Forbes Valuations of MLS Teams

[S_D]

http://www.forbes.com/business/2008/09/09/mls-soccer-beckham-biz-sports-cz_kb_0909mlsvalues.html

Saw this link on BS and I thought it was pretty good info.

Los Angeles Galaxy, worth $100 million

Toronto FC worth $44 million

-turned a profit of $2.1 million
-spectators topped the league in spending, averaging $15 a game on food, beverages and souvenirs
-rakes in $4 million in local television and sponsorship revenue.


Toronto FC was one of the most successful launches in pro sports history,” Garber says

Paul if you are reading this Tom better have given you a nice fat raise...just not too much though...we still need to be able to afford a DP :D

[Roogsy]

http://www.forbes.com/business/2008/09/09/mls-soccer-beckham-biz-sports-cz_kb_0909mlsvalues.html

Saw this link on BS and I thought it was pretty good info.

Los Angeles Galaxy, worth $100 million

Toronto FC worth $44 million

-turned a profit of $2.1 million
-spectators topped the league in spending, averaging $15 a game on food, beverages and souvenirs
-rakes in $4 million in local television and sponsorship revenue.



Paul if you are reading this Tom better have given you a nice fat raise...just not too much though...we still need to be able to afford a DP :D

I was close! When we were discussing it a few months ago I said I wouldn't be surprised if it was over 40mill!

[werewolf]

ahhh a $2.1 Mil profit, that explains the ticket price increase for a last place team.

[jloome]

Yeah, and keep in mind that'll be the written down profit, once they've written off every piece of capital depreciation and lost income possible. That really translates to a profit of several factors greater.

[olegunnar]

Only two teams on that list had positive operating income.

roh oh!

[Chevy]

Direct quote from the article....



The Toronto FC, which commissioner Garber holds up as the blueprint for the coming expansion teams, is worth $44 million, up four-fold in just three years. The team turned a profit of $2.1 million in its inaugural season last year, when it sold every ticket at 20,500-seat BMO Field.

A cosmopolitan city with a passionate soccer fan base translated into a sea of supporters donning the red and white team colors at home games. Toronto FC spectators topped the league in spending, averaging $15 a game on food, beverages and souvenirs at concession stands. Toronto also rakes in $4 million in local television and sponsorship revenue.

“Toronto FC was one of the most successful launches in pro sports history,” Garber says after reflecting on how Toronto reporters scoffed during the initial press conference, predicting that MLS would never succeed in a city with a history of failed soccer teams.

[rocker]

i would hope they made a profit!

if the CSA ran TFC there'd be a loss.

I wonder if they might have to move the Crew franchise soon.
if this league continues to grow, won't the Crew be a big drag on the sharing of revenue?
they'll always be takers, not givers.
sponsorship is key, and if a small city like that doesn't have the base, they are in trouble as the cap goes up and the league tries to grow.

[FluSH]

-spectators topped the league in spending, averaging $15 a game

What? $15 a game? I easily spend 3 x that on BEER alone every game!!!

[RPB_Brantford_08]

i would hope they made a profit!

if the CSA ran TFC there'd be a loss.

I wonder if they might have to move the Crew franchise soon.
if this league continues to grow, won't the Crew be a big drag on the sharing of revenue?
they'll always be takers, not givers.
sponsorship is key, and if a small city like that doesn't have the base, they are in trouble as the cap goes up and the league tries to grow.


The Crew will have to move soon,dwindling crowds fro a first place club are troubling...this is where the Senators ownership group should come in and Move the franchise to Ottawa, the could pickk the Crew up cheap,
all they need is a stadium.

[AL-MO]

YEAH because they'll be alot more successful there.

[Oblio2]

$2.1m
Spend it all on grass!!!!!!

[Ladies Love Julius James]

What? $15 a game? I easily spend 3 x that on BEER alone every game!!!

Ya but remember kids and soccer moms who don't buy anything.

[nobodybeatsthewiz]

agree with jloome....no WAY in hell they only turned a NOI of $2.1MM

[Detroit_TFC]

The video interview with the CEO of DC United was very interesting. Stadium announcement "in the spring." Also, Payne said no need to seek addtional investment partners for DCU, they expect "a significant increase in value in the near future."

