Reports: Charlotte to be announced as team #30 on 12/17

Discussion in 'MLS: General' started by NashSC, Dec 5, 2019.

  1. scoachd1

    scoachd1 Member+

    Jun 2, 2004
    Southern California
    You might want to consider the source or at least spend about 30 seconds doing a search (try www.statista.com) before you bet. If you look at different periods of measurement, I'm sure you can come up with different answers.

    Now the super rich have investment options we don't (well I can't really speak for you but since there are only about 600 billionaires in the US I can make an educated guess). But the Dow roughly tripled in value since 2010. In contrast the average NBA franchise went up by a factor of 5 during the same bull market run. So even if the super rich have better options, its hard to argue sports franchises have been a poor investment primarily done for vanity purposes as some have tried to paint it.

    https://www.thestreet.com/ says Robert Kraft has a net worth of $6.9 billion of which $4.1 Billion is the from the value of the Patriots. When you consider he also owns and MLS club, it is appears that his sports franchises have done a lot better than some of his other investments. If you are speaking of EU soccer owners you might have a good argument. But if you are talking of US sports owners you really don't.
     
  2. scoachd1

    scoachd1 Member+

    Jun 2, 2004
    Southern California
    How have ticket prices changed over the last 5 years. In addition to your other points, one I don't recall seeing is that the the Hunts have also went on a huge academy building spree.
     
  3. superdave

    superdave Member+

    Jul 14, 1999
    VB, VA
    Club:
    DC United
    Nat'l Team:
    United States
    @scoachd1 you misunderstood me. I wasn’t comparing asset appreciation, I was comparing annual return on investment. When Steve Ballmer spent $2B on the Clippers, that was money he couldn’t invest in something else. His annual profits from the Clips was almost certainly less than he was making wherever he had that money parked..

    Also, let me point out that your emphasis on asset appreciation just proves Andy is right and you are wrong.
     
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  4. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    This. If I buy shares of IBM from the existing shareholders, it's not "revenue" for IBM. It is revenue for the individual shareholders that sell to me, but they're also giving up their respective shares of future dividends.

    Expansion fees are revenue neutral for the league. If individual owners mis-spend their payments (a la much of the NHL in the 1990s), that's on them, but that's a different discussion altogether.
     
  5. ElJefe

    ElJefe Moderator
    Staff Member

    Feb 16, 1999
    Colorful Colorado
    Club:
    FC Dallas
    Nat'l Team:
    United States
    Probably because you're not counting your 2019 USL League One champions North Texas SC as an academy investment, but given the makeup of the lineups that NTXSC fielded in every match this past season, you should absolutely count NTXSC's founding as an academy investment.
     
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  6. Baysider

    Baysider Member+

    Jul 16, 2004
    Santa Monica
    Club:
    Los Angeles Galaxy
    Yes and no. It’s more like a company issuing new shares, which could be good or bad or neutral for the existing shareholders. As others have said, the value of ownership reflects income streams along with the “toy” value of ownership (and the capitalized value of future growth in those things). New shares dilute the income part of the value but probably not the toy value (and may even enhance it).

    The original owners created something (a league) that has value above income and they realize this value by expansion.

    I’m not arguing that expansion is a bubble, in fact I would argue against it, but it’s not, on the surface, inconsistent with a bubble.
     
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  7. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    Cash flow is not the same as profit/loss (revenue).
     
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  8. Baysider

    Baysider Member+

    Jul 16, 2004
    Santa Monica
    Club:
    Los Angeles Galaxy
    Maybe I’m not getting your point, but cash flow is the part that matters. For most businesses, operating cash flow, which tends to overlap with income, makes up most of the story. But in this business, I think that’s less so.
     
  9. POdinCowtown

    POdinCowtown Member+

    Jan 15, 2002
    Columbus
    The league should worry about Dallas because in a large and prosperous market, they can't fill their stadium. Growing revenues through adding premium seats is fine but they still have a lot of regular seats unsold.

    How do you know the Hunts are worried or not about attendance? Spending on upgrades doesn't prove either possibility.
     
  10. scoachd1

    scoachd1 Member+

    Jun 2, 2004
    Southern California
    You are somewhat right in that I believe the appreciation I posted for the stock market assumed any dividends were reinvested. But to your point, per Forbes, the average NBA threw off $115 Million in operating income over the past two years which could be used for other things like buying into MLS franchises. Now estimating free cash flow of private companies is even murkier than trying to discern operating income as unlike public companies, sports franchise owners have a vested interest (primarily their negotiations with players) to minimize earnings estimates they release to their financial ecosystem. So the disparity major US sports franchises and the stock market, is even greater than what I wrote. So unless I'm missing something, your last point above seems to instead show that Andy is even more wrong than I implied.

