Profitability?

I seem to recall a 15k average as the break even, with two cavaots (sp?)

- Controlling essentially all the revenue in Frisco brings the number down.
- Salary cap and roster size have expanded a little.
- That estimate is a few years old, but ticket prices have stayed pretty close to par for that time.

So, I think 15k is just barely in the park anymore, I'm guessing an avg of 16 to 17 is more like it now. Cotton Bowl rent was never that much of an issue, it was the cut the city took that hurt them.

 

I think FCD turns a profit even @ 12-14k. Hopefully they will be well above that. Controlling the revenue streams plus the 1.5mil a year for naming rights and I dont see how they couldnt be in the black. Were not talking huge profits but they are profits none the less. As for the league losing money itself, I bet they are in better shape than most think. With the Adidas deal, increased advertising dollars, and some good size transfers recently (Howard, Beasley) they should be in decent financial shape. But as we all know a SSS is the key to profitability for each franchise.

 

If I remember correctly, it is something like $15,000 just to open the gates at the Cotton Bowl, and there were NO revenue streams for the team other than the ticket sales (parking, concessions, merchandise vendors - all those proceeds went to Fair Park)

The number of tickets for ULHOWA (before the RTFH [road trip from he11]) was set at 16K minimum. (Capacity 21,183)

 

I think the Crew have been breaking even with an average attendance in the 16s. And that is without the major stadium sponsor.

 

One interesting thing from the radio show tonight was GE kinda backing off the importance of ticket sales in the grand scheme of things. It sounds like the PHP deal gives them a bit more wiggle room on that aspect of revenue.

 

But important enough that you can't afford to have a half-empty stadium, imo. Corporate revenue tends to dry up rather quickly if butts aren't in seats. The naming rights deal is a twenty year deal (perhaps with outs for either party after a certain amount of years under certain conditions), and it definitely helps pay for the stadium debt ($15-17M + cost overruns of the $65M was paid for by HSG). But every other sponsorship deal is one to three years, and those sponsors expect certain attendance numbers.

One very big advantage the PHP has is that it also has 17 youth fields which will be in use throughout the year, regardless of the team draw. The concerts will also help.

Ultimately, though, I think if you ask Lamar Hunt whether he thinks ticket sales are important in the grand scheme of things or not, he will you give you a resounding yes. He's probably one of the biggest advocates of the importance of ticket sales and high season ticket bases in all of sports.

His quote today in the FWST:
"It has potential to be [profitable], but we're going to have to grow our season ticket sales quite a bit," Hunt said. "But next year we'll have a full schedule of events and theoretically a full schedule of concerts, which are going to be important to the facility. That's not so much important to the team, but to the investment that's been made."

Clearly, Lamar expects certain attendance numbers to be hit, and definitely needs certain overall revenue numbers to be hit for his investment to turn profitable. The naming rights deal is a step in the right direction. But I would say that ticket sales is still pretty darn important in the grand scheme of things, naming rights deal notwithstanding.

 

Well said.

However, I'm not saying that now they suddenly don't give a crap if nobody shows up.

At the beginning of the year it was "10k season tickets, 15k a game or we're DOOOOOMED". I'm just noting the surprise of hearing GE's much more relaxed take on that.

It sounds like they are falling short of where they wanted to be on ticket sales, but so many other positives are happening that they're pushing that toward more of a goal for next year and beyond. Also, GE seemed to indicate that they would be very aggressive in getting major concert acts to play at PHP (telling quote: "so people don't have to drive alllll the way to Grand Prairie or downtown"--definitely the "Frisco method" in play here, a la Tornado and RoughRiders--have we discussed that much? NORTH OF 635 is their clearly defined narrowcasted market...that's a whole 'nother story) which opens up another potentially lucrative revenue source...

 

This was the biggest lesson they learned from the Southlake fiasco. Even bigger than the field turf lesson.

 

They were both huge lessons. In that sense, Southlake was good - better learned there than in Hell's Kitchen. (Sorry, folks, The Oven sounds weak - let's give it a little flavor, shall we? Frankly, I don't know if that is even a good option, but let's keep going until we find something that really snaps.)

 

Out of curiosity, are ticket prices going up? That certainly happened at the HDC. And just having corporate boxes to sell can really change the cash flow. Concessions and parking can add another $5 or $10 per person to the take. My guess is that 15k will be a comfortable financial situation but the league as whole will still be losing money and so it wouldn't really be a profit the Hunts can take home with them.

 

The answer is yes and no, depending where you sit.

The low end tickets are going down to $9. Last year they were $12.

The midrange tickets are also lower in $13-16 range. Last year they were in the $15-20.

The high end tickets are way up in the $30-40 range from the $20-30 range last year.

Suites were not available before.

