Why do potential owners shun MLS?

Discussion in 'MLS: Expansion' started by detroitexpress, Aug 9, 2002.

  1. detroitexpress

    detroitexpress New Member

    Oct 24, 2000
    Detroit
    ...why did the NASL have so many owners, but MLS has only two? Why don't any of these rich guys want to invest in MLS?

    Is it single entity? What's the deal? It's like MLS has bad breath or something.
     
  2. Horta

    Horta New Member

    Aug 4, 2002
    Rottenchester
    One reason could be that soccer specific stadiums are needed for the teams to be more profitable.
    Maybe someone could tell me the average salery attendence and break even point for an MLS team.
    Do any of them make a profit?
    The first thing you would have to do is fight lawmakers taxpayers and eveyone in between to build a 20k seat stadium. I find it a bit sad that NFL teams hold cities ransome demanding $150million dollar stadiums, all paid for by the taxpayers, when soccer teams have to fight to get a fraction of that. Soccer stadiums would generate big time revenue because they could be used for so many different things.
     
  3. jdm2662

    jdm2662 New Member

    Aug 6, 2002
    Hillside, IL
    I know Columbus made a profit last season. They have a pretty steady fan base, and play in their own stadium. That always helps. The only reason why it was built because Lamar Hunt wrote the check for it.

    I don't know what shape the other teams are. All I know is, since the Fire are playing in a smaller stadium, and there are no parking and liquor revenues, I'd imagine they are not going to break even this season. The only thing I can think of if that they are not paying much in rent. (They paid $50,000 a game at SF). They also only got so much in revenue since the park district owns SF.

    The Fire are not going to get their own stadium unless they come up with the money. It took the Bears over 30 years to get a stadium deal from the city. The only reason why they even got it because the city is going to benefit from it. Hence, they benefit as well with the Fire playing there instead of somewhere else.
     
  4. Rickster

    Rickster Member

    Dec 1, 1998
    Most of the NASL owners were a joke. There are A-League owners with more substance than many NASL owners.
     
  5. benine

    benine New Member

    Jul 22, 2002
    Chicago
    yes. it's the stupidest buisness proposition for anyone without a personal interest in the growth of soccer. The limitations for what each team can do both on and off the field puts a major strain on treating the team like a proper buisness. Can't negotiate directly with players, can't negotiate local media coverage, can't be too warm to the public since there is a very finite amount of information that the league ever wants knowen about it's operations, profitt sharing out the ass, centrally controlled merchandising and sponsorship deals. For all these reasons and more.


    Seriously, the way the league works now it will and should die soon.
     
  6. LoveFifa

    LoveFifa New Member

    Apr 23, 2001
    Detroit, Michigan
    Has to be a ManUre fan. Oh yeah, lookie there. I was right.
     
  7. Rocket

    Rocket Member

    Aug 29, 1999
    Chicago
    Club:
    Everton FC
    Nat'l Team:
    United States
    My guess is that more investors would be interested if the reported $20 million fee to become a partner in MLS were dropped.

    It's tough to attract smart investors if they're required to pay $20 million to join a partnership that'll be losing $30 to $50 million a year for the forseeable future.

    It would make much more sense to waive the partnership fee for investors willing to build an SSS for the expansion team they operated.

    The new franchise, if properly run, could be expected to generate a profit, thus lowering the net deficit of the league. And the annual losses of MLS' present investors would be lowered since the new investors would pay a share of the league's operating expenses.
     
  8. ElJefe

    ElJefe Moderator
    Staff Member

    Feb 16, 1999
    Colorful Colorado
    Club:
    FC Dallas
    Nat'l Team:
    United States
    Well, the NASL would give a franchise to almost anyone with two nickles to rub together. The franchise fee was ridiculously low. (I remember reading that it was $50,000 or something along those lines.) They also didn't do a whole lot of screening to make sure that their owners could competently run their teams.

    Result: The NASL had a lot of owners, but because so many of them were not financially able to stick with a money-losing business long-term until it was a money-making team, there was incredible franchise turnover.

    Needless to say, MLS has been a little more particular, even beyond their $20-25 million entrance fee.
     
  9. ElJefe

    ElJefe Moderator
    Staff Member

    Feb 16, 1999
    Colorful Colorado
    Club:
    FC Dallas
    Nat'l Team:
    United States
    Re: Re: Why do potential owners shun MLS?

