OK, I have been lurking here for a while but I am still a newbie. I have been to a few games in KC with a friend and have enjoyed them and have always thought that the MLS would be a success. But, in these possible discussions about expansion, there always seems to be two problems, 1. a lack of SSS and 2) a lack of a owner with funding. 1) If I am rich man, which I am certainly not. Would I rather invest $10MM to get a team and then an additional $30MM to get a Soccer Spec. Stadium or would I rather put down $10MM to get a minor league baseball team and another $10MM to get a stadium. To follow this further expected attendance in MLS ($17.5K/game *15 games * $15/ticket) = $3,937,000. Minor League Baseball (AAA) ($10K/game * 50-80 games * $10?/ticket) = $5,000,000. Then you have the expenses, minor league baseball (if affiliated, MLB teams pays salary, you pay bus and air travel). MLS you pay salaries (Approx $2.5MM and travel expenses by air). It seems to me that you can make more money in the baseball minors vs MLS. Then there is the problem of the shared wealth. If I am a prospective owner such as Jeff Lurie (Phil) and I think I can do a better job than the MLS and I can get 30,000 to a game do I get to keep the extra. No I have to share with Dallas and whoever else sucks. Additionally, lets say in 5 years everybody has an SSS, what stops AEG from saying they lose money on their MLS but makes a killing on their concerts which they don't share so the other owners chip it. There is no way I would invest in this, it seems like a ponzi scheme for Hunt and AEG. I think you just have to delevop a salary cap like NFL for the time being and let the owners determine how committed they are to each market, only then will you get new owners to come in. By not sharing the wealth or (lack) you force the owners to improve each market. If I was Kraft, what reasoning do I have to put a lot of effort into the team if I have to continue to subsidize Dal or SJ. Maybe the more profitable I am, the less I have to put in? Someone please explain to me why my thinking is wrong. (End of rant) Hope this is ok for a newbie.
If it were me, I'd opt for a league where I actually "own" the team, rather than giving my money to and building a stadium for a team that is run by the league,and they just use my money to do it. Minor league baseball, and minor league soccer (USL), for that matter, both allow you to do the former, while MLS does the latter. Nobody's going to make any money with soccer, at least not in the short run, so, money-wise, you lose either way. I think an A-League franchise, if run correctly, (like Rochester or Charleston), can be successful eventually. MLS will eventually turn the corner as well (they have already in some ways), especially if single-entity falls by the wayside sometime in the future. Either way, you're stuck paying for a stadium (if you built it) if the team folds. PS: Welcome aboard!
couple things: 1.nice first post 2.MLS is a top level league, unlike minor baseball and will hopefully eventually climb the ESPN highlight ladder and be treated like one in the US. That plateau will change everything. 3.MLS should by then be a money making entity and THEN there will be "owners" instead of "i/o's" and revenue sharing will be completely different, but now this way is needed until the league and every team is more stable, there are more owners, and there is quite a bit more demand for soccer in America. 4.As with #3, a salary cap will be there too and owners will have player control, but i don't think MLS is ready for that. At least this way they can draw some outsiders because of guarantees to play in LA, DC, or NY for example.
Thanks for the welcome Bula- I completely agree about if MLS (being that it is major can and should be able to move up in the eyes of ESPN, which is where the real money lies. With regards to "they should be making money by then" I guess that is where I am concerned. I would love to see them say, "in 2006 ok, 7 teams out of 12 have have SSS, and the others have very favorable deals on their stadium leases, so we will drop the league owned mandate and go to local ownership of teams who will make them sink or float." However, I just don't see the incentive for that to happen. If I am AEG and own 6 or 7 teams, and I have by then built 4 SSS stadiums, I can by simple accounting make the team look like it looses money forever, where other parts of his entertainment group are extremely profitable, and never wish to abandon the current structure. I enjoy the stability that he has brought to the league recently but I am concerned about the long term ramificationsof having so many eggs in one basket. 3. I would love to see things progress the way you state it but I can really see where MLS will have a hard time drawing any new investors with the current setup of the league. I wonder if this is why MLS has a hard time drawing new investors.
if I had only 20-40 million I certainly wouldn't invest in either. If I was anschutz and losing 40 million was like a drop in the bucket I would go for the soccer franchise.
