It looks good but apparently they haven't come up with the amount of $ MLS wants. We'll see what happens. It looks like 2006 is a more likely time table. http://newsok.com/cgi-bin/show_article?ID=1204236&TP=getsports
Well, just the fact that they are down to negotiating the franchise fee should be viewed as a good thing. I'd be shocked if MLS let this group walk away just because the number isn't high enough.
I wouldn't be surprised if the league wants to make sure that they have deep enough pockets to support a league in the red. Sure, by 2006, more teams will hopefully be in the black (Chi, Dallas, Colum, LA, Denver, maybe NY/NJ). But the league isn't quite profitable yet, hence the need for deep pocketed IOs.
Exactly. They let the Florida guy go exactly because he didn't have deep enough pockets. To me, the fact that they are quibbling about the 10mil fee is a big deal in my mind. MLS won't want to cave to this ownership group, because of their need for deep pockets, and for the perception that the 10mil fee is really negotiable. In my mind, there is no ownership group if they do not want to pay the required fee.
Spot on! Let's not forget Horowitz and the Miami debacle. A few mil for the fee, a few mil for a stadium isn't as significant as being able to make cash calls.
I think the fact that the OKC bid is going to build a new SSS should help off-set he quibbling over money. I think that makes it a more stable prospect because you don't go off and build something that you don't expect to be in for many years. Plus they'd already be starting off in financially better shape than several other teams. The thing that needs to be still kept in mind is the fact that MLS is a good bit of a risk. That's why you're not getting anyone else trying to get in. People with the deepest pockets in the world (Paul Allen, et al.) MLS isn't going to make the same mistakes again, especially with the future of the league. Personally, I think Vargas and Chivas USA is a riskier deal personally.
If the season ticket drive ever gets underway, and the results are good (6-7,000), I don't think AEG/the other MLS owners would have a problem being a minority owner.
Actually, MLS would be the majority owner anyway, as the league owns 51% of all MLS teams while each Investor/Operator owns the other 49% of his team. -G
Well... sort of. The league as a whole (i.e. the combination of all the Investor/Operators, as well as the league investors who aren't operating a team such as Alan Rothenberg, Dentsu and others) share in 51% of both the profits and the losses of each MLS team. So in a way, yes. -G
Even though they don't have 10 million dollars yet for the franchise fee, they still have an I/O group in place and an SSS in construction. I don't know about you guys....but I think that's FANTASTIC news. I don't see why this groups wouldn't be able to get 10 million dollars together in time at all within a year's timespan. Meanwhile, MLS needs to PULL THE CLEVELAND DEAL it's going nowhere fast and the I/O doesn't really seem that committed at all. Focus on Seattle, Portland, San Antonio, and Rochester instead.
Well, I wouldn't call it "quibbling". They're just acknowledging the fact that they don't have the funds YET for the franchise fee. By 2006, I highly doubt that will be a problem. Like Wallydrag said, Oklahoma has an I/O group, and a stadium in construction. That sounds way more stable to me than Chivas, who has to play in someone else's stadium.
Let's look at this from MLS's perspective for a moment: The new franchise fee - $10, $20 million or whatever - doesn't go to pay Don Garber's hair stylist. Recall that MLS HQ pays all the league's players and covers the overall debt that MLS still runs every year. MLS OKC needs to have enough cash to operate its franchise: paying staff, travel, marketing, promotional, stadium, etc. costs. But if it can't kick in some real cash to help carry MLS overall debt burden, then the OKC "investors" end up getting a free ride. Also, as much as Horowitz has been bashed in here, recall that he spent $10s of millions on MLS. Sounds like the OKC group might not be as deep-pocketed as Horowitz (just a guess). If so, that won't make it terribly attractive to MLS. Basically, OKC would end up being a substantial gamble: if the team's a hit at the gate and makes money in that it covers its internal operating costs with MLS getting its cut, that might be okay. But what if this start-up business stumbles out of the gate; the team underperforms and attendance is less than what was expected? If so, just how long would this investment group stick with it? And will AEG and HSG want to bail out a franchise that needed a discounted franchise fee just to get into MLS?
I don't believe that the OKC I/O group doesn't necessarily have deep pockets. You said it yourself that a team needs to be able to help MLS and those teams that aren't making money and that they'll probably be losing money for the first several years, not because the team's doing bad but because they got to help out the teams that aren't bringing in any money. That's why I think that they're trying to negotiate the franchise fee. They're like, "Hey, we know that we're not going to be seeing are money back in the near future, and I know that we're going to have keep putting in money year after year. Cut us a break on the franchise fee so we can pump that money in later and keep this team and leage stabalized." An I/O group isn't going to go into this kind of venture without knowing that they're going to be paying a long while and that they do need deep pockets. And also that they're going to initially lose money. It would be incredibly reckless to simply buy into an organization without knowing everything that you can about that company. Would you buy millioins of dollars worth of stock from a company that you only had an idea about but didn't do really any research on? No! You would find out everything tiny iota about that company and know what you're getting yourself into. You know the risks but you're not going to pay that kind of money unless you believe that you'll get a return on it. I'm also sure after the Horowitz deal and contraction, that MLS has stressed to this I/O group what it to be expected of them and that this isn't a flash in the pan venture. I also think the fact that you're going to spend some of your money to build a stadium would also encourage you to keep your team put for a while, at least until you made your money back on the stadium. By the way, if Rochester is going to enter the league also, they're going to get a price break somewhere also.