[Beach_Red]

The video interview with the CEO of DC United was very interesting. Stadium announcement "in the spring." Also, Payne said no need to seek addtional investment partners for DCU, they expect "a significant increase in value in the near future."

Yeah, it was good. This league is about to reach the 'tipping point,' I think.

[Eastend]

What? $15 a game? I easily spend 3 x that on BEER alone every game!!!

that's what I was thinking...I guess we balance out the ones who don't buy.

[werewolf]

$15 X 20,000 people X 19 home games = $5,700,000

and that doesn't even include tickets, TV contracts, advertisements....

[GeorgeB]

"i expect soccer francises to trade in the $80 to $ 100 million range within the next three years." hmm, i wonder if he was talking about us ?

[Bluenose13]

$2.1m
Spend it all on grass!!!!!!Hmm......I probably have spent that over the last 20 years :stogey:

[ManUtd4ever]

Hmm......I probably have spent that over the last 20 years :stogey:

HAHA, you're not the only one...:D

[troy1982]

The Crew will have to move soon,dwindling crowds fro a first place club are troubling...this is where the Senators ownership group should come in and Move the franchise to Ottawa, the could pickk the Crew up cheap,
all they need is a stadium.

In defence of the crew the article is unclear if they included the shirt sponser deal which came at the very end of last season. They also now have concert revenue (which probably wouldn't be counted for team revenue but the owner still get the money). In addition they are in first place and the crowds appear to be better, based on TV viewing (not announced)

when you include non team revenues for all the owners I think most teams are just in the black. But the article shows why doubling or tripling of the salary cap within 2 years (which many here are demanding) will not be possible.

[yellowfellow]

that's what I was thinking...I guess we balance out the ones who don't buy.

You mean, the ones who can't buy. ;)

[Toronto Ruffrider]

$15 X 20,000 people X 19 home games = $5,700,000

and that doesn't even include tickets, TV contracts, advertisements....

I think some of that money goes to the City of Toronto, but I can't remember what proportion.

[rocktml]

wow good read thanks

[ChrisLav]

Only two teams on that list had positive operating income.

roh oh!

Actually Dallas comes in with a positive Operating income of: $0.5 million. They're just at a lower value than Chicago & 4th on the list.

[jloome]

I believe the city gets 50% of concession sales, going from memory. Could be wrong. Anyway, if you look at their expenses versus revenue, even assuming they're serving a debt (unlikely, given its MLSE) on their chunk of the stadium, this team is writing down BIG TIME.

The rest of the league picture is equally interesting. Presumably, if LA, Toronto and Dallas had a combined profit of $6.7 million and Toronto accounted for $2.7 million of htat, then LA had no more than (assuming the obviously incorrect lowball of $100G for Dallas) $3.9 million in profit. It sold 300,000 Beckham jerseys, at about $100 a piece. Shit, that's $30 million in shirt sales right there.

What kind of absurd expenses (read: travel, in all likelihood) are these teams encountering that leads to such skimpy bottom lines? Either this is an old boy's club of using pro sports to cover bills for other ventures, or something is seriously wrong.

[Cashcleaner]

Once again, this is not news that we should really be happy about. I'm sorry, but I'm not impressed at all with the fact that our club, sorry - the owners of our club, are making 44 million bucks while we've got a senior roster totalling less than 2.3 million.

Once again, I really have to point out that we are trailing behind only the Galaxy when it comes to revenues for this year and yet we certainly don't show the signs of a club that is even looking like playoff contenders.

[Shakes McQueen]

Once again, this is not news that we should really be happy about. I'm sorry, but I'm not impressed at all with the fact that our club, sorry - the owners of our club, are making 44 million bucks while we've got a senior roster totalling less than 2.3 million.

Once again, I really have to point out that we are trailing behind only the Galaxy when it comes to revenues for this year and yet we certainly don't show the signs of a club that is even looking like playoff contenders.

They aren't making $44 million dollars. That is the valuation of the entire club.

We had an operating profit last year of just over $2 million.

The three profitable MLS teams combine for a total of $6.7 in operating profit.

- Scott

[Detroit_TFC]

In the context of the upcoming players contract negotiations, you can start to see some of the talking points on both sides. The owners will say that a large salary cap increase is not feasible due to poor profitability throughout the league, except for LAG, TFC, etc. The players will say the investors are reaping a windfall based on the increasing valuation of the teams.