The only problem that I question with your initial comparison is that you compare it to AAA baseball. I wasn't aware that AAA franchises are out there being had. I know that there are a lot of A and presumably AA franchises changing hands and moving around from time to time. But if someone had $20 to $40 M could they just choose to start a AAA franchise somewhere? As far as the motives of the soccer investor / operators and the other major sport owners, I don't think you can compare those that are in it for the love of the game vs. those that are in it for the money. Some are in it for both and do make money. Some are willing to just be in it for the prestige or are in it for the love of the game and make plenty of money in their other business ventures and don't care what they do with their sports franchise. Outside of the really major teams like the Yankees, I don't think these owners get rich off their sports teams. They are rich before they get into sports and have to be rich to stay there. And even as successful as the Yankees are, with them having such a HUGE payroll, it wouldn't surprise me if they didn't make that much money for George.
You can have my $10.00... I would put up my money if the team could be owned in a way similar to the Green Bay Packers. I am sure people have suggested it before and been crucified for it but I think that it a great way. The community owns the team and takes stock in its success...
Re: You can have my $10.00... That's not a bad idea, but it doesn't work just anywhere. I just wonder if there enough soccer fans in any one area to pull it off.
6 to 7 of the current 16 Pacific Coast League teams are either up for sale or have owners crying for new or improved stadiums, and rumors of proposed franchise moves abound. At least one city (Reno) is proposing to build a stadium that can accomodate AAA, and other towns have parks that can be upgraded for probably less than 8 digits. Well, the next time someone whines about A-League stability, I'm ready to post about the history of the Pacific Coast League, to make the point that stability is something that has never truly been achieved in America. Our habit to pave over history and trash tradition basically IS our history and tradition.
The PCL started to go downhill when it was decided to go with two AAA leagues. Having teams from California to the South and from Alberta to New Mexico puts a dent in travel plans.
Not to mention teams in Oklahoma, Omaha, Iowa, Memphis, New Orleans and Nashville. They're in the PCL now, too. Go figure.
About Travel costs As some stated about travel costs in the PCL and the other part of AAA, since these teams travel vast distances, i would assume they fly to most of their games. I'd assume they would bus for a few but fly to most. Any idea? Additionally, how does MLS teams travel? Do they charter a flight or do they fly in a regular commercial plane. If so do they travel in 1st class or what?
Re: About Travel costs AAA teams do have to fly to games on a regular basis. One of the benfits is that the parent club does cover a great deal of the travel costs.
Welcome, BB. Excellent thread, all. What if these NFL owners take a liking to the numbers ($$$) their soccer exhibitions take in enough to tell MLS to take a flying leap while they form their OWN outlaw American pro soccer league... keeping any and all profits to themselves? 1967 again. I think the ownership/investment questions are what is making Wolstein and his Cleveland partners tread lightly re MLS expansion. This comes to mind based upon his dealings with the original MISL back in the early '80s. He had major disagreements with what he saw as supporting weak-sister franchises and a league that was, in his opinion, run more like a circus (Earl Foreman's Washing Whips logo comes to mind) than a legitimate sports business. Yes, Wolstein took his ball & went home, and kept the MISL out of Cleveland for a short time, but he was & is no fool with his money. He wanted a real say with the MISL, and he will want the same with MLS. Now, he is chummy with NFL owners from his bid for the Browns, and, if MLS doesn't suit him, I could envision him kicking it around with Lurie, Seattle, and Houston (and let's add St. Louis, Tampa & Minn just for fun) about a soccer league of their own. For better or worse. As for the PCL, IMO, they should have declared themselves an outlaw major league right after WWII & before O'Malley put his evil scheme in motion by purchasing the PCL LA Angels (for elimination of the territory for his Dodgers) in the early '50s. This was all long before TV $$$ was an issue. TV would have eventually made the PCL an equal to those dinosaurs in the east. Off the soapbox.
