I copied this from elsewhere on these boards: First, my numbers may be so far off as to not be funny. If Helmet or Jay or any of the SSV guys who know the real numbers will respond, let me know if this is a fantasy. Garber above says "$50 million has been invested." Invested in a euphamism for 'spent'. He's saying they've spent $50 million on the Quakes in 10 years. He's not saying what the flip side is: what was the income? How about this for some 'ballpark' figures: I don't know the Quakes average attendence for 10 years but say it was 13,000. I don't know the average ticket price but say it was $20. That's ticket revenue of: 13,000 tickets per game, times $20 per ticket, times 16 games per year, times 10 years = $41,600,000 Well, that's a loss of $8,400,000 over 10 years. $840,000 per year. Well, not the disaster as advertised above, is it? Now let's look at sponsorship. A modest amount of local sponsorship per year should have been, what? $500,000 a year? What about league-wide sponsorship? Adidas is kicking in something close to $15 million a year for the league over the next 10 years. What's each franchise's share of that? Estimate it down to $1 million a year. I know these numbers aren't right, but are they even in the ballpark? It looks like $50 million spent, and damn close to $50 million taken in. 40 million + in ticket sales 5 million or so in local sponsorship Share of league-wide sponsorship Additional 1 million a year for the next 10 from Adidas Can someone who's familiar with the real numbers educate us?
If San Jose has lost $20 million the last few years, what do you think the Metros have lost in that time? I would say 5 or 6 times that.
The Metros are getting their own stadium. MLS would have happily eaten the SJ investment if the same were true there. You're assuming highest ticket price, no? I doubt that was the case in reality.
If he meant to say they "lost" $20 million over the past few years, he would have said they "lost" $20 million, not "invested" $20 million. I invested $2 on a bagel this morning. But I got no offsetting revenues in return.
Well, there is also the small issue that the MetroStars are in the #1 media market in the nation, a market that has its own set of rules.
They wouldn't be moving if AEG was not losing money. In order to succeed in this league you have to have a SS Stadium. That is the only way this business model works and the city of SJ decided not to step up. The Houston mayor and city council decided to do the same thing to Bud Adams and Bud Adams decided to move the Houston Oilers and turn them into the Tennessee Titans. Adams made a lot more money moving the team and Houston got an owner (Bob McNair)who is loved by the town even though the team is terrible.
Bajoro, I don't know about the exact numbers but that's the kind of back of the napkin calculation I would have done (and have done in various threads to try to guess at various things, like Spartan Shops revenue, etc.). I've noticed too that they've been careful to say $20 million "invested". My guess is that revenue offset that $20 million a good bit, maybe somewhere between half of it to nearly all of it. And for any I/O that's invested significantly in an SSS, they're much more heavily "invested" than AEG would have been in San Jose. No, not necessarily. They could possibly be breaking even or losing a much smaller amount than $7 million a year (or whatever you come out with if you talk purely about expense w/o considering revenue). But that would likely still be sufficient reason to move if you are AEG and your business plan involves making big bucks via your big entertainment business. After all, they need to find ways to bankroll the soccer franchises that they are really investing heavily in, like NY.
Yes, they lost millions. No, AEG did not lose $20 million in its time here. They use words like "invested" so that it will be parsed as "lost" by people who don't put much thought into it. The Quakes lost millions, but not in any way that makes them stand out from other non-stadium-having teams.
The question should be whether AEG lost millions. Not on your life. Not with the staff of accountants they've got. I'd give you any money that they got a refund from the IRS. Billionaires like Phil Anshitz do not lose money.
My best guess is that they were in the zone where if AEG was really interested in putting in the time and effort, they could have at least broken even by shoring up three things: - The deal with Ye Olde Spartan Shoppes - Continuing the steady growth in attendance - Marketing of sponsorships/ad revenues But 'breaking even' is a relative term for a corporation that expects big returns on its investment.