Considering once RB is in their own place under better terms and Seattle is likely to be a smash hit like TFC is, plus other developments like KC's future stadium, Philly, etc, overall league profitability will increase soon, by a lot. Increasing the salary cap, and thereby recruiting better quality players, will put a lot more butts in seats where that is an issue. If the owners dig in over this, they are just being penny wise and dollar foolish.

This is a tipping point for the league, on a financial level at least.

[Fort York Redcoat]

Only two teams on that list had positive operating income.

roh oh!

So perhaps its more than 2 but this is something we should all keep in mind when talking about CBA and more DP's and raising the salary cap. This league is not as succesful as our team. I want more quality players but what will happen to the league if they paid players more and keep adding players year after year with expansion?

One way to look at it is that we will be fine and any other club could just move but one only has to wiki this league to see how fragile it's been in the past.

sidenote: Why is it that leagues think Florida needs not one but two struggling teams at a time?

[Shakes McQueen]

The article actually said THREE teams were profitable - Los Angeles, Toronto, and Dallas.

- Scott

[Beach_Red]

Presumably, if LA, Toronto and Dallas had a combined profit of $6.7 million...

... and none of them make the playoffs...

But really, speculating about sports teams' money? We don't get anywhere near enough real information...

[bangersandmash]

When I first saw 2.1 mill I thought "hey, that's almost what they spend on players!" Next year's team is ALREADY PAID FOR! Woo hoo!

[Billy the kid]

With so few team turning a profit, the message to take from this might be that the salary cap will not move a whole lot whent the CBA is renegotiated.

I thought L.A. would have a much higher operating income with all the Beckham jerseys and such, a lot of his expense was picked up by sponsors.

[nobodybeatsthewiz]

What kind of absurd expenses (read: travel, in all likelihood) are these teams encountering that leads to such skimpy bottom lines? Either this is an old boy's club of using pro sports to cover bills for other ventures

of course it is.....theres no way a league who models itself on keeping its primary expense (player salaries) in check squanders all the other opex charges. its the old boys club, look at the owners.....AEG, MLSE....so many cross-overs on those balance sheets/income statements it'll make ones head spin.

[greatwhitenorf]

I think the negative assesments on Columbus are a bit out of line. They've probably had 60% or more games with crowds above 15,000. A few early season games had bad crowds - one at about 6,800 - but most MLS teams don't do as well early in the year. And Columbus was coming off of a bad season last year.

Their final three home games are all likely to draw big crowds. New York, LA and DC Utd. And they'll make the playoffs as top seed probably.

We shouldn't be too fussed about how some old boys network is cooking the books. Soccer has been kicked around like an unloved mongrel by the mainstream media for so long, it needs to have big-pocketed, crafty owners like the ones coming into the game nowadays.

For those of us gashed by the demise of the NASL, it's great to see the pro game revive here and to get to see the nay-sayers get their come-uppance. Unlike the NHL, MLS manages to find owners who aren't heading for jail.

What's encouraging for Canadian fans is that the league is still financially powered by ticket sales and locally-generated revenue streams. Which means cities with proven soccer support, like Vancouver and Montreal, have a great chance of getting in sooner rather than later.

With those kind of escalating expansion fees, who'd bet against the league adding two US and two Canadian teams in the short term?

[Toronto_Bhoy]

The article actually said THREE teams were profitable - Los Angeles, Toronto, and Dallas.

- Scott

Sounds kinda like the NHL…

[ensco]

Yeah, and keep in mind that'll be the written down profit, once they've written off every piece of capital depreciation and lost income possible. That really translates to a profit of several factors greater.

jloome is right. It was approx $4.5 million on a cash basis. Here is an estimate done in the off-season of MLSE's true cash income last year (done with the help of an MLSE insider).

MLSE Income Statement for TFC – Cash Basis

Summary
Revenues: $8,910,000

Single Tickets $6,407,500
Luxury Boxes $472,500
Food/Beverage $850,000
Merchandise $330,000
Naming Rights $500,000
Parking $150,000
MLSE Management Fee $200,000
Stadium Profit/Loss ??