FWIW, $10 a ticket for AAA baseball is a bit high. I would us an average of $8. Most of the better seats are $10-11, while the rest are anywhere from $5-8. 70 games is probably a good home schedule for most AAA Teams. So, assuming 10,000 fans a game....pretty average for that level franchise. Ticket revenue would be around. $5.6 million. However, I'm pretty sure each MLS team makes some money from the national ESPN/Fox TV contract, plus local radio and TV deals as well. The majority of AAA teams, don't have much of a broadcast deal to speak of. There might be a big difference there. And that difference will become more and more vast as the MLS grows in popularity. There is very little growth prospect in AAA baseball, whereas one can make a bet that MLS will become a major player in US professional sports one day. I put my money in a soccer franchise.
Thanks for the follow up. I guess I am more concerned at what Joe Stoker was getting at. I personally would rather invest in a soccer franchise but we are in the minority as we are here on this website, so it takes something special to convince a normal business investor to invest in an unknown commodity. My biggest concern about the league is the revenue sharing. Someone in the New England thread stated something about lets say you bring in $5 Million in ticket revenue, and your expenses (travel, player salary, is around $4 million) you would have a million profit. Not lets say you have to share 50% of that with the MLS. You now only made $500K and spent the other $500K supporting SJ. Or you could take your $1 million profit and say you had a consulting or extra rental fees of $1.0 Million, so you could break even and not have to share but you still would have your million dollars. I just wish they would make each team independant of the league and I think you would see better promotions as the teams would have more incentive to bring in fans. Unfortunately, until I think we see that changing I am not convinced we will have any growth.
Correct me if I am wrong, but wouldn't and couldn't the USSF block any creation of a New Professional Soccer League to compete directly with MLS? I don't think we have to worry about that Cleveland guy taking his ball and starting his own league. I thought the USSF had to approve the creation of any new leagues or something of that nature.
$10 dollars isn't really that expensive considering it's cheaper than even the more mid-range sports. The investment in baseball has been going in more to the lower leagues than the MLB. The profitability is usually better.
Just so you know, MLS does not make money from the ESPN contract. It is a time-buy. MLS is paying ESPN for the time to broadcast games, then turns around and sells their own commercials. Whether they are making or losing money on this, I don't know. Also, don't look for the MLS to ditch single-entity. The reason for SE is not what was stated earlier. It is for: 1) Limit financial disparities between large and small market teams, 2) To offer advertisers an integrated/corrdinated advertising venue, 3) Control non-paying sponsers ('ambush' is the word MLS uses.) 4) Economies of scale, and 5) Make decisions with the leagues interests ahead of individual teams. Unstated is the advantage they get when implementing salary caps. MLS could not do this with separate ownership. So I would look at SE as a given. In the long run, we might find that it produces better results, but it will take 10 years or so before we can really know. We can see the mess baseball and Hockey are in right now for some of these same reasons. (This info was paraphrased from an MLS publication.)
I wasn't stating that $10 is expensive, I was just saying that a correct estimate based on AAA league averages is lower than that. Yes, you are correct investment has been going to the lower leagues and profitibality is greater. But, that profitibality is only on paper because the minor league teams don't pay the player's or coach's salaries. Second of all, like I stated before, you are never going to grow a AAA team into an MLB franchise, it just won't happen. However, there is the possibility that the MLS will continue to grow and that one day you will own a major sport franchise which makes tons of money with ticket revenue, broadcast revenue, and liscensing fees. So, all things being equal, I go with the possibility of hitting it big in the future with MLS, rather than the no-growth prospect of AAA baseball.
