I can't seem to find another thread on this topic so I'm posting this here along with the link for the only other thread I could find on this. https://www.bigsoccer.com/community/threads/mls-team-values.1928032/ In 2008, Forbes magazine estimated the value of the clubs in MLS. Not surprising, the LA Galaxy were far and away #1 at 100 million dollars with Toronto FC coming in second at 40 million. http://www.forbes.com/2008/09/09/mls-soccer-beckham-biz-sports-cz_kb_0909mlsvalues.html At the time, it seemed that Forbes intended to do this on a yearly basis like they do with other sports. Now while they still updated the lists for the top football clubs in the world, they've yet to revisit MLS' soccer teams. Since then, LA has gotten a lucrative television deal on the same network as the LA Lakers, and Seattle, Portland, Phili, Vancouver and Montreal have all had successful launches. In addition to this, numerous stadiums have been built, and several older teams' support has gotten even stronger, so it would be interesting to see a new estimation of MLS' team values. At the time the, then KC Wizards, were operating on just 13 mil income. They're probably doing just a bit better than that now. Unfortunately that hasn't apparently been forthcoming. It takes money and man hours to gloss over the necessary information and apparently Forbes hasn't felt it worth their while to do it again. However, six days ago, they did cover the dets on the recent sale of DC United which is the highest value an MLS team has ever been sold for. http://www.forbes.com/sites/mikeoza...res-son-values-mls-team-at-record-50-million/ So I imagine with the sale of DC United for 50 mil when they were worth 35 million in 2008 I could use a compounding formula to estimate other team's worth right now, but without other factors taken into account that would be useless, since other teams like KC would have accumulated value at a faster rate than other and alot of those factors are fairly new. Hopefully the DC sale sparks another valuation from Forbes bc I'm really interested to see how that needle has moved. I'd probably estimate that NY has moved closer to the top and Seattle and Portland are likely #2 and 3 with some combination of Phili, TO, Dallas, or RSL rounding out the next four. Older clubs overcoming their losses like SKC may be up there too. Who knows. Any finance gurus out there willing to hazard a guess?
I suspect Forbes' methodology is similar to what they now do for the NHL -- they assign a value based on four factors. Here's how Forbes describes it: Sport: Portion of franchise's value attributable to revenue shared among all teams. Market: Portion of franchise's value attributable to its city and market size. Stadium: Portion of franchise's value attributable to its stadium. Brand Management: Portion of franchise's value attributable to the management of its brand. http://www.forbes.com/lists/2010/31/hockey-valuations-10_Toronto-Maple-Leafs_312012.html Now, if you look further at the old MLS valuations, many teams are valued at 2.4 - 2.6x their Forbes' revenue projection, but I suspect there were some adjustments made for brand management (LA), market and future stadium (RBNY), etc. Under Forbes methodology big market teams are worth more. Teams that control their stadiums and can generate ancillary revenue from them are worth more. Teams with good sponsorship and merchandising are worth more. Given MLS revenue sharing is fairly limited, I suspect the sport number is reasonably close for every team. I'd guess this order: 1. LA 2. Seattle 3. RBNY 4. Toronto 5 a. Houston 5 b. Philadelphia In the next tier, I think you'd see the best performing teams in smaller markets -- Portland, Salt Lake City, Kansas City -- along with some of the big market teams with lower attendances but good sponsorships or stadium deals -- Chicago, DC United, and Dallas. FWIW.
So setting DC United as a baseline of 50 mil in that second tier, and considering that nothing else has changed in their situation since they were last valued at 35 mil; I guess we can put a median rate of increase at about 11% per season at least for DC. If it's even higher for LA under similar unchanging conditions they could be valued at close to 150 mil right now and Seattle and RBNY could be close to 70 or 80 mil. But I like they way you set that out. It makes alot of sense. I didn't even pause to take into account the market size. But then again I hadn't analyzed it that closely. Thanks for that.
I know it will cause a storm of protest, but I think MLS will get it's $100 million for NY2, which means RBNY has to be pretty close to that. I'd guess mid $80s to low $90s for RBNY with Seattle just above that. I suspect though Seattle probably has higher gate revenue, LA is worth more because its brand is more valuable and its market is much bigger. Still, if LA was $100m in 2008, $150m seems high. I'd guess more like $115 - $120m. That's the top. I suspect it drops off rather fast after RBNY, with TFC, Philly and now Houston somewhere in the $60s -- all have stadiums, good attendance, good sponsorships and decent local media in very large cities -- meaning unlike DC United they tick all the boxes. They are worth more, but probably not that much more. For the second tier, DC United included, I think the range is mid $40s to high $50s. Montreal reportedly paid $40m, so that should set the floor for most MLS teams, with Columbus probably at the bottom. Well, perhaps. The toughest to determine are New England and Chivas IMO. Both are in huge markets and should be worth a lot of money, but if they are sold I'm not sure either has a place to play -- I sure wouldn't want to rent a stadium from the Krafts. Nor am I sure the Chivas brand could transfer to a new owner. Tough to gage those two. Just guessing mind you.
I think that what he was saying is that MLS estimates RBNY's value at a bit below what they're asking for for NY2, and that they're basing their asking price off of this. Of course with the Forbes vacuum in effect it's all speculation. MLS is basically trying to set their team values on their own.