    Untrue. The vast majority of the contract terms between teams and players are negotiated by the teams themselves, since they know what salaries they want to afford now and in the future. Only the final details (like transfer fees and such) are negotiated by the league office.
    This has got to be a joke. I can tell you that every single local TV deal and radio deal is negotiated by the teams themselves. Don't believe me? Call Andy Swift over at the Burn and ask him who negotiated with KFWD, Fox Sports Net, and KFXR for their coverage of Burn games.
    While I happen to agree with you on this point, I will also say that the number of people that really, really care about such matters is really, really small.
    The NFL would disagree with you strongly on both those items. Or are you going to suggest that the NFL's almost-complete revenue sharing and their "centrally controlled merchandising and sponsorship deals" are really impeding their ability to attract new investors?
    Does the "and more" include any reasons that are in any way valid?
     
  10. monster

    monster Member

    Oct 19, 1999
    Hanover, PA
    Club:
    DC United
    Nat'l Team:
    United States
    Re: Re: Why do potential owners shun MLS?

    You've obviously never interacted with the DC front office as I have. Or heard about Peter Wilt buying supporters beers.
     
  11. MtMike

    MtMike Member+

    Nov 18, 1999
    the 417
    Club:
    Sporting Kansas City
    Nat'l Team:
    United States
    monster,

    which is you, the guy on the avatar, or the guy on the "Regular Guy Column" website?? Just curious, cause, best as I can tell, they don't match. :D
     
  12. monster

    monster Member

    Oct 19, 1999
    Hanover, PA
    Club:
    DC United
    Nat'l Team:
    United States
    The guy in the avatar is 10 pounds lighter and three sheets to the wind.

    The guy on the column site ate too many pork chops and hadn't had a drink in days.

    Someday, maybe they will meet. :D
     
  13. Viking64

    Viking64 Member

    Feb 11, 1999
    Tarheel State
    A couple of reasons. One, they don't buy a team, they buy 49 percent of one, and have to be part of a corporation. And since they are not Hunt or St. Phil, they don't like being Junior partners.

    Megabucks people like this think they are born to lead and MLS is contrary to what they think they deserve. The are control freaks for the most part, and don't relate to the setup. Even though the setup allows them to do what other league owners wish they could do: keep player costs down.

    Finally, I think too many are overmatched and they know it. Making a pro soccer league work in the United States is hard work, and will take more time, money, and dedication than the average megabucks guy wants to invest. It's too easy to make money other ways.
     
  14. Horta

    Horta New Member

    Aug 4, 2002
    Rottenchester
    It just seems no matter how you look at it, the future of div.1 soccer depends on builing the stadiums. I saw a piece on Empire about the Metros' new stadium (proposal?). Beautifull, with shopping, entertainment and of course the Metros.
    Revitalizing a section that had gone to seed. If the league can survive long enough for other cities to see the value of these facilities, it might help change thier minds about financing such a usefull stadium.
     
  15. diablodelsol

    diablodelsol Member+

    Jan 10, 2001
    North Ridgeville, OH
    It has absolutely nothing to do with single entity, and everything to do with being profitable(and single entity is NOT why the league is not profitable). If soccer was a profitable business in the US, there would be owners lining up to invest. The Crew have their own stadium, and still aren't wildly successful. While they do make money, I'm not sure the ROI on the $50mil invested in the team is that great.

    Why is the franchise fee so high? To keep the small fries out of the club. It will take a long time for soccer to be profitable in the US, and they don't want anyone in the club who can't wait out the losses.
     
  16. PercyB2362

    PercyB2362 New Member

    Jul 12, 1999
    The Crew make money? Do you have a credible source for this assertion? I have seen a media report claiming Crew STADIUM made a small profit last year, but it made clear the reference was to Stadium operations only, not to be confused with CREW operations. It is very possible (even likely)for the stadium to make money, and the CREW as an entity still fail to do so. Last year there were 2 marquee events at the Stadium that won't be there this year... AS and MLSC games. Still, the stadium might turn a profit again this year because (my understanding) it is being used as a fill-in for Ohio Stadium during renovations there? If that is the case, it's still just a short term situation. And, what's the chance of CLB hosting both these 2 MLS events in a season, if/when more SSS are built? I personally think MLS will be shouting loud and doing backflips the moment it thinks it can legitimately proclaim that any of it's franchises has actually turned a profit for the year.
     
