Expansion and business side (money trail) of MLS

[Haddy]

Surprised to find this from a local Detroit business publisher...

Article is on the Greek-Canadian family trying to bring MLS to Detroit. They are bidding for a site.

Reporter does a great job of breaking down club revenues and expenses along with what percentages MLS earns and how it's shared across the league. Very enlightening.

http://www.crainsdetroit.com/article/20131020/NEWS/310209973/detroit-soccer-no-free-kick-backers-must-win-site-bid-beat-odds-on

Enjoy.

[Alonso]

Very interesting... if $300 million per year revenue is low according to MLS, surely a $5 million per team salary cap would not be too taxing. $5x19 = $95 million in salary which is only a third of revenue (again, $300m is revenue that the league claims is on the low end)

[Yohan]

Very interesting... if $300 million per year revenue is low according to MLS, surely a $5 million per team salary cap would not be too taxing. $5x19 = $95 million in salary which is only a third of revenue (again, $300m is revenue that the league claims is on the low end)
Yet the article says only 4-5 teams are making a profit... so, the cost of operating a team is that high?

[ag futbol]

Yet the article says only 4-5 teams are making a profit... so, the cost of operating a team is that high?
That's an interesting number, wonder if it's a bit outdated.

I'd also be interested to hear about how MLS defines "breaking even". Some of the arguments in the past CBA negotiations have been about MLS using creative accounting to divide things up and claim poverty to the players while making money in other areas.

Ballpark, I would think at least 6-8 clubs are breaking even at this point. I mean if you get past the obvious (SEA, KC, LAG) don't at least half of RSL, POR, VAN, PHI, MTL, HOU, COL, TFC have to be making money? I know some of those are less obvious, but you look at it, teams like Colorado, Phily, and Houston have buildings that are 3/4 full, minimal extra money spent on DPs and they can't break even on a 3-4M dollar payroll? And people are lining up to pay large expansion fees for this? I'd have to seriously question their business model if that was the case. Doubt they are that stupid. Even TFC, the endorsement deals they are sitting on from the good years are probably still carrying the day.

[SoccMan2]

I think a Detroit MLS team would do fine if they can get a soccer stadium built, 16000 to 18,000 a game would not be an attendance figure that difficult to obtain.

[Cashcleaner]

^ No way. There is no money in Detroit and the city's downward spiral doesn't seem to be stopping anytime soon. Crime and urban decay is rising, while the overall population is falling. There are several other cities more deserving of a franchise than Detroit.

[SoccMan2]

Ya this downward spiral and the no money in Detroit is not having that much of an effect on the Pistons,Tigers, Red Wings they all still seem to be doing pretty good in attendance, furthermore, the people who support these pro teams in Detroit and who would also support a Detroit MLS team come from the subburbs where people still have jobs and where the economy is still pretty decent.

[Macksam]

^ No way. There is no money in Detroit and the city's downward spiral doesn't seem to be stopping anytime soon. Crime and urban decay is rising, while the overall population is falling. There are several other cities more deserving of a franchise than Detroit.
Are you very intimately familiar with Detroit and its surrounding areas?


Ya this downward spiral and the no money in Detroit is not having that much of an effect on the Pistons,Tigers, Red Wings they all still seem to be doing pretty good in attendance, furthermore, the people who support these pro teams in Detroit and who would also support a Detroit MLS team come from the subburbs where people still have jobs and where the economy is still pretty decent.

This sounds about right.

[Cashcleaner]

Pistons average attendance was third worst in the league last year - steadily declining over the last few years. The Tigers and Red Wings have been in good shape - but they've been fielding playoff teams, so that should be no surprise nobody. And one doesn't have to be from a particular place to know a few things about it. That's kinda why we have newspapers, magazines, the Internet, etc.

[Gringo Starr]

I spent some time in Detroit this past summer and found the doom and gloom stuff to be overblown. The population will probably decline by another 100 000 but the worst of the decline is over. We walked around the downtown area both day and night and felt safe doing so. They are rebuilding all the parking garages so that they are secure from break ins which were a deterrent to those from the suburbs. Plenty of affluent people ringing the city. What really strikes you though is the pride they have in their city and all the micro businesses popping up--feels a lot like Portland. If prices are fair there will be people in the stands--walking around you'll see Detroit City FC scarfs and gear already.