    Now as I wrote earlier, the results of a financial analysis really depends on the time frame used. While the past 10 years have been good for stocks, it has been exceptionally good for US sports franchises. But as any experienced investor knows, things don't always just go up. Take Disney's investment in the Mighty Ducks. Disney as most probably know is one the highest performing stocks so its IRR for its investments were very high as even a good investment for most companies would be considered a miss for Disney. So after a very lucrative start, the returns were not as good as other potential investments so they sold. That said, Disney's sale is not exactly a good argument in support of the hypothesis that investments in US major sports franchises have been primarily been vanity plays by the people that own them.
     
  11. scoachd1

    scoachd1 Member+

    Jun 2, 2004
    Southern California
    Actually I was referring to the fact that you didn't mention their rapid expansion in academy/franchises like FC Dallas Juarez. I also don't recall you mentioning in any concrete basis how FC Dallas ticket prices have changed.
     
  12. superdave

    superdave Member+

    Jul 14, 1999
    VB, VA
    Club:
    DC United
    Nat'l Team:
    United States
    https://www.forbes.com/nba-valuations/list/#header:operatingIncome

    The 15th team in net profits made $50M, for what it's worth. The team is worth $1.4B, which is a return rate of about 3 1/2 percent.

    The Clippers made $40m. That's 2% of Balmer's investment. That sucks.
     
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  13. TWiz

    TWiz Member

    Mar 10, 2015
    Club:
    FC Dallas
    As a FCD Season Ticket Holder in Section 106 (Mid-Field) for the previous 8 years, I offer my experience.

    In 2011 when I upgraded from a 10 ticket plan (10 tickets in the same section that could be used in any combo throughout the year) to two full year STM plan I got each seat at a 40% discount over advertised (~$850 each). These were premium seats that included free parking (about 300m from the stadium), Club Lounge Access and in seat food and beverage service. In addition, I received a $20 a game food credit for each seat. Also almost every season you would receive a STM gift (Jersey, Scarf, or one year replica rings) and they had several STM only events a year. I also had the ability to trade any unused tickets for additional seats in the same section to other games at no charge. I was also given free tickets to US Open games and at least once a year for a regular season game to bring friends.

    in subsequent years (almost one benefit a year) the unique Club section menu disappeared, the in seat service disappeared, the food and beverage voucher disappeared, the ability to trade in tickets disappeared, the 40% seat discount disappeared, US Open tickets are not free (although cheap) and finally they implemented FlashSeats so you had to sell unused tickets via the app. Last year I paid $1000 for each season ticket and had almost none of the perks that the same seats afford a decade prior (except parking was still free and they had a meet the team night).

    What I have seen is actual attendance grow significantly during that period (which is likely why the perks all have gone away). It was extremely obvious back in 2010/2011 that the stadium was usually half empty. That is why it was easy for the STM to swap tickets because their was almost always seats available for any game. The only time I can recall not being to swap for more tickets in my section was the first time Beckham came to Dallas.

    During the years they were building the HOF, shortly after kick-off the stadium section by section was relatively full. I can also antidotally use my ability to sell tickets on the secondary market to make the point. Since the team swapped from the ticket sales team managing it for you and making you use FlashSeats, I have seen a general increase year to year in the ability to sell my unwanted tickets quickly and for closer to full value each year.

    What my experience has been is my ticket price going up by 15% with a lot less add-ons and secondary market demand for my seats has gone up each year as has the amount I can get for my unused tickets. Doesn’t sound like a the sky is falling in Dallas.
     
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  14. AlbertCamus

    AlbertCamus Member+

    Colorado Rapids
    Sep 2, 2005
    Colorado, USA
    Club:
    Colorado Rapids
    I can't specifically document it in the same way because I have not been consistent in my ticket packages over the years, but I sense the same trend with the Colorado Rapids. The organization used to throw tickets at the soccer community and free tickets were all over the place, now that is not the case. And for a team that stank last season, crowds really weren't that bad, and announced attendance seemed closer to actual than in the distant past.
     
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  15. footballfantatic

    Mar 27, 2008
    Ontario, California
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    The Galaxy awhile ago(~8 years ago) was selling $10 tix for groups of 10 or more not to mention all the corporate ticket handouts. Those were the days! Now that is impossible to find. I remember a few friends always having a few free tix from their company.
     
