a team, they stay near the black and you sell them ten years later for $22 million, you probably did alright with your money, and had more fun then many other investments.

 

The NFL expansion fee is around $900 million. Is this true?

 

I wish I was weathy enough to consider a $10 million fee and the absorbed losses incurred over a number of years to be a bargain.