[habstfc]

30% of gate revenue goes to the league to subsidize the weaker teams. BS. It's time for these teams to get off the mls tit and stand on their own. 40 million dollar expansion fees and on top of that you have to hand over 30% of your gate on top of that? Makes no sense. TFC are helping teams financially like chicago, new England, colorado to be better than us on the pitch? If MLS wants to be taken seriously it's time for teams to have their autonomy in every aspect especially financially.

I've been to Detroit, BAD idea putting a team there.

[Haddy]

30% of gate revenue goes to the league to subsidize the weaker teams. BS. It's time for these teams to get off the mls tit and stand on their own. 40 million dollar expansion fees and on top of that you have to hand over 30% of your gate on top of that? Makes no sense. TFC are helping teams financially like chicago, new England, colorado to be better than us on the pitch? If MLS wants to be taken seriously it's time for teams to have their autonomy in every aspect especially financially.

MLS owns each and every team. You probably missed that in the article. Expansion fees are paid to earn the rights to operate a team, not own it.

With that said, MLS has every right to do whatever it wants with the money it collects - like it or not. That's what you get from single-entity.

#getusedtoit

...just had to!!

[Ivy]

I agree. If teams can't sustain themselves in a growing league, gtfo. There are plenty of markets around the US, and tons of rich folks who will fork out the necessary cash to buy teams. It's annoying having to give life support to teams like Chivas and NE. Yah you have decent teams, but come on, you're charity cases.

[habstfc]

MLS owns each and every team. You probably missed that in the article. Expansion fees are paid to earn the rights to operate a team, not own it.

With that said, MLS has every right to do whatever it wants with the money it collects - like it or not. That's what you get from single-entity.

#getusedtoit

...just had to!! I know what the article says. Technically you're right but this isn't macdonalds franchise its a sports team. I understand the logic from a 1996 or even a 2010 perspective but it's time for mls to cut each franchise loose and run it like a real sports league.

[Haddy]

I know what the article says. Technically you're right but this isn't macdonalds franchise its a sports team. I understand the logic from a 1996 or even a 2010 perspective but it's time for mls to cut each franchise loose and run it like a real sports league.

Oh I agree. That's the appeal of the NASL, aside from quality, it's run closer to the way I believe many of us would prefer.

But all the investors in MLS knew the terms of the deal when they were signing their franchise agreements. Too bad they didn't tell any of us (at least those of us, like me, who didn't bother to read about it in-depth).

I'm very interested to see where the league is, financially, about five years from now.

[habstfc]

Oh I agree. That's the appeal of the NASL, aside from quality, it's run closer to the way I believe many of us would prefer.

But all the investors in MLS knew the terms of the deal when they were signing their franchise agreements. Too bad they didn't tell any of us (at least those of us, like me, who didn't bother to read about it in-depth).

I'm very interested to see where the league is, financially, about five years from now.

I fear MLS is very close to "jumping the shark". It does have a bit of a "fad" feel to it. So many cities coming out of the woodwork wanting MLS franchises. Where were all these cities even 3 years ago? I don't remember cities like Orlando being in the conversation back then and now they will soon have a team.

[Haddy]

I fear MLS is very close to "jumping the shark". It does have a bit of a "fad" feel to it. So many cities coming out of the woodwork wanting MLS franchises. Where were all these cities even 3 years ago? I don't remember cities like Orlando being in the conversation back then and now they will soon have a team.

As an example, Orlando was founded in 2010. I'm sure there are tons of footy fans in all those cities popping up lately...but really it's about investors trying to capitalize on momentum. MLSE falls in to that category, surprise! LOL. I agree the trend is definitely there, let's just hope MLS is savvy enough to maintain its momentum.

edit: I didn't use TFC as an example, mainly because the trend didn't truly start until after TFC had kicked a ball. A lot happened in the couple years following 2007.

[Yohan]

As an example, Orlando was founded in 2010. I'm sure there are tons of footy fans in all those cities popping up lately...but really it's about investors trying to capitalize on momentum. MLSE falls in to that category, surprise! LOL. I agree the trend is definitely there, let's just hope MLS is savvy enough to maintain its momentum.
http://www.orlandosentinel.com/os-orlando-city-soccer-20131026,0,2844337.story


In the United States, football, basketball and baseball still dominate. But the ESPN (http://www.orlandosentinel.com/topic/sports/espn-%28tv-network%29-HOC792.topic) Sports Poll found that in 2011, soccer was the second-most-popular professional sport in the U.S. — behind the NFL — in a key demographic: those ages 12-24. It was first among Hispanics.One reason is the obvious one: Kids who played in youth leagues are now adults.