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  16. scoachd1

    scoachd1 Member+

    Jun 2, 2004
    Southern California
    in 1975 Paul Snyder the owner of the Buffalo Braves had a deal to sell the team for $6.1M, In Dec 1975, the Dow was at 852. Well Donald Sterling bought the Clippers in 81 for $12.5 million. In Dec 81, the DOW was at 973. In between John Y Brown (The Ray Kroc of Kentucky fried Chicken) flipped the team to get ownership of the Boston Celtics. Seems the Franchise has done quite well for those who owned it. Now will it work out as well for Steve Ballmer as the previous owners who knows. BTW, I believe the yield for S&P 500 is under 2%. Why don't you just admit you were wrong instead of continuing to prove beyond a doubt to everyone you have no clue about what you are writing.
     
  17. scoachd1

    scoachd1 Member+

    Jun 2, 2004
    Southern California
    As interesting note, I have gone to see games in both Dallas and Colorado with free tickets in the past. I can also attest that Galaxy tickets are a lot higher than they used to be. If I recall correctly, I could get a 4 pack, with 4 free burgers and and 4 free drinks for something like $25 at Home Depot (but don't hold me to this price as my memory was never any good). Finally my wife was friends with the daughter of one of the former owners of the Clippers franchise.
     
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  18. superdave

    superdave Member+

    Jul 14, 1999
    VB, VA
    Club:
    DC United
    Nat'l Team:
    United States
    Ok, ok, I concede the point. Andy was right and you were wrong.
     
  19. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    There is a difference between making a lot of money owning a sports team over time due to appreciation of value, and buying a sports team with the intent to make a lot of money over time due to appreciation of value.

    I would contend the large majority of people buying sports teams aren't doing it for financial reasons.
     
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  20. Matt Hall

    Matt Hall Member+

    Sep 26, 2012
    Club:
    Philadelphia Union
    I don't have a good feel for what the owners are looking for - on the one hand they're already rich, but on the other hand they sure do seem interested in cost control and expansion, even in the established leagues.

    Re: the debate here, I think I'm missing a nuance, because it seems like both sides are making good points. It's been profitable to be an owner for both cash flow and appreciation reasons. This is the same story as outside investments, where earnings are up but multiples are up as well.
     
  21. CMeszt

    CMeszt Member+

    Farewell Sweet Prince
    Jan 9, 2004
    Gentrification's Apex.
    Club:
    Philadelphia Union
    It was less than seven years ago that Dave Checketts sold his remaining shares in RSL due to his inability to sustain the losses the team was taking on. I suspect something similar was going on in Chicago/Bridgeview until last fall.

    Even with the skyrocketing valuations, cost containment remains important.
     
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  22. ElJefe

    ElJefe Moderator
    Staff Member

    Feb 16, 1999
    Colorful Colorado
    Club:
    FC Dallas
    Nat'l Team:
    United States
    Those youth teams further afield in places like Juarez are actually part of FC Dallas Youth, FCD's pay-to-play arm. AFAIK, the FCD Academy is only in Frisco.

    As far as ticket prices are concerned, I don't have any concrete data and I haven't been a season ticket holder since 2015 and I haven't seen an FCD match at Toyota Stadium since 2016, but I have seen complaining from my fellow FCD fans a couple of times in the past few offseasons about rising ticket prices.
     
  23. ElJefe

    ElJefe Moderator
    Staff Member

    Feb 16, 1999
    Colorful Colorado
    Club:
    FC Dallas
    Nat'l Team:
    United States
    #373 ElJefe, Jan 14, 2020
    Last edited: Jan 14, 2020
    Actually, the historical average return of the S&P 500 since 1927 is 8.18% per year. It's a big reason why folks are often advised to invest their long-term money into S&P 500 index funds, as opposed to managed mutual funds: Good returns with low management fees.
     
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  24. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    Right. Ken Horowitz was fine covering the annual red in of the Miami Fusion. It was his share of the league losses (including the three league owned teams) that was bankrupting him.
     
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  25. CMeszt

    CMeszt Member+

    Farewell Sweet Prince
    Jan 9, 2004
    Gentrification's Apex.
    Club:
    Philadelphia Union
    2005 Expansion in hindsight:

    One team contracted.
    One team whose owner had to bow out due to lack of funds.
    The whole Cleveland bid that never happened.

    It's a good thing the league has done a lot of other things right in the interim.
     
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