$3.0-3.3 Million: Slow and Steady
$3.4-3.6 Million: Significant Increase
$3.7-4.0 Million: Most Likely Scenario?
$4.1-5.0 Million: Best Case Scenario?
$5.1-7.0 Million: Double or Nothing...
$7.1-10.0 Million: Dare to Dream!
<$10 Million: Playing with the Big Boys!
No Salary Cap: MLS is the new EPL!!
MLS will never dramatically increase the cap without a good TV deal. It wants a stable revenue stream before cap increase. A bit of catch 22, but MLS is happy with steady increase from current strategy, and I don't think the Don will rock the boat hard.Originally Posted by Initial B
“Years have gone by and I’ve finally learned to accept myself for who I am: a beggar for good football.
I go about the world, hand outstretched, and in the stadiums I plead: ‘A pretty move, for the love of God.’
And when good football happens, I give thanks for the miracle and I don’t give a damn which team or country performs it.”
-Eduardo Galeano
I don't think we'd need to pull out; more compliment. A tier-1 Canadian league would still be a "premier league" to Canadians, but would be seen likely as tier-2 to the USSF, which would allow them to work together by being a loan destination for MLS, with some "friendly" competition between MLS sides in Canada and their Canadian league equivalent.
As for the cap level, I think you've hit the nail on the head. Yohan, I seriously question how much money MLS clubs actually lose; there's a lot of book cooking going on with U.S. clubs because subsidiaries can be used to write down costs for major corporate holders.
I think MLS could easily handle a $5-6 million salary cap without breaking anyone.
Hmmm, with Orlando joining the league in 2015, I'm thinking that Beckham's Miami can't be far behind. If they get those team in those markets, I can see them getting a larger TV contract just based on the potential market. That in turn leads me to believe they're going to raise the cap significantly for 2015.
Becks and if LeBron teams up in Miami, that's a lot of hype.
The thing is, hype doesn't necessarily mean more viewership. So far, MLS has not been able to turn hype into ratings.
“Years have gone by and I’ve finally learned to accept myself for who I am: a beggar for good football.
I go about the world, hand outstretched, and in the stadiums I plead: ‘A pretty move, for the love of God.’
And when good football happens, I give thanks for the miracle and I don’t give a damn which team or country performs it.”
-Eduardo Galeano
Rapids Pres. on lack of shirt deal: http://www.mlssoccer.com/news/articl...4-i-lose-sleep
3 MLS teams without a current shirt deal. If those get locked up for the next few years, along with Orlando (already signed) NYCFC and Miami/Becks (both shoe-ins for sponsors)....I really can't see the owners being too shy about raising the cap more than in the past. Nothing crazy, but more than usual.
MLS has never had such a strong stable of wealthy owners/investors. The next CBA negotiations are arguably the most important in the history of the league.
Do you take the DP player out of play?
In case anybody wanted to do a comparison with NASL, they have no salary cap but I was told that most teams build fairly conservatively. The Cosmos have some of the most expensive players (two are at $180K and $144K per year respectively), but teams are trying to keep their highest paid players to around $72K per year. Since they're working with rosters of 25 players, I figure the average player salary would be around $50K, which means that NASL teams probably have payrolls around the $1-2 million range. So about half the salary cap of MLS teams.
This makes me wonder: if a league with an average attendance of 4K can work with a $1.2 million payroll and still be solvent, how can