Businessmen trying to capitalize on that.

[SoccMan2]

It's funny how people come out here and state that teams like TFC are supporting teams like Chicago and New England, have you looked at the kind of attendance teams like New England and even Chicago are getting this season, well New England's attendance has increased this year and Chicago is up and down, however, our team TFC's attendance this year is pretty close to what Chicago and even New England is getting so I don't see how TFC is helping the Chicago's and New England's of the world, we will soon become one of the teams that will benefit from the single entity MLS structure because the fans we had in the first 4 or even 5 season's are gone, MLSE fucked them over enough with the crap on the field, they aint coming back people, get use to the type of crowds we got this season the 10 to 12000 people we saw at BMO for most of this season, that's as good as it is going to get, too many years of futility will do that, so let's all thank the MLS single entity structure because that's what will be saving this team's ass from going to the graveyard of North American pro soccer teams!

[OgtheDim]

...because the fans we had in the first 4 or even 5 season's are gone...

Nope. Some, not all, and those people, people like you, can be replaced.

What was will not be again - it is not coming back, in the same way. But there is a market for this team and for this game, and that market is constantly being refreshed as people grow up and move into the city. Everybody under 20-25 that was there yesterday was in high school or junior high when TFC started. People that age don't have your memories. They are making new ones. Yes, there are issues with the team, and TL scares the heck out of most of us who know how badly this could go. But, the market for this team remains.

This city is younger then it was 7 years ago.

This city is more diverse then it was 7 years ago.

This city is more soccer aware then it was 7 years ago.

And all that can be capitalized upon.

Moarn what was, for sure. But to say its dead is to ignore the reality of what this city is......constantly changing.

[Gilberto9]

http://www.youtube.com/watch?v=R7fS2xjQkd8

Looks like Detroit's 4th division team has a passionate supporters group...

[habstfc]

It's funny how people come out here and state that teams like TFC are supporting teams like Chicago and New England, have you looked at the kind of attendance teams like New England and even Chicago are getting this season, well New England's attendance has increased this year and Chicago is up and down, however, our team TFC's attendance this year is pretty close to what Chicago and even New England is getting so I don't see how TFC is helping the Chicago's and New England's of the world, we will soon become one of the teams that will benefit from the single entity MLS structure because the fans we had in the first 4 or even 5 season's are gone, MLSE fucked them over enough with the crap on the field, they aint coming back people, get use to the type of crowds we got this season the 10 to 12000 people we saw at BMO for most of this season Sorry disagree. Teams like Chicago and new England have to give away free hot dogs and beer with their tickets to get people to come. Financially TFC generates the third most amount of money in mls. We have the second highest ticket prices I believe and are 9th in league attendance. I am a SSH and made it to at least 14 games this year and aside when it's monsoon weather tfc drew waaay more than 10 - 12,000.

[Macksam]

Pistons average attendance was third worst in the league last year - steadily declining over the last few years. The Tigers and Red Wings have been in good shape - but they've been fielding playoff teams, so that should be no surprise nobody. And one doesn't have to be from a particular place to know a few things about it. That's kinda why we have newspapers, magazines, the Internet, etc.

Don't believe everything you see or hear.


It's funny how people come out here and state that teams like TFC are supporting teams like Chicago and New England, have you looked at the kind of attendance teams like New England and even Chicago are getting this season, well New England's attendance has increased this year and Chicago is up and down, however, our team TFC's attendance this year is pretty close to what Chicago and even New England is getting so I don't see how TFC is helping the Chicago's and New England's of the world, we will soon become one of the teams that will benefit from the single entity MLS structure because the fans we had in the first 4 or even 5 season's are gone, MLSE fucked them over enough with the crap on the field, they aint coming back people, get use to the type of crowds we got this season the 10 to 12000 people we saw at BMO for most of this season, that's as good as it is going to get, too many years of futility will do that, so let's all thank the MLS single entity structure because that's what will be saving this team's ass from going to the graveyard of North American pro soccer teams!