I was more thinking about his comparison to Seattle. Any value of RBNY should probably include RBA 9as I can't see MLS accepting a sale of RBNY without the rights to RBA) but obviously Century Link is going to be separate from the Sounders.
Oh, okay. Yeah that's true. With the Sounders current access to Century Link, alot depends on the involvement of Paul Allen in the ownership group. They're only equal tenants to the Seahawks so long as Paul Allen remains a part-owner. I guess alot of that depends on what you consider the owning stake. Paul Allen doesn't necessarily have to sell if Roth sells his stake. As it stands, the Sounders aren't technically tenants. But, in reality, if Allen sells along with the rest of the ownership, that's exactly what they'll become. I would assume that revenue and merchandizing would offset this as well as the fact that it would be expected that they would remain tenants if the team was ever sold and they'll still make money playing in that stadium, even if they have to pay rent. Lots of teams in MLS don't technically own their stadiums. Look at TFC, for example. But yeah, I would assume that Red Bull's value comes largely from the stadium moreso than Seattle. But I'm just guessing that that's what Triplet had in mind.
It also depends if they buy into SUM or not right? https://soccer.fakesigi.com/major_league_soccer_selling_stake_soccer_united_marketing_150.html SUM valued at around 600 million, 75% of that is 450 million still controlled by MLS LLC. Depending on the number of investors (May be more than 20 MLS LLC Imvestors) if we use 20 that is 22.5 Million per team just for SUM.
I thought teams automatically have shares in sum as soon as they become members of the league. And I think for CBA purposes, MLS don't report SUM earnings on their balance sheets. I may be wrong about that.
oh I am sure MLS does not want to report SUM revenues to the PU. Not sure if the Forbes number includes SUM valuation or not, if they do not then that means the value of each MLS LLC share (team) is worth more than what forbes says. I also do not think that you have to own SUM to own MLS LLC. So there may be some shareholders of MLS LLC that do not own SUM. (There are also MLS LLC shareholders that are not owner operators, not sure if they are allowed to own SUM).
Not to be nit picky, but the new investors didn't buy DC United for $50 million. They bought a combined 60% share of DC United from Will Chang, and based on what they paid for that 60% share, Forbes estimated the total value of DC United to be around $50 million. Also...SUM revenues are NOT reported in terms of a teams total revenues, thus don't effect the team's value. SUM is a completely different business entity. If MLS folded and shut down its doors tomorrow, SUM would still exist. What complicates things even more is how MLS teams structure their balance sheet. FC Dallas, for example, includes all revenue generated from the stadium, including non-soccer events. That is how they were one of two teams to turn a profit (LA Galaxy was the other team) back in the day when Forbes first ran numbers on such things. Colorado, on the other hand, has 5 separate entities that handle soccer operations (Jasonma can correct this as he is the resident expert on this). They have one business that controls jersey sales, memorabilia, etc. A second company strictly deals with TV rights. A different company is set up to handle events held at DSG Park. The there are the Colorado Rapids themselves, which is essentially game day revenue, sponsorship, etc. And if I'm not mistaken, there is even a 5th company that handles concessions. In other words, it is very difficult to make apples to apples comparisons of MLS teams because each is structured differently. That said, the Forbes valuations are the best guess we've ever had. Given how TV contract, both nationally and locally have improved, sponsorship has increased, more teams are in revenue controlled venues today than in 2008, attendance figures are up across the board....its hard to imagine that most MLS teams haven't experienced at least a 40% jump from the 2008 valuations, similar to what DC Untied has apparently seen.
That's an interesting bit of information. This sounds eerily similar to the LA Dodgers. Except that we know that Frank McCourt was a lousy thief.
You are probably right that they would be sold together, but in all cases I'm only speculating about the value of the operating rights for the team. That said, while I haven't speculated on the stadium bricks and mortar value, the revenue streams generated by the stadium are a factor in the valuation of the operating rights.
I think we should start a MLS business thread or business news thread for stuff like this: sponsorships, tv contracts, club values etc.
That could be a good idea to submit to the mods. I find it interesting that Forbes hasn't done a more recent evaluation on MLS considering that the business model has had even more success since 2008. Could it be lack of interest, or perhaps a lack of cooperation from MLS?
Any hardcore RSL fans here? I saw a post about an interview with the president of SKC. He appeared on a Soccer pod cast recently and spoke about club finances. It was something like in 2008 the club only had $1.8 in sponsorship dollars and now RSL has over $7 mil. That's a marked increase in a few short years. I wouldn't be surprised if other teams have seen similar boost. I bet their is increased interest in sponsorship for the Dynamo now that we have our own stadium. We seem like just another professional club now that we don't play in a college stadium.
To expand upon this, being in your own stadium gives the team the right to sell signage space, choose their own concessions vendors, etc. Revenue controlled stadiums open so many doors to new revenue streams.
My valuation for Philly is probably high. Howard the Drake posted this in the Stadium Profitability thread, which indicated the Union's revenue is about $20 million a year. http://www.philly.com/philly/news/20120719_Impoverished_Chester_to_Philly_Union__Pay_up_.html If the team values are 2.5 - 3x revenue, as many were in the first Forbes MLS valuations, the Union would be $50 - $60m, but probably not in the $60s as I posted earlier.