  17. snowfx2

    snowfx2 New Member

    Jul 28, 2001
    so cal
    http://www.cybersoccernews.com/mls/020320garber2.shtml (look at Garber's response nearly half way down).

    And no, CCS is not a short term situation, Ohio Stadium renovations were finished at least a year ago and seats 100,000 people and the field was not widened. Hunt put about $28 million into this stadium, so it's definitely here to stay, why you even think it's only a temporary solution boggles my mind.

    Within the past year, CCS has hosted the Ohio High School football championships, an NSYNC concert, and the NCAA College Cup. Also, the all-star game was there in 2000, not 2001.
     
  18. feuerfex

    feuerfex Member

    Apr 21, 2001
    Think about it.

    The Crew has averaged about 17k/match in attendance over the past three years. At an average ticket price of $15 for 14 matches that is an income of $3.57M. The salary cap is ~$1.7M. That leaves $1.87M. The crew pays $50k/year in rent. That still leaves an awful lot of money to pay the rest of the bills. It would be very difficult to not believe that the Crew are not making money,
     
  19. jdm2662

    jdm2662 New Member

    Aug 6, 2002
    Hillside, IL
    Let's not forget about stadium and parking revenues. They probably aren't pulling in a large sum of money, but some profit. They also hosted the US-Mexico WCQ last year that sold out.
     
  20. Sober Tom

    Sober Tom Member

    Sep 10, 2001
    Glassboro, South Jer
    Club:
    CA River Plate
    Nat'l Team:
    United States
    People can rant all they want about how the league is "being run poorly, is digging itself into a deeper hole everyday, yada yada yada". Truth is, anyone who says that is either ignorant or knows nothing of how to build a money making business. This league is going to take time to build, just like any other business. It's going to have growing pains and it's going to make mistakes. However, single-entity is probably one of the main reasons why MLS is STILL here. If there was no single entity, I guarantee you that we would not have a league right now. It would be NASL all over again, but this time with a much quicker death. Relax people, building a credible business is a bitch. Selling soccer to Joe Six-Pac is an even bigger one. And you can put that in your sig.
     
  21. Preston McMurry

    Preston McMurry New Member

    Jul 28, 1999
    Earth
    Because the potential "owner" would not actually be an owner, he would be -- in MLSese -- an "investor/operator": Owning nothing, controlling little, and responsible for the debts of all. (If there's one thing rich people hate, it's not being in control.) One would think that Russia's failed 80 year experiment with that setup proved its inability to motivate ...
     
  22. dawgpound2

    dawgpound2 Member

    Mar 3, 2001
    Los Angeles, CA
    You know Preston, for all your railing against MLS, I'd like to think you could spend that time more wisely. Like supporting fund-raisers for your A-League players who truly make no money. I know you like to rip on MLS for their player-relations, but what about these A-League teams with $250,000-400,000 payrolls? They're really abusing these A-League players, and it's got to stop!!!!!!!
     
  23. gosya

    gosya Member

    Feb 6, 2001
    New York
    The bottom line is unless a rich individual has personal interest in soccer, it's very hard to convince someone to invest in it. Hunt, Kraft and Anschultz do, and that's why they are still here.

    Think about it - invest $20 million, to suffer losses for the next several years, hopefully succeeded by modest gains. Chances are, that soccer (if ever) will become a big money-making business in the U.S. long after these guys are six feet under.

    Even with the well-to-do major four sports, most of the owners are people who enjoy owning a sports team and very few are in it for the money. Disney and Cablevision tried to complement their existing entertainment businesses by adding sports teams to their portfolio and are currently regretting it. There's a big price premium for purchasing a sports team that's due to owning a trophy entity or just being a fan of the sport. Do you really think Washington Redskins command $800 million tag or Yankees with $700 million, purely based sum of discounted cash flows from operations? Hell no.

    So, there you have it. 3 rich guys who like soccer. If there are more (very) rich guys who like soccer, we will see more I/Os.
     
  24. superdave

    superdave Member+

    Jul 14, 1999
    VB, VA
    Club:
    DC United
    Nat'l Team:
    United States
    Leaving out ancillary revenues (mostly concessions, but also parking) makes these estimates worthless.

    Not to mention the indecipherable double negative of the last sentence. :)
     
  25. feuerfex

    feuerfex Member

    Apr 21, 2001
    Only if one assumes that the crew are not already making money (see below), otherwise this additional revenue is "gravy."

    Translation for the language challenged: Only a boob would believe that the Crew are not making money. ;)
     

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