I guess the news that the Ottawa Senators are about to file for bankruptcy makes the contention that the NHL has prospered open to debate. I think the Buffalo Sabres were reported to be considering filing for bsnkruptcy as well.
While I agree that MLS doesn't HAVE to be like anyone (size, generation of revenue, etc.)....as long as it survives and has a decent quality of play, that's the main thing right? (rest/gravy)....I think it is a false argument to say MLS, ergo men's pro outdoor soccer has only been around 8 years, while hockey has been for 80. You can't discount NASL and its predecessors......really, there has been some form of men's outdoor pro soccer for 35+ years, and attempts to make a go of it.... The thread was started as investment ???? If Uncle Phil puts his assets in trust w/trustee (w/instructions to "carry on") upon his passing, MLS could survive a long, long time no further questions...but as an investment, it may not attract a lot of interest still....certain things will have to happen first....if the stadiums get built, MLS gets to profitability and the original founders (say, Anschutz/Hunt) ever want to get out WHILE EATING SOME/HALF/ETC. THE STADIUM FUNDING COST...well, yeah, then A LOT of folks may show interest.. It all depends how much they will want (at the end of the day) after years/years of losses....it all depends how they want to price it (franchises)...price 'em right, they'll sell fine! But that could mean it was a terrible investment for Uncle Phil et al. All depends. MLS has (likely) a further issue to deal with....when(ever/if) it reachs profitability, you can be darn tootin' that the single-entity clause will come under legal challenge (again)...don't gloat too much about hockey's salary problems...MLS only retains tight control due to the massive losses (of soccer) leading to a dismissal of the monopoly claim...the losses turn into profits, its a whole new (legal) ballgame IMO.. Now wouldn't that be a nice problem to have! g
baseball, basketball and hockey leagues have very little competition from foreign leagues, while MLS has to compete with televised games from the EPL, La Liga, Serie A and MFL amongst others, so any comparing MLS with the big three really can't be done, imho. A (possibly dumb) question, is the MLS looking for more investors? MLS imo is Anshutz and if Anshutz has been able to reduce losses and even turn a profit with some teams, if I were Anshutz I would be very patient, let it grow and then wait for a big payday, no matter if that payday will take 5 years or 10 years, Anshutz is not just involved in the MLS, the man is building an sport empire. With MLS he planted a few (expensive) seeds and with a little love they will grow into some mighty oaktrees.
One of the main things that the Red Sox, Charlotte NBA franchise, and Buffalo Sabres have in far greater abundance than MLS is sex appeal. Owning an MLS team isn't sexy. It doesn't get your name in the papers like owning a team in other major sports does. The reason why you have a number of people bidding higher and higher fortunes on teams that are not proven money-makers and in sports with an unstable salary structure is ego, pure and simple. Daniel Snyder owns the Redskins (and wants to bring baseball to D.C.) because it makes him a member of the most elite clubs in the world - NFL ownership (and/or MLB ownership). Taking over an MLS team isn't that big a deal to him because it's not something that the richest men in the world are tripping over each other to do. It's just not that sexy yet. The day that soccer turns away a well-qualified potential investor will be the day that the millionaires with the biggest egos will decide that they need to try to make themselves a name in this sport.
I think Stan's right on the money: MLS, as a strong 5th league, can be sustainable. How do I know? Because we've already seen the blueprint: Cbus made a profit in 2001 and broke even in 2002. What does that tell us? The problem with MLS is not the revenue it brings in, but its control of that revenue. So, I really don't understand how anyone can say MLS is not investment quality. ONe of its business divisions has already made money for its I/O and it's pretty clear why. With the exception of NY (due to much higher costs), SSSs would solve the problem. (JRI's point about amortization of construction costs is valid, but privately funded stadiums tend to pay for themselves, so I don't share his concern)
I think that investors in sports franchises still have an expectation that growing franchise value is where they get their main return on investment. A piddly operating profit may or may not be attractive, because investment in sports franchises ties up lots of capital, has awkward cash flow and there is still a very real possibility that MLS will not have long-term stability even if several of the teams currently break even. Where would Columbus, LA and Kansas City - the three healthiest bottom line clubs I believe - be if MLS had to contract again? I have no doubts that a couple of the NASL teams could have turned (or did turn) operating profits, but these teams didn't/don't play in a vacuum. For the cost of an SSS and/or the franchise fee, I would think that the operating profit of Columbus Crew would not be enough to sway a calculating investor to pony up. But I do think operating profit should be an encouragement to a wealthy soccer enthusiast, who is more liable than a calculating investor (who is not necessarily into soccer) to value the "prestige" and exposure of owning an MLS club and supporting the growth of soccer in the US. Robin Williams? Nomar Garciaparra? How about supporting your fiancee's industry and pony up for the MLS and WUSA. Maybe you could even get your brother on the roster.