No. A good winning season will bring those people back.

[SoccMan2]

Did you see how many people were actually at BMO for most games this season, there was always 2 to 3000 less in the stands than the anounced attendance, why because people were fed up with the 7 years of futility and being out of the playoffs most of those 7 years by July! Well be ready for the free hotdogs and yes even cheap beer even at BMO to try and get people back in the stadium, and when all is said and done the real average for attendance for the 2013 season will be more like 14 to 15000 which will be far below the league average, thankyou MLSE!

[OgtheDim]

As stated in other places, what is is not what will be. And who was here is not what MLSE is worried about. The potential here is much larger compared to Chicago and NE. A competitive team will get people back. That this will not include you is your choice. But, your choice is not how this team will be defined.

[habstfc]

Did you see how many people were actually at BMO for most games this season, there was always 2 to 3000 less in the stands than the anounced attendance, why because people were fed up with the 7 years of futility and being out of the playoffs most of those 7 years by July! Well be ready for the free hotdogs and yes even cheap beer even at BMO to try and get people back in the stadium, and when all is said and done the real average for attendance for the 2013 season will be more like 14 to 15000 which will be far below the league average, thankyou MLSE! Every team exaggerates attendance, chicago among them. Last post you said 10-12,000 now your saying 14 to 15k.

[Haddy]

because the fans we had in the first 4 or even 5 season's are gone, MLSE fucked them over enough with the crap on the field, they aint coming back people

Really, all of them?

I'll agree many left but they were, for the most part, replaced. Try and remember, we are just two years removed from BMO Field's all-time attendance record.

I know a ton of people in 119 that continue to buy their seasons each year but won't attend until it's worth it. They keep the tickets as an investment for future fun and laughs.


Did you see how many people were actually at BMO for most games this season, there was always 2 to 3000 less in the stands than the anounced attendance, why because people were fed up with the 7 years of futility and being out of the playoffs most of those 7 years by July! Well be ready for the free hotdogs and yes even cheap beer even at BMO to try and get people back in the stadium, and when all is said and done the real average for attendance for the 2013 season will be more like 14 to 15000 which will be far below the league average, thankyou MLSE!

I don't want to sound negative here, but it's MLSE's job to SELL tickets, not make sure people attend. Obviously losing, low ratings and empty seats will eventually lead to a sales decline, at which point an investment in the team roster and some more wins will re-energize the fan base and ratings/attendance will recover. That's what next year's DP hunt is all about - at least to some of the executives. A few half-decent years, the fan base grows a bit more, followed by another rebuild and the cycle repeats.

Fluctuation. That's the key word in the North American sports model. There is always a winner and a loser, and very rarely does a team consistently maintain one status.

That is my opinion of the business of NA professional sports at its very core.

[Ivy]

It's funny how people come out here and state that teams like TFC are supporting teams like Chicago and New England, have you looked at the kind of attendance teams like New England and even Chicago are getting this season, well New England's attendance has increased this year and Chicago is up and down, however, our team TFC's attendance this year is pretty close to what Chicago and even New England is getting so I don't see how TFC is helping the Chicago's and New England's of the world, we will soon become one of the teams that will benefit from the single entity MLS structure because the fans we had in the first 4 or even 5 season's are gone, MLSE fucked them over enough with the crap on the field, they aint coming back people, get use to the type of crowds we got this season the 10 to 12000 people we saw at BMO for most of this season, that's as good as it is going to get, too many years of futility will do that, so let's all thank the MLS single entity structure because that's what will be saving this team's ass from going to the graveyard of North American pro soccer teams!
Was that one big sentence?
To be honest, sometimes I'm shocked that 10-12,000 average everyday fans still come out in late October, single digit temps, while it's raining and blowing wind. You're telling me they can't fill that stadium again with one successful season? Give me a break.
BTw, they announce 18-19k attendance at Saputo too, but on crap weather days, it looks no different than BMO field does, and this is their year 2, with playoffs.

Also, TFC will become the charity case? the same TFC that's willing to spend 26m on 2 players?

[jazzy]

There's nothing wrong in investing in a city like Detroit to create jobs and investment . If they can sell tickets this should be a goal of sports franchises , to also benefit the city itself and create positive moral long with financial input.