Expenses: $4,450,000

Sales/Marketing $1,600,000
Technical Staff $1,000,000
Appearances (Friendlies) $1,000,000
Travel $450,000
Game Day Costs $150,000
Maintenance $150,000
Advertising $100,000
DP: $0
Youth Development $0

MLSE Cash Income: approx $4,500,000 + stadium profit/loss

Detail of Each Line Item
Ticket Revenue
• Regular Season Game Tickets:
• $685,500/regular season game at 100% of face value
o West stand: 10000 seats @ avg $40/seat = $400,000/game
o East stand: 7000 seats @ avg $35/seat = $245,000/game
o South stand: 3000 seats @ avg $13.50/seat = $40,500/game
• $541,500/regular season game actual
o Seasons’ tickets (70%) at 30% discount
• $8,122,500/season pre City/MLS share
• Friendlies:
o 6,000 seats @ avg $75/seat = $450,000/game x 2 games
o $900,000/season pre City share (no MLS share assumed)
• Total Ticket Revenue:
• $9,022,500 gross
• Revenue to City: $255,000 (7% , but capped at $15,000/game x 17 games)
• Revenue to MLS: $2,360,000 (30% of remainder ex boxes, ex friendlies)
• Revenue to MLSE: $6,407,500

Luxury Boxes:
• $1,050,000/season (30 boxes @ avg $33,500/box/season) pre City/MLS share
• Revenue to City: $577,500 (55%)
• Revenue to MLSE: $472,500 (45%)

Food/Beverage Concessions
• 20,000 seats @ avg spend $10/seat = $200,000 gross/game
• 25% of gross to City, or $50,000/game
• 25% margin on gross to MLSE, or $50,000/game
• Revenue to City: $850,000 (17 games)
• Revenue to MLSE: $850,000 (17 games)

Total Merchandise Sales: $1,000,000 gross
• this is hard to estimate (estimate based on news report of Tampa Bay Lightning total merchandise sales of $945,000 in 2003 and $4.1 million in 2004)
• Merchandise Sales at BMO
o 100 jerseys/game @ $150 = $15,000 gross/game
o T shirts/bags/hats = $5,000 (?) gross/game
o $340,000 gross/season, less cost of concession operations:
o $1,000/game or $17,000/season
o Revenue to City: $48,000 (15% of $323,000)
o Revenue to MLSE: $160,000 (?) (50% of remainder, rest to MLS/adidas)
• Merchandise Sales ex BMO: $680,000
o Revenue to MLSE: $170,000 (25% of gross, rest to MLS/adidas and retailer)

BMO Naming Rights
• Revenue to MLSE: $500,000/season
o excluded from City sharing calc, offset to $10 million capital commitment

Parking
• 3,000 spots @ $10/game = $30,000/game gross
• $450,000/game gross
• Revenue to MLSE: 1/3, or $150,000
• Revenue to City: 2/3, or $300,000

MLSE Management Fee (per agreement with City)
• $200,000

Stadium Advertising and Carlsberg Sponsorship
• Shared by MLSE and City more or less equally (along with stadium profits and losses)
• MLSE gets first $250,000 of profit, then City get next $250,000, then profits shared 50/50
• Unknown

MLSE Costs:

Sales/Marketing
• $1,600,000
• Assume average $60,000 x 26 people
• http://toronto.fc.mlsnet.com/t280/about/meet_us/
• Plus $50,000 costs allocated from MLSE (eg ticketing)

Techical Staff
• Mo + 8 assistants/trainer/physician/managers
• $1,000,000 (?)

Travel (Airfare/Hotel/Meals + Other)
• $450,000
o $20,000/game airfare x 15 games = $300,000/season
o $7,500/game hotel x 15 games = $112,500/season
o $2,500/game meals/other=$37,500

Game Day Costs
• $150,000
• Security/utilities etc
• $10,000/game x 15 games

BMO Maintenance
• $150,000
• 2 employees x $50,000/per person + materials

Advertising
• $100,000 (?)
• Mostly done in tandem with BMO and City of Toronto (ie flags on street poles)

Youth Development
• $0 (?)

Designated Player
• $0 (?)

Appearance Fees for Friendlies
• $1,000,000/season
• $500,000/game (?) (2 games)

Total Costs:
• $4,450,000

[ensco]

this will probably go up to at least $6 million this year (ticket prices increased, 2 CC games added, less expensive friendlies in 2008)

in two years, even prior to the Edu windfall, they'll have recouped the franchise fee

[nobodybeatsthewiz]

ahhh the beauty of cash accounting vs income statements. smoke and mirrors.