I think this is spot on. It is my impression this if AEG were willing to put more effort into the this market -like they are with the Metrostars- they could have made it work. The Earthquakes organization 2005 we able to create an excellent soccer team with very little resources, just compare the salaries of the starting line-ups of SJE vs. the LA Galaxy or the MetroStars. Look at Donovan's salary when he played for SJ vs. LA. Look at how many 'big name players' were on the MetroStars roster and still that team sucked. I'd bet if someone looked at the amount 'invested' in the MetroStars it would be more, and the loses would be much higher. If AEG wanted to leave that make the could have put out a bunch of press releases making that make look bad. What has been the MetroStars attendence? How much has AEG 'invested' in that market? AEG isn't interested in soccer, they are in the real-estate business. And because of it they were will have a team playing in Huston's 100 degree heat at a high school stadium. I'm sure that will make for compelling soccer and make MLS look professional. I'm done with MLS and will make every effor to make sure AEG doesn't see another penny of mine. Goodbye MLS, and F#$% off AEG. BTW and the same for Spartan Shops and Ron Gonzolas.
UrawaRed gets pubbed, he gets it! Anshitz has amazing creative accountants and doesn't lose a nickel. Guaranteed!
There is a real disconnect here--I keep reading about AEG being a well-run business operation (albeit without any concern for soccer) and about Phil being a shrewd guy...but on the other hand, if their objective all along was to sell the team, why overstate the losses? Who's going to want to buy a team that's a major black money pit? Given the weather and basic demographics, the bay area is one of the top (if not THE top) market for professional soccer. I'm still puzzled that AEG didn't give it a better shot. Why not at least negotiate a better deal with Spartan Shops, who had everything to lose? The untapped potential here is huge. AEG's actions seem based on emotion rather than good business practice.
AEG's actions are simple. No one would build them a SSS to manage and reap the benefits from (Concerts, etc.). Owning the Earthquakes was a risk they took to try and have the city build them a facility to manage/operate and gain revenues from. The Earthquakes were their "In" to obtain that goal. They were willing to sell the team, but part of the sale would be to manage the SSS for the new owners. It really is that simple.
Do we know this for a fact? I ask because the last time I mentioned it (AEG insisting on control of the SSS as a term of a sale) I was told it was a rumor. If it is true, it still reflects a lack of business acumen. Anyone who spent an hour researching the market here would know that such a deal would not fly, at least not in the metropolitan SJ area where land is scarce and expensive and there are more than a handful of people willing to operate a stadium that someone else buys for them.
How much money did they "lose" on LA? Millions upon millions upon millions...if you do the math the way they do.
I have been told this by more than one person. It may be a rumor with one root source that several people told me after hearing it from the same place. I don't think that's the case though. But how are we ever going to know? *sigh*
AEG is now going to take their entity (Earthquakes), move them to Houston and play the same SSS game down there. Watch!
So, El Jefe, What kind of political obstacles do they have down there to building a stadium? Is a public vote needed for any funding for a sports stadium? My guess is that Houston will put up the land and AEG will foot all the construction costs, something they would not do here, (but again, Houston is the 4th largest market in the country).
Of course they are. Why wouldn't they? In the world of politics, sports, big business and real estate the difference between a Tri State area and Cali compared to almost everywhere else is night and day. I think AEG is a better concert market for AEG from my readings. If true, it makes sense. In the fake mock up 80 million dollar project did you notice the land figure? 30 mill if you haven't seen it. In Houston there are areas where the land would be given for free and even Fed development money could be asked for if I am not mistaken, for building the infrastructure necessary for the stadium. Not the stadium, but the roads, parking lots, etc. Just easier to do business there. I said it elsewhere, two of the biggest institutions sports wise here in NY (the Yankess and NY Giants) can't get money for new stadiums. Cali has many of the same issues if I am not mistaken. Just real hard to do when you mix all of th issues I did in my second statement. AEG will get this one done. Just start being more bitter now and accept it, so it hurts less later. Yeah, it F'N sucks, but it will more than likely happen.