Jaxx, back in 1966 when pro soccer (as most of us know it) was just forming here, a group of potential owners who were turned down by the US & Canadian Federations (who granted their blessing on the United Soccer Association) summarily thumbed their noses and created their own league, the NPSL, and garnered a CBS TV contract. They also sued the federations & everyone connected with them. The lawsuits brought the USA & the federations to the peace table within the year. That's why I used the term "outlaw". The kind of money & legal power behind the group of NFL owners I mentioned could give the federations & FIFA an awful nasty fight. And Wolstein has proven himself a maverick in the past, so nothing would surprise me with him. I would speculate that the only goal of such an outlaw group would be the bottom line, as opposed to MLS' statement of developing players for a US World Cup winner. Based upon their success with their international exhibitions this summer, the outlaws would import quality players or entire teams from around the globe for 10 to 12 game summer tournaments. Yes, oldtimers, just like the ISL of the early 60s and the USA in '67. Of course, there would be FIFA sanctions against any or all who play in the league, but the subsequent restraining orders would prevent any enforcement. A custom-made fit for NFL stadiums between May and July. Again, history tends to repeat itself, and nothing would surprise me with these wise & wealthy gentlemen. Control & clear profits.
It's an ego thing.... People generally think that they can run certain businesses better than anyone else. These business include restaurants, airlines, and especially sports teams. Although the average Joe, given a certain number of millions to buy a team, would get in over his head within a few months and screw things up in a royal fashion, most people persist in this illusion. "If I only had the money I'd show them how it was done!" So by the MLS having Single Entity, they take away a lot of the ego factor and I'm sure there's some rich people out there who feel they can't "make their mark" in a SE system. But I thing Single Entity is better for certain circumstances: (1) If it's a long-term project of building a fan base for a sport rather planning on making money right away. (2) When developing players for the national team is as important as the league. (3) When there's not enough committed investors for all potential cities. And I think many people would agree that without SE, cities like San Jose would be watching A League teams now. I don't know what will happen in the future, but I get the feeling that AEG has run some figures on potential income with a SSS, and the math came back pretty good. I would also imagine that's why they're in the process of trying to get all their teams into SSS's as soon as possible. If the current investors can MLS profitable, then I doubt they're going to change a system that works. So my guess is that you're looking at SE for a long time in the future.
Denver- I agree completely with what you said about the ego thing. However, also as you said most people and definitely most investors would want to be in charge of their own destiny and not linked to San Jose or whomever. If I had the money to invest in this vs a AAA baseball team, long term I would choose MLS. But I'd be sure that if my competitor on the fields sucks selling tickets I'm not going to cover his ass. I guess SE makes sense in the beginning, but I can't see the league expanding unless we loosen up the rules. My proposal would be: 1. Split all TV revenue (if any) and MLS league expense equally. 2. Negotiate jersey, shoes, advertising contracts equally. Maybe the team for which the sponsorship get 50% the league gets 50% which gets allocated. This allows teams to have a selfish owner who wants to make his team worth more, but also subsidies the smaller teams leaving stability. 3. You get to keep the gate revenue minus your expenses to yourself. This way you have an incentive to sell your product. 4. Pay the visiting team something (like 25% of gate revenue up to a certain amount). This allows the league again to level the playing field keeping the league in business (good for all) while allowing the management of the teams to prove who is best. 5. Set a salary cap for each team, just like the NFL. I know some people say that you have to have this to keep salaries in check, see NY Yankees, Cosmos vs rest of league etc, but it works in the NFL. Then if a team sells a player, maybe they get to keep 50% of the revenue and the rest goes to the league. They would also have to buy the players. This is the way I hope to see the league in 5 years otherwise I think I will be looking at a 12 team league (include Phily, Seattle, Rochester, lose SJ)
You assume that FIFA would care about a restraining order. They wouldn't nor should they since US Law holds very little to an international organization that is not dependent on the US for anything (unlike potentially the IOC). No player or team from any other league would dare set foot in the US to play a few games in the summer for an outlawed league when they wouldn't be able to play in their own league because of a ban imposed by FIFA. Their lively hood would all of the sudden consist of a bunch of games played in the US where they wouldn't make to much money. FIFA maybe weak in some areas but when it comes to getting other FA's to abide by these types of rules they have an iron fist. Remeber FIFA still doles out a significant chunk of money to every Federation, no one would want to lose that money.