I read somewhere (though I don't remember exactly where) that Horowitz is still an investor in MLS... he's just not an Investor/Operator. -G
I'm not sure I buy into the idea that MLS HQ will allow the OKC I/Os in for, say, $8 million, while Chivas, Rochester and whoever else will still have to pony up $10 million. I don't think the other 3 would take to that too kindly, and MLS knows that. It may open up a big can of worms which MLS wouldn't be able to control. If OKC really wants in, I suspect they're going to hvae to come up with the cash.
Rochester isn't going to get in without some financial breaks from MLS. That's the big reason they're not a certified expansion team right now. I mean, they have the stadium already. They have the fans. What's been holding them back? Money. The cost to buy into the leage and operate in it has always been the big issue. With Chivas USA, I thought that they were getting a little bit of a price break though that might not be so. But at any rate, Chivas USA hasn't written a check to MLS yet, hell, they don't even have a city let alone a stadium to play in yet. That's where an issue should be brought to light. I say if you're building a stadium then you get a break on the entry fee just because you'll make up the difference by recieving all the money from parking, concessions, not paying rent, etc. as opposed to paying rent at an oversized stadium (Chivas USA in San Diego and Chicago), receiving only a portion of the money the stadium takes in (if at all).
The franchise fee is potentially only a small part of the overall investment in the league. And comparing Oklahoma City or Chivas USA to Rochester is apples/oranges. Rochester is currently a high-drawing, successful, profitable soccer franchise. They have been somewhat ambivalent about joining MLS because it means that they will be throwing away a business model that has been "berry berry good to them". Without MLS: +they have competed at a high level +have managed to swing their own stadium deal +have averaged five-figure crowds consistantly +they possess solid local (Syracuse) and "national" (Montreal and Charleston) rivals +possess a competitive team (even attract international team players) +make money +are big fish in a small pond (great media coverage, etc) +are competitive in Open Cup (past winners) with MLS: +lose equity in their team (become part of SEM) +lose brand identity (as they become part of MLS) +lose roster flexibility (must operate under strict salary cap, etc) +lose profits (short-term if not long-term) +become smallest market for MLS rather than healthiest in A-league Sure there is a higher potential for Rochester to rise if MLS as a whole continues to trend positively. They will instantly go from being the model franchise to being the franchise with the poorest owners. In reality, the cash flow demands of MLS could put tons of pressure on Rochester's current owners to sell. They may not have the resources to play in the bigger game. Then they would be stuck on the sidelines. And its not like they could just roll things back and start another A-league team. These are just some of the reasons why Rochester's ownership has viewed the expansions issue as a non- open-and-shut case for the Rhinos.
I've said it before and I'll say it again: The public expectations that come with the new stadium essentially force Rhinos ownership to commit to MLS, since the stadium was financed on promises of MLS soccer in the near future and it is being sold to the community on promises of MLS soccer in the near future. Rhinos ownership doesn't want to put itself in the position of having to dash those expectations. That sort of thing isn't good for business.
We have seen similar promises from the stadium group in Seattle and they are further from having an MLS team than they were before the stadium was built. The money is already promised for Paetec Park. Even the naming rights were negotiated at different rates relative to the league that they are playing in (if I remember correctly). Besides, the Rhinos don't have an MLS-capacity stadium. If the Rhinos ownership were completely at peace with the decision to move up as soon as they possibly could - 2005 for instance - why in the heck would they open the stadium knowing full well that they would have to bring construction crews right back to add capacity in just a year or two? Re-starting construction is expensive - even if you already have a second phase type plan. I know that MLS would probably let them start with the lower capacity, but why would they want to? There would surely be games that would draw larger crowds than the 15,500 or 16,500 or whatever the stadium seats with all of the temporary seating added. Plus, if they can afford to play in MLS and have sufficient cash flow to double or triple their payroll as it is expected that they would have to do - then surely they could afford the extra 1 or 2 million to raise the stadium capacity closer to its final amount (just north of 20,000). I think that the Rhinos group are very attracted to the idea of an MLS team - but I think that they have mixed emotions too. What exactly makes this team's ownership group different from Ken Horowitz? Granted the team has a better fan base, but they won't necessarily draw tons more fans than Fusion FC. Don't you think that the ownership group is aware of the similarities? I think that the Rhinos owners are more comfortable either holding out for a couple of years and/or using the leverage that their "already established and ready with our own SSS" situation to force Garber into a very advantageous package. Garber will look pretty foolish if he keeps putting expansion off. And if the other groups bidding for teams don't get on the ball in a hurry, Garber is going to be forced to ask Rochester to expedite plans to join the league (by way of a major reduction of the franchise fee or something like that). I think that is another reason why Chivas USA in the HDC is now on the frontburner. Garber realizes that the continual dance regarding where and in what facility the team will play in could force them to put off joining the league even longer. But if they play at HDC, that will take away one of the major factors in launching the team (facility will be nailed down, they can begin marketing the team in LA, etc). How many other expansion candidates would be remotely ready to join the league in 2005 or even 2006?
Let's bear this in mind about the group in OKC... besides Roger Webb saying he has one, there are no names out there (I haven't even heard rumors, and usually I at least get something; not that I'm the most connected guy, things just tend to come up). So besides how much money they have, there's some question about how serious they really are.
Actually they couldn't get Paul to build them a stadium, although he was more than willing to throw them in an NFL venue.