Okay,I agree "prospers" isn't a good word concerning hockey's finanical state, but certainly it covers their solid fan support. If the hockey owners can't cover their costs, then a salary cap or single entity or both makes sense. It seems sports franchise owners haven't got a brain in their head concerning soaring costs. Ironically most of them have built their personal fortunes through their business experience and knowledge that doesn't seem to translate into the sports world. So how does MLS attract new investors? That is the thread. Well, although soccer has been stumbling along a vague professional path for years, only recently has a rational plan been developed to insure the continuing structure and development of a nationwide professional league. Somehow Don Garber has to convince worthy investors that the league has not only staying power but has growth potential. That is the hurdle and the history of American pro soccer isn't pretty. I would guess the most rational plan to attract investors is to build all ten MLS franchises into solid programs with SSS's. This appears to be their plan, but is moving along at a snail's pace and is highly frustrating to its hardcore supporters. I don't see any other plausable way they can attract investors except to resolutely plow on with their current program and hope for the best.
Possibly dumb question: How about a public trust where we, the fanatics can contribute $500, $1,000 - whatever you can. It scares me that three men hold the destiny of this league in their hands. Someone said before that this must be an investment of love. Well, we are those lovers (?). Maybe we don't initially get into the millions, but with wize investing and continued support our share could make a difference. Look at the Green Bay Packers. They play in an area that not even the cows would call a major market. Had it not been for the investment by the fans (through their local govenment), the pack would surely be a sunbelt team right now. Is there anyone on this board who would know how to set this up. Seeing that MLS is not a privately traded entity, this may be the only way to go until it is.
On second thought, MLS needs to be on the Nasdaq as soon as possible. It would probably go over as a small cap stock and find it way into a number of 401k plans before you know it.
I don't disagree with your basic point: how many people will invest massive amounts of capital for the small return of operating profits? Not many, unless they think there's better returns to come (either in the form of larger operating profits or a profit on sale). I think we disagree on the effect that breaking even has, though, on expectations for a startup. The biggest risk in any startup investment is simply that the company will breeze through funding without results. But you eliminate that risk when you break even. You still have to rely on expectation to justify your investment, but it dramatically changes the foundation for those expectations.
Okay, here it is Stock & Financial History Stock certificates from the 1923, 1950 and 1997 stock sales Of all the reasons that make the Green Bay Packers and their story so incredible and unique, the most significant is simply this: The team is literally owned by its fans. Presently, 110,901 people (representing 4,748,909 shares) can lay claim to a franchise ownership interest. Shares of stock include voting rights, but the redemption price is minimal, no dividends are ever paid, the stock cannot appreciate in value, and there are no season ticket privileges associated with stock ownership. No shareholder is allowed to own more than 200,000 shares, a safeguard to ensure that no one individual is able to assume control of the club. what did I say that was wrong? If it is the govenment thing, then I can support that with the 2 million dollar renevation to Lambeau's locker room over last summer. Done through a bond act if I recall correctly. Anyway, nice job trying to find fault in my post rater than opening your mind to the idea.
Keep it coming Matt in the Hat. I think it would be fun to have an MLS "Plankowner" Certificate on the wall of my study, which is hundreds of miles from the nearest MLS team (hence I can't justify buying tickets I couldn't use). Also - I saw those locker room's when the commentators were sitting in the middle of them before the Falcon's shellacked the Packers. Pretty tough place to call home 8 - 11 times a year (preseason, home games and a playoff game or two). It was funny how the guys got to sit in nice easy chairs inside, then went outside to Melissa Stark. Sort of ironic in a harmless way when you think about how far women sports reporters thought they had come when they gained access to the locker rooms. Now they are tough enough to brave the elements in Green Bay.
The Packers' plan so thrilled the NFL that they banned anyone else from trying it on a full-ownership scale. The other major leagues have done the same thing. The Boston Celtics sell stock (which does appreciate and depreciate), but the stock only represents 49% (if that) of the franchise. The thing you don't want is, say, the MLS stock ending up priced like Qwest. A mutual fund whimsy could sink the league. Could you structure a share system like the Packers today? Very fair question.
I wonder if preferred stock, rather than common stock, would be a sensible way to go. I certainly don't pretend to understand all of the ends and outs of floating shares. Some of the previous posts on this thread have mentioned how dilution of the ownership would not be popular with a lot of the "heavy lifters" who have been through the thick and thin with MLS. But it would be interesting to examine all of the possibilities - especially of a very limited equity share going public. Another idea - what if MLS formed a separate, publically held corporate entity. The charter of the company would stipulate that it be governed by a board elected by team operators and investors - which developed SSS specifically for MLS and/or USL. The corporation could then lease or sell the SSS's to MLS -at terms advantageous to shareholders and the league alike. The beauty of the thing: the board would hold MLS accountable for making sensible expansion/contraction decisions. The investors love soccer, so they will be promoting its development on a large scale (i.e. the lease terms or sale of stadiums to MLS/USL will be settled more amicably than they might be by stadium authorities, municipalities, other sport franchise owners), but the responsibility to the shareholders will ensure that the board doesn't go off half-cocked building/redeveloping stadiums in places where they will not succeed. These type of symbiotic corporations are being established for other purposes (building schools, hospitals, etc). Why not use them to build and develop stadiums. I know it probably isn't feasible. Fun to think about, though.