 

Here is the ticket price schedule as it stands now-

http://fc.dallas.mlsnet.com/MLS/fcd/load.jsp?section=tickets&content=seating#seat

I cant imagine there will a large increase going into next year. I also dont think parking will be 12.00 a car like it is at the Cotton Bowl right now.

 

Okay, let me throw some numbers at you...

MLS Salary Cap is under 2 million. From what I have read, the operating expenses of the club are 4 million a year.

Stadium Sponsorship = 1.25? million per year.
Addidas deal = 1 million (I know, it is a little more than that, but let's go with 1 million per year).

If we average 15K per game at the new stadium... and let's say the average ticket costs aroun 13 bucks (a low estimate). That means we pull in 200K per game for 15 home games.... which gives us 3 million per year in attendance revenues.

1+1+3 = 5. Now maybe I don't have the operating expense numbers right, but I think that is what I recal hearing? And those numbers don't include revenue generated by consessions, parking, youth tourneys, international games, concerts, other corporate sponsors, etc....

Given those numbers, I would guess that starting next year FCD would be way in the black if they averaged 15K per game.

There are other costs for the league itself and propping up some of the money losing teams (Metrostars), but the team itself should run a profit at 15K per game I would think.

 

Just the fact we are discussing this team turning a profit when just
3 years ago they were within an eyelash of being contracted is amazing.

 

I wouldn't have not met y'all. The mere thought of that makes me cringe!

 

Usually its the thought of meeting us that makes people cringe.

By the way- I only came aboard a game or two before you so the feeling is mutual.

 

Makes me sad to think of the folk in Miami and Tampa Bay, and possibly soon in San Jose (although it does sound like KC is getting out of the woods.)

 

To put in perspective how big that is, if that deal is worth $1.5 mil a year, at an average of $15/ticket, that would be the equivalent of more than five thousand tickets per game.

 

There's an article from one of the news threads in the last couple days citing a public document saying that the combined payroll (players + coaches + staff + FO) of an MLS club (forget which) in 2002 was $4 Million.

I'll try to track it down.

 

And here it is (not the article, but the public document it quoted):
http://www.unt.edu/cedr/mckinneystadium.pdf

From the Burn/McKinney proposal:

 

These numbers came out due to the McKinney situation. HSG is about to really turn a corner with their soccer teams. With them unloading a highly unprofitable team in KC, they now have only two teams to run. The Crew might not make a profit post-operating costs but they aren't hemorrhaging money any more. This leaves us with FCD who could realistically turn a profit next which I hope means more money for players over the years. Just think of the added exposure that FC Texas brings and things are looking great. The other thing that will help with tickets is that all FC Texas players will have tickets included in their team package. 45 teams X 15 players =
675 tickets not counting parents and coaches.

 

Yep.

Step one is getting most (all?) teams in or near the black, with full stadiums. That will translate into a better television product, and probably a better tv deal. At that point, you have something you can start to really market and work on - including expanding the salary cap, etc.

 

The player salaries are not included in the team budgets. They are paid for by the league. But each owner is responsible for annual payments to the league (based on what percentage of teams are owned by that ownership group). The annual payments (and sometimes mid-year cash calls) cover league expenses (player salaries, player benefits, transfer and acquisition costs, league staff, NYC rent, league marketing costs, league broadcasting, etc). Some of the league costs are off-set by league sponsorship deals, but the bulk of the expenses still have to be covered by the annual investor/operator league cash calls. In summary, while some people plug in $1.7M (salary cap) into the expense budget when trying to figure things out, the actual cost that should be plugged here is much higher.

After that, the local IO is responsible for all his local expenses. This means that HSG does NOT have to help cover the mess that is Metrostars. AEG has to cover all those losses (although when Dallas was league-owned, all IO's had to help cover the Burn's cost of doing business). So HSG's expenses are staffing (including coaches and non-FCD HSG positions) and all costs associated with running a business (operations, marketing, pr, advertising, technology, rent, etc). Related to the FCD/PHP enterprise, HSG also has debt payment, park maintenance, park sponsorship fullfillment (you have to ensure you provide exactly what you promise the sponsors), day of game costs (no rent, but security, ushers, cleaning, traffic, etc), etc. Specifically related to competition: coaching salaries (as mentioned above), team travel expenses, pre-season costs, etc.

While moving to PHP will save the FCD day of game rent costs, it will also aquire new expenses (expanded staff, maitenance crew, debt service, etc).

Ultimately, with the added revenue streams (parking, conscessions, suites, naming rights), FCD can very quickly start to turn a profit, even if only slight. The Galaxy turned a slight profit its first year at HDC. The Crew, though, have yet to get in the black, although they have gotten close. The difference, naming rights AND 20,000 avg. attendance in LA vs. only 14k-ish in Columbus.

 

We do not know what Biz. model HSG operates in; thus, it is very speculative to say that increased revenue will result in higher salaries for future players. We could also assume that the new revenue will go down to reduce the debt that FCD has incurred...