[Cashcleaner]

They aren't making $44 million dollars. That is the valuation of the entire club.

We had an operating profit last year of just over $2 million.

The three profitable MLS teams combine for a total of $6.7 in operating profit.

- Scott

Still doesn't make me feel any better as a fan. :p

[Beach_Red]

Still doesn't make me feel any better as a fan. :p

Now that Toronto seems to be a proven market, I wonder how profitable a team could be here if it played in a European league. Most flight's aren't much more than they are to LA, are they?

[greatwhitenorf]

And which league would that be? The Baltic House League? Azores Pub League?

Ahh, well. A man can dream, wot?

[Oldtimer]

Without going into all the details, the accounting that was used in the Forbes article is suspect, it looks like the "losses" were leaked conveniently just in time for the CBA negotiations. Specifically, it looks like only television revenue that was distributed to the teams is counted as "team income" while revenue that was earned by SUM but held as retained earnings isn't. That conveniently makes almost a $1 million difference per team.

There may be other accounting tricks that were used to make it look like most teams are just slightly in the red, i.e. stable enough, but unable to give the players any more money. I suspect that the Player's Union has accountants on staff and won't be fooled.

[BigLou]

They aren't making $44 million dollars. That is the valuation of the entire club.

We had an operating profit last year of just over $2 million.

The three profitable MLS teams combine for a total of $6.7 in operating profit.

- Scott
His point must be taken though. I do think that as the second richest club in MLS we should be spending more dough. This is when we need to start spending money on new facilities and players etc. Up until a few weeks ago I was a believer in MoJo's 5year plan but seeing the Earthquakes climb out of the league basement has changed my perspective of MoJos record in TO. In this league changes can be made quickly. Its time for action.

[Beach_Red]

His point must be taken though. I do think that as the second richest club in MLS we should be spending more dough. This is when we need to start spending money on new facilities and players etc. Up until a few weeks ago I was a believer in MoJo's 5year plan but seeing the Earthquakes climb out of the league basement has changed my perspective of MoJos record in TO. In this league changes can be made quickly. Its time for action.

Other than pick up a couple of guys that refused to play for TFC, what has San Jose done that Mo hasn't?

You're right about your first point, the owners need to spend more money on facilities. And fast. They may want to take a go slow approach because soccer has always failed in this city, but the proof is there now that this will be a success - if they invest more in the areas they can, the areas not affected by the salary cap.

I'm still disapointed that there wasn't a single other possible owner in all of Ontario for an MLS team in Toronto, no one else showed any interest.

I guess we take what we can get....

[profit89]

http://mugatusays.com/uploaded_images/donovan-724234.jpg

[stretchthetruth]

^^^ that pic never gets old... says it all, really...

[Draracle]

so now we need to organize a buying group of ~40k who can front $2500 each... then make the MLSE an offer they can't refuse.

[james]

The article actually said THREE teams were profitable - Los Angeles, Toronto, and Dallas.

- Scott

i dont get how Dallas could possibly be making money. They had the worst attendence this just passed weekend just like they usually do when playing home. They have had all bt 1 sell out this year and there attendence this weekend was an inpressive 7,200. :nonod:


While other teams this weekend - Columbus had a sell out (Vs Galaxy tho no suprise) , New England had 18,800 fans and DC United had a very inpressive 28,800!

[Toronto Ruffrider]

i dont get how Dallas could possibly be making money. They had the worst attendence this just passed weekend just like they usually do when playing home. They have had all bt 1 sell out this year and there attendence this weekend was an inpressive 7,200. :nonod:


While other teams this weekend - Columbus had a sell out (Vs Galaxy tho no suprise) , New England had 18,800 fans and DC United had a very inpressive 28,800!

Perhaps Dallas is one of the few teams that doesn't try to pad its gate numbers. We know that most MLS teams just love giving out comps.:rolleyes:

Aside from attendance, it's really difficult to gauge overall profitability in MLS, or in any sports league for that matter. Creative accounting can do wonders in changing the financial complexion of a league.

[Bobo]

Ya but remember kids and soccer moms who don't buy anything.

Is intoxication the new standard of support now? Actually for many it has been since the beginning. Pretty sad.