Sorry for posting such a large excerpt from Soccer America's MLS Confidential (Ridge Mahoney), but there's just a lot of interesting stuff said concisely enough. Mods, feel free to nuke this if you think this is inappropriate, although I'm sure Ridge and SA don't mind the plug.
What is Rochester's initial capacity? If it's equal to the stadium Dallas is playing in this year, I would find that extremely unfair. Anyone have the info?
12 or 13 thousand, depending on who you listen to. It's probably still negotiable, which is why MLS is probably taking a hard line. Not that anyone out there could actually put up an expansion fee in addition to putting together the financing for the stadium (unless there are deep pockets yet to come forward).
AAUI the Rochester project is pretty much fixed because the County, City and State all agreed to the plan and provided various components (the County donated the land, the City is providing the improvements and the State of New York is forking over most of the dough) I don't know for sure, bt I don't think these people were buying a pig in a poke here. Nobdoy said "Hey, kick in the cash and we'll let you know what we're building later" The problems with MLS and Rochester/Monroe County are well known but bear brief repeating: Rochester has a profitable A League franchise. Possibly the only professional soccer team in North America that runs consistently in the black. The owners are not in the Anschutz league financially, however, and have a real reluctance (not to say the questionable ability) to drop $30 or 40 million on an MLS team, and then lose a million or three every year thereafter. To put it another way, if YOU were them, and you had a popular, profitable A League franchise and the government was about to build you your own building which will make it even MORE profitable, would YOU kick it overboard in return for the opportunity to start losing big money in MLS? I sure wouldn't.
How confident are you in these numbers? OK, I'm an optimist, but I think the owners might break even in MLS (more or less.) The league is obviously working very hard to stanch the flow. I think it's a very reasonable estimate that the cash call might be $1M per year. And with some intelligent left pocket-right pocket accounting, I can see a team with a good lease, and averaging 15,000 per game, turning a nice profit. OK, they'll only get to keep 49% of that, but still...I just don't see losses for the teams with good leases being in the 7 figures. I just don't. Because if those teams do lose $1M, then that implies that the teams like DCU and the Metrostars lose $3-4M or worse. And given what we know about league finances, that doesn't add up to me. If the Mutes could break even with a decent not great lease (and they said they could), then a team with a good lease and better attendance is gonna make money.
This one just sticks out like a sore thumb. Besides the quiet rumblings we heard a few months back about the city of St. Paul being the driving force behind a downtown stadium, there's been next to nothing in the way of news out of the Twin Cities. Could another one of those "Secret Stadiums" that we saw materialize out of parking lot improvements in Kansas City be in the works in St. Paul???? In seriousness, I really don't get why Minnesota is on this list, they have no investor possibilities (sans Taylor who probably doesn't have the cash right now anyway) and a proven history of having one hell of a time getting public money for stadium issues. Last summer, I was in favor of a team in Minneapolis/St. Paul, and as much as I'd personally like to see one there, I don't think it would be a fit for MLS at this point in time.
The new Rochester stadium will have 13,000 permanent and 4-5,000 temporary seats after their phase 1 construction, which begins in April. Or, you can read it straight from Mr. DuRoss here: http://www.rhinossoccer.com/forum/topic.asp?TOPIC_ID=803
Not terribly, but you have to make some guesses. The initial I/O buy-in for MLS was $5mm in 1996. In 1998, Horowitz supposedly forked over $25mm to get into the club. SO as far as a "franchise fee" (or whatever you call it in a league that doesn't really HAVE franchises) certainly isn't going to be LESS than that. As for the red ink, who can say? I'm an optimist too, and I'm VERY bullish on MLS right now. I really think that they're going to start turning the corner this year. (Not really the place here to say why - lots of reasons) But to make an investment of this magnitude, particularly for guys who are NOT Paul Allen, you need a little better track record, IMO, than MLS has. Otherwise, it's a HIGHLY speculative investment. You'd be better off in cocoa futures - at least there's a chance of a big payoff, instead of sitting around praying you'll break even.
Bill, I think you could talk about those reasons here, it seems fairly appropriate. I am also very bullish on MLS at this point. I think they're now starting to get a sense of cost control (sans metrostars), their salary structure is not out of grasp like MLB or the NHL's is. Venue control is coming and ancilliary revenue's are starting to appear. And by 2006 the league may actually have a TV contract that generates additional revenue. As it stands, MLS could make money w/out a TV contract, and may get to profitability before they get a decent contract, and that would just add a cherry to the top of an already decent icing.
I was also really glad to see this confirmation from Garber: I know that we've discussed at length whether it makes sense for the league to insist on SSS. It's still useful to see that the league is formulating separate business plans. I think everyone's all for SSS wherever feasible, but it's helpful to emphasize that other options can also work economically. And at this point, economics needs to take precedence over the aesthetics of football lines.
it looks to me that, Rochester is better off waiting till the next expansion. By then they will have their stadium built with a few seasons behind them, they may make lots of money, may need to expamd and by then prove themselves to the Rochester politicians, public, MLS. If they were to join MLS to soon (seems to me) "may" hurt both Rochester and the A league.
Well, the only problem with that line of thinking is that Rochester ownership has built up expectations in western New York that they WILL be in MLS. Worse still, they've sold luxury suites and sold sponsorships based on that promise. If they come back and say, "Well, we're going to be an A-League team for a little while longer," then that's going to be a huge disappointment to the local fandom who have been turning out in decreasing numbers to see the Rhinos play whatever A-League opponent that arrives in a backfiring clown car. And it might cause an exodus by those people who have made a financial commitment to the team and the stadium on the promise that they're getting in on the ground floor of Rochester's entry into the big leagues. In other words, the Rhinos ownership has painted themselves into something of a corner here, and they're only way out is to move up to MLS. And if that's the case, I don't think that it's necessarily in MLS' best interests to roll over for them. Make them a fair deal in order to get another team playing in a SSS? Yes. But they shouldn't give away the store to make it happen.
Also from DuRoss: He believes they will satisfy MLS with the intial capacity. Don Garber and he have spoken about the capacity and both understand and agree on the capacity.
That was the number being used by Whoreowitz to justify bailing on the Fusion. It's as close as anything I've heard from a definitive number without going back to the lawsuit transcript, and not only were those numbers way out of whack ($200mm??? I don't think so) but they also covered startup costs and the first couple of years, not 2002 - 2003 which is the only number that's germane here. Almost hurt myself laughing. Line of the day. Everybody send EJ five dollars. And frankly it IS true that the Rhinos numbers have been pretty soft of late. I don't think you can assume the reasons, however. I am a firm believer in product. People don't go to a sporting event for civic pride ("Support/Help Save/Show your Pride in your local team") they don't go for a promise of something better ("If we buy tickets then MLS will send us a team") or even for a sure thing ("MLS is coming next year so let's go watch the Rhinos today") Rather, I think they throw the wife and kids into the car to go see a game. It's a personal buying decision that has nothing to do with anything other than the here and now. Rochester is an odd case. MLS is very reluctant to go there, seemingly, and for a lot of obvious reasons. I think they're looking for an excuse to renig on whatever promises they've made or implied. The bottom line though is the one rock-solid MLS committment: if you build a stadium, you can have a team.
Does that mean the whole team gets out of the car at the same time? Gee, A-league players who read these message boards must really love us.
I wonder how much of an effect the fast ferry to Toronto will have on the Rochester soccer market? Would Torontans show up for Rochester MLS matches? - Paul
Re: Re: Various confirmations re expansion issues It is hard to imagine Garber listing MN as a candidate unless he has had some dealings with potential investors in the area. It's possible he could be trying to will a team into existence by just mentioning it a lot, but I don't take him to be that big a fool. The St. Paul thing originated back around the time St. Paul had a referendum on building a new Twins stadium. Buzz Lagos (Thunder coach) was interviewed on MN Public Radio and he mentioned a soccer stadium on the river in downtown St. Paul. I have not been able to find a link to the story or the interview on MPR.org.
I'm rich! I'm rich! Well, if that's the case, wouldn't that seem to put the lie to the whole line of thinking that if the A-League Rhinos draw 10,000 a game, then the MLS Rhinos will draw 20,000 a game? It's always been my contention that there's not this huge untapped fan base in western NY that wouldn't ever go out to an A-League game, but would turn out for an MLS game. Yeah, if Rochester were in MLS, you'd get a few thousand more per game from the people that would end up going from because of the higher profile, but it wouldn't exactly get them to the top of the ole attendance charts in MLS. I think that the fanbase in western NY is starting to get tired of seeing their hometown boys kick the snot out of the overmatched competition in a league that they know in their heart of hearts is not the best in the country. It's sort of like what happened to the San Diego Sockers in the '80s. They'd win the MISL championship almost every damn year, and eventually, it got old and the attendances started declining. It's one thing if you're the New York Yankees and you're dominating the best baseball league in the country and likely on the planet, but it's another thing if you're the Rochester Raging Rhinos and your "MLS-quality" team is made up of players that were drummed out of MLS, if you've gotten beat by an MLS team in the Open Cup for the past few years, if none of the wildly successful USA team in Korea came from your league, and your fans know all that. I don't know about that. I think that they're very skeptical about Rochester. (And who can blame them too much? Their market is half the size of Columbus and is much smaller than either Oklahoma City or Tulsa.) And because of that, they're just not going to roll over for Rochester just because they've got a stadium. But I do think that they'll let Rochester in, provided that Rochester provides more than just a nice facility and a lot of civic hype. They want the cash from Rochester, because Rochester sure as hell isn't going impress the TV networks or the sponsors into giving them more cash.
I don't see why MLS might not lower the franchise fee to $5 or 10 million, or perhaps even waive it. Back in 1998 when Horowitz joined, the league was only a couple years old and was supposed to be making money by now. But here we are in 2003 entering Season 8 and the league is still losing money. Getting someone to fork over $25 million to join MLS will be a VERY tough sell. On the other hand, if an expansion team if profitable from day 1, then half of its profits (more or less) will go to the league. And this in turn will reduce the losses of the present franchises, perhaps even making some of them profitable.
ElJefe....where did you get your demographic info regarding Rochester. The metro population of Rochester is 1.1 million....about the same size as Oklahoma City...much larger than Tulsa. Columbus is not twice the size of Rocheser!!!...Metro Columbus is 1.5 million...again Rochester is at 1.1 million!!! When you look at division A attendance for the Rochester Rhinos....understand that the baseball stadium where they play their games is very limited in size and sight lines for soccer. 10,000/game is the "functional capacity" for soccer for that stadium...with about 70% of seats being substandard because of very poor sight lines. The mass of seats are aligned in the corner of the soccer field. ...and remember, the field looks like a unkept pasture since they lay temporay sod over the infield for Rhino soccer games! To get a capacity of 10,000 per game in the above scenario is oustanding...and it shows the strong interest in soccer in metro Rochester. With a new soccer specific stadium in downtown rochester, I could easily see average attendance of 15,000 for A league games. Also, if Rochester got a MLS franchise...it becomes a regional franchise. Within 90 minutes of Rochester there is a population base of 2.5 to 3 million people. Throw in the quick proximity of Toronto via the new Fast Ferry over Lake Ontario...you throw in another exciting dimension. Rochester has more than proven itself for a MLS franchise. The question is...would it benefit the Rhinos the join the struggling MLS league?
how could they (MLS) wave or lower the fee ?? that would be a bad example..for future I/O and past...and Horrorwitz will want a $ 20,000.000 refund If MLS waves the fee, will automatically devalue it's worth, and will loose credibility, and it does not have much of that. How can you sent 18 players, coach, and franchise license, to any give market with no fee...that is ABSURD ! but, put me down for one just in case ! NO MONEY, NO SSS, NO I/O....no team otherwise soon will be, CIAO !! MLS
One of the main things MLS needs right now is more investor/operators and more teams. And provided that the expansion team enters with its ducks in order, i.e.: 1) an excellent stadium situation where the I/O controls most, if not all, revenues, and 2) an I/O or ownership team with deep enough pockets to absorb their share of league losses for several more years, MLS would be foolish to ask for an inordinantly high franchise fee that makes it unlikely for any new I/O's to join the partnership. You need to realize that the price of shares of a company (or partnership) goes up when the company's doing well, stays stable when its doing OK, and goes down when it's doing poorly. MLS has accumulated $250+ million in losses thus far and has yet to show a profit. Hmmm. I wonder if it's doing well, OK, or poorly? Thus, it's stupid for MLS to still charge a franchise fee of $25 million or more. I'd say $5 million would be appropriate. However, they might even want to consider waiving the franchise fee if the expansion candidate had a new SSS and was located in a good market.
I was looking at the rankings of the Nielsen DMAs (http://www.nielsenmedia.com/DMAs.html). A look at the US Census data for 2000 (http://www.census.gov/population/cen2000/phc-t3/tab03.txt) gives the numbers that you detailed. I can only guess that Nielsen Media Research counts a much smaller area for Rochester market than the US Census Bureau. I've heard this "people will come from all over to support a Rochester MLS franchise" argument many times. Two questions: 1) Why do people believe that, when it's never been a significant source of support for any existing MLS team? 2) If we're going to believe that people will come from all over for a Rochester franchise, why shouldn't we believe it for Oklahoma City or Tulsa? After all, they're only 100 miles apart on a turnpike with a 75 MPH speed limit. More than it would benefit MLS to have Rochester join it.