Storm Clouds for MLS Owners? [Archive]

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ensco

02-02-2009, 03:06 PM

Parkdale

02-02-2009, 03:14 PM

interesting thoughts.

from the TFC perspective, there's very little cash investment from the MLSE into running the team. The stadium is mostly covered and the seats are in demand. I'm sure that a team like Toronto FC, or Seattle or the Galaxy on tour goes a long way to support the tired and depressing attendance you'd find at an RSL home match.
Hopefully they can keep their costs down, and still offer a good value to the fans.

People still want entertainment during hard times, and MLS tickets are very inexpensive compared to the alternatives.

giambac

02-02-2009, 03:15 PM

League officials in all sports are salesmen for their product. As a result, they can’t tell you the truth, which is the following: paid attendance and TV revenue are going to fall across all sports. This is affecting different sports in different ways so far, with the strongest sports (ie the NFL) affected the least. But for the niche sports, it’s getting ugly. NASCAR, with its reliance on automaker sponsorship dollars, is cutting teams (http://www.poconorecord.com/apps/pbcs.dll/article?AID=/20090115/NEWS/90115005) and possibly races. The NHL has at least three teams (http://http//www.theglobeandmail.com/servlet/story/RTGAM.20081129.wspt_saturdayfeature29/GSStory/GlobeSportsHockey/home/?pageRequested=1), and maybe as many as seven teams, in serious financial trouble. Arena Football has folded (http://www.reuters.com/article/newsOne/idUSN1550407020081215). Even MMA (http://www.wrestling-edge.com/wwenews.php?subaction=showfull&id=1231526435&archive=&start_from=&ucat=1) is having issues.

Also of note, though less relevant given the very different industry structure over there, many football clubs in Europe, especially in Spain and Italy, are in financial difficulty (http://sports.yahoo.com/sow/news?slug=reu-financial_factbox&prov=reuters&type=lgns).

So what does all this mean for MLS?....

(It's a long post and I'm fooling around with a website I'm working on, so I've put the rest of this up here:

Thinking About Things (http://thinkingaboutthings.com)

Actually I believe that the MLS and TFC are well equipped in these difficult times. In a weird way I believe that the economic recession may help the MLS and TFC.

Here is my rational.

People use sport for entertainemnt and to some extennt it serves asa form of escape from our everyday stress and worries. With the economic downturn people will be more conservative and diligent with their spending. However people still need some form of entertainment. Although they will cut back I think it will effect the more expensive sports (hockey, Basketball,) where tickets are pricey. I beleive these people will turn to less expensive sports like baseball and soccer where the prices are more affordable. TFC and MLS have a good niche and a very good price point. Where people can no longet take their kids to a basketball or football game they will opt for the more affordable baseball or soccer match.

That's my take. The price point in the MLS is good. It's more about the product. If the product is good people will turn to it.

rocker

02-02-2009, 03:17 PM

interesting article... some points:

on ticket sales, this article seems to suggest tickets sales are not going down:
http://www.sportsbusinessjournal.com/article/61406

also, when he asks "What is the ability of the MLS owners to fund losses?" one has to remember that this is the very reason Garber has been sticking to his guns about having deep pocketed ownership groups. The league in the past wasn't even always functioning as a proper business -- even in good times it was basically taking money from the owners to keep things afloat. I don't really see how this downturn is any different. The economic may be worse now than in the past, but in the past MLS was worse off in terms of fan support and notoriety.

I find when the author begins to speculate on the wherewithal of the different owners, it's kind of pointless. He doesn't have any real info on these guys.

Beach_Red

02-02-2009, 03:25 PM

Actually I believe that the MLS and TFC are well equipped in these difficult times. In a weird way I believe that the economic recession may help the MLS and TFC.

Here is my rational.

People use sport for entertainemnt and to some extennt it serves asa form of escape from our everyday stress and worries. With the economic downturn people will be more conservative and diligent with their spending. However people still need some form of entertainment. Although they will cut back I think it will effect the more expensive sports (hockey, Basketball,) where tickets are pricey. I beleive these people will turn to less expensive sports like baseball and soccer where the prices are more affordable. TFC and MLS have a good niche and a very good price point. Where people can no longet take their kids to a basketball or football game they will opt for the more affordable baseball or soccer match.

That's my take. The price point in the MLS is good. It's more about the product. If the product is good people will turn to it.

I agree.

Recessions aren't across-the-board bad. There is also opportunity. As Homer Simpson would say, it's a crisitoonity.

ensco

02-02-2009, 03:31 PM

I agree.

Recessions aren't across-the-board bad. There is also opportunity. As Homer Simpson would say, it's a crisitoonity.

I get your point here in Toronto, but will people in Chicago or Dallas "trade down" as you hope? I have my doubts.

Beach_Red

02-02-2009, 03:33 PM

I get your point here in Toronto, but will people in Chicago or Dallas "trade down" as you hope? I have my doubts.

A lot of it depends on how MLS markets itself. If they can sell it as the "global game" it won't look like trading down.

giambac

02-02-2009, 03:34 PM

I get your point here in Toronto, but will people in Chicago or Dallas "trade down" as you hope? I have my doubts.

They will have no choice but to trade down. When the funds are cut people won't be able to afford the Bears or the Bulls. If they want enteratinment it will be in the form of bleacher tickets to a white sox or Cubs game or a Chicago fire match.

flatpicker

02-02-2009, 03:36 PM

A lot of it depends on how MLS markets itself. If they can sell it as the "global game" it won't look like trading down.

This is a good angle...
The MLS obviously isn't the number one sport in North America (way down the list in fact)
But it would make for a good ad campaign to label themselves as the "World's Game" or something...
Create hype based on the sport rather than the league itself.

TorontoBlades

02-02-2009, 03:40 PM

They will have no choice but to trade down. When the funds are cut people won't be able to afford the Bears or the Bulls. If they want enteratinment it will be in the form of bleacher tickets to a white sox or Cubs game or a Chicago fire match.

Or they could watch the game on the tube, or buy a 50 cent newspaper the next morning. Truth is, industries where people spend their disposable income will all take a hit. People will now be saving their "extra" cash incase times get worse and they need to keep money for necessities, like that mortgage payment you thought you could afford last year when you had a job, for example...

olegunnar

02-02-2009, 03:41 PM

giambac

02-02-2009, 03:45 PM

Or they could watch the game on the tube, or buy a 50 cent newspaper the next morning. Truth is, industries where people spend their disposable income will all take a hit. People will now be saving their "extra" cash incase times get worse and they need to keep money for necessities, like that mortgage payment you thought you could afford last year when you had a job, for example...

People always need some form of entertainemnt to get their minds awy from work and stress. whteher it's going to watch a movie or something else. People will just be more picky on how much they spend. MLS tickets are way cheapier then most other sporting events. Shit in some case going to the movie sis as expensive.

Boris

02-02-2009, 03:48 PM

i think this is the time mls needs to market itself as that good cheap entertainment.
the next few weeks, we'll see what direction they head in

Beach_Red

02-02-2009, 03:48 PM

I think the TV and sponsorship revenue sports will have $$ issues. MLS is a gate revenue league so it should be pretty safe (one of the last left).

What I mean is you have teams that rely on the TV money to cover the costs (green Bay Packers for example)...and you have operations like Nascar that are crazy popular as fan sports, but the teams rely on sponsorships to operate. MLS has no such problem. They have a crappy TV deal (ESPN8, the ocho) and crappy sponsors (Sierra Mist etc.).

Sponsorship is another place where "trading down" could really help MLS. The Super Bowl just dropped some of the ad prices, but they're still crazy expensive.

As for the owners wealth and balance sheets, I've never believed any of those numbers. If you go by what they say sports is NEVER a good investment. And yet, if you go by what they do, there are always investors in sports.

giambac

02-02-2009, 03:51 PM

i think this is the time mls needs to market itself as that good cheap entertainment.
the next few weeks, we'll see what direction they head in

Agreed.

These diificult times present a great opportunity for the MLS. It's up to them to take advantage of this opportunity.

ensco

02-02-2009, 04:05 PM

A lot of it depends on how MLS markets itself. If they can sell it as the "global game" it won't look like trading down.

I think we should distinguish between, "what it should be", "what it could be" and "what it is"....

Anybody who has been to a game in Chicago and Columbus knows that they are over-reporting the gate.

I was in Dallas last summer and went to a game in Plano. They reported 13,000 attendance but it wasn't half that. The Dallas Morning News on game day had coverage of a Dallas Stars players' off-season golf tourney, but absolutely nothing on their MLS team that was playing that day.

When hockey is getting off season press in the southern US, but your local MLS team isn't, there is a serious problem.

Flipityflu

02-02-2009, 04:15 PM

you know that tiny little salary cap we have complained about since day 1....we are going to thank our personal deity's for it.

Beach_Red

02-02-2009, 04:28 PM

I think we should distinguish between, "what it should be", "what it could be" and "what it is"....

Anybody who has been to a game in Chicago and Columbus knows that they are over-reporting the gate.

I was in Dallas last summer and went to a game in Plano. They reported 13,000 attendance but it wasn't half that. The Dallas Morning News on game day had coverage of a Dallas Stars players' off-season golf tourney, but absolutely nothing on their MLS team that was playing that day.

When hockey is getting off season press in the southern US, but your local MLS team isn't, there is a serious problem.

Well, if we're talking about marketing than, "what it is," isn't relevant ;).

I think MLS will get to the point of off-season press a lot faster than the NHL did. Sure, it's getting some now, but that was a huge complaint from the NHL for, oh, forty years before they started getting any.

It's very likely that this round of expansion will push MLS a little further into the mainstream. The opening of the new stadium in New York will also help a lot. Then the next round of expansion and so on until the league is at twenty teams - there might also be some team movement and ownership changes.

I've seen a lot of sports leagues come and go in North America from the WHA to all those football leagues (WFL, USFL, XFL) and the World Basketball League (I won the contest to name the Hamilton team - got season tickets), team tennis (remember the Philadelphia Freedom and the Elton John song?) a few lacrosse leagues and even the NASL. I think MLS has a few things going for them none of those leagues did. One is a huge player pool from around the world and the next most important is a huge amount of kids playing the game.

The NHL did pick up once a lot of places in the states started hockey programs but they're expensive and likely to suffer in the next few years. There'll probably be a "trickle-up" effect on the NHL.

MLS has a bit of a model in Toronto now and Seattle looks to be just as good. I think New York will surprise people when the new stadium is opened. If MLS takes advantage of this "crisis" it could do really well.

ensco

02-02-2009, 04:30 PM

^here's hoping you are right

jloome

02-02-2009, 05:06 PM

I think we should distinguish between, "what it should be", "what it could be" and "what it is"....

Anybody who has been to a game in Chicago and Columbus knows that they are over-reporting the gate.

I was in Dallas last summer and went to a game in Plano. They reported 13,000 attendance but it wasn't half that. The Dallas Morning News on game day had coverage of a Dallas Stars players' off-season golf tourney, but absolutely nothing on their MLS team that was playing that day.

When hockey is getting off season press in the southern US, but your local MLS team isn't, there is a serious problem.

Depends on your definition of serious. Professional football leagues the world over -- 90% of them, anyway -- survive with sub-10,000 attendances, and most of them do it without big league TV revenue. The only relevant cost here compared to elsewhere is travel, because the league is trans-continental.

And while I thoroughly agree that the league is fudging attendances badly (5,000 for a playoff game in New England was obviously one they couldn't get around) they're also fudging revenue: I can believe that all but three teams lost money, maybe. But I can't believe LA made less than a million dollars profit in David Beckham's first year. They allegedly sold a quarter million Beckham shirts around the world, for cryin' out loud.

So really, we have no idea. Maybe we're a tiny pro sport that will do well because we'll slide under the "I can't spend on that" radar; maybe we're bigger than we think and more cost constraint will be necessary.

Who fucking know? Don Garber and the owners. That's about it. Everything else is just unsupportable, as we have no access to their books.

ensco

02-02-2009, 05:33 PM

Who fucking know? Don Garber and the owners. That's about it. Everything else is just unsupportable, as we have no access to their books.

Well, as Warren Buffett says, "when the tide goes out, we find out who's been swimming without underwear". An awful lot of MLS owners are in the businesses that have been truly getting annihilated here.

Beach_Red

02-02-2009, 05:55 PM

Who fucking know? Don Garber and the owners. That's about it. Everything else is just unsupportable, as we have no access to their books.

And even then, they can only tell us what happened last year.

But there's one other reason why I think soccer will do well in North America now - it's ideally suited for television.

This wasn't the case twenty years ago. Before there could be scrolling ads onscreen - and all kinds of other clutter we're just used to now - soccer didn't have enough stoppages in play for commercial breaks.

Now, the no stoppages works great - no time to flip the remote to something else. I don't have any stats, but I bet soccer holds its viewers better than other sports do. The tough part, of course, is getting the viewer in the first place.

It's also easy to fit a soccer game into a TV slot - it won't run 4 1/2 like baseball, or even 3 1/2 like a lot of football games.

MisterMacphisto

02-02-2009, 09:10 PM

Even MMA (http://www.wrestling-edge.com/wwenews.php?subaction=showfull&id=1231526435&archive=&start_from=&ucat=1) is having issues.[COLOR=Black]

You just linked to a quote about WWE. For the love of god, do not ever... EVER confuse the WWE with MMA. :rolleyes:

ensco

02-03-2009, 06:56 AM

You just linked to a quote about WWE. For the love of god, do not ever... EVER confuse the WWE with MMA. :rolleyes:

Fixed. I have the right link in there now.

Mark in Ottawa

02-03-2009, 07:13 AM

Create hype based on the sport rather than the league itself.
Exactly. The challenge is to generate a stable base of support.

Here in Ottawa I remember when the Senators first got started they had no problem with ticket sales what with this being an insane hockey market. The junior team, the 67's, were a bit worried about an eroding or moved fan base and so began marketing to youngsters and their families thru player visits to schools to support reading programs and physical fitness.

Those young people got a few free tickets and brought along parents and siblings for an inexpensive family outing and the base of support was set and rebuilt.

Both the Senators and the 67's used to allow minor hockey teams (Novice age and TimBit players) to take to the ice between periods of afternoon games for their own cross ice games.

Ok... it was kinda hokey and had a small town feel to it but again built good memories of the franchises even though they may have been a less than successful at the time.

ensco

02-03-2009, 08:23 AM

Depends on your definition of serious. Professional football leagues the world over -- 90% of them, anyway -- survive with sub-10,000 attendances, and most of them do it without big league TV revenue. The only relevant cost here compared to elsewhere is travel, because the league is trans-continental.

And while I thoroughly agree that the league is fudging attendances badly (5,000 for a playoff game in New England was obviously one they couldn't get around) they're also fudging revenue: I can believe that all but three teams lost money, maybe. But I can't believe LA made less than a million dollars profit in David Beckham's first year. They allegedly sold a quarter million Beckham shirts around the world, for cryin' out loud.

So really, we have no idea. Maybe we're a tiny pro sport that will do well because we'll slide under the "I can't spend on that" radar; maybe we're bigger than we think and more cost constraint will be necessary.

Who fucking know? Don Garber and the owners. That's about it. Everything else is just unsupportable, as we have no access to their books.

MLS' structure can't replicate the Costa Rican, Colombian and Scandinavian leagues, where the teams generate significant revenue by selling players. We're at least ten years from having an academy system that could generate that, and it's not clear that North American labor laws allow the kinds of contracts that allow clubs elsewhere to sell young players.

Re Beckham jersey sales, I'm pretty sure Beckham gets most of that.

Beach_Red

02-03-2009, 08:56 AM

MLS' structure can't replicate the Costa Rican, Colombian and Scandinavian leagues, where the teams generate significant revenue by selling players. We're at least ten years from having an academy system that could generate that, and it's not clear that North American labor laws allow the kinds of contracts that allow clubs elsewhere to sell young players.

Re Beckham jersey sales, I'm pretty sure Beckham gets most of that.

Hey, you changed that ^ ;) it used to say MLS wasn't set-up to be like those leagues, making money from selling players.

And I was going to say that it isn't the ultimate goal of MLS but it could be a good stepping stone on the way to what it wants to be. You're right about the academy stuff, so MLS will have to sell players who aren't quite so young - even like Edu.

But I agree, it's not the goal of MLS to be like the Costa Rican or Scandanavian league - I think owners and TV execs here realize that the only way the league can exist is if it has as a goal to be at the top level in the world. And there's really no reason that can't happen. It'll just take a while. There has to be steady growth in fan bases, sure, but the top teams in European leagues look to me like they're that way because of billionaire owners as much as because of dedicated fans. Billionaires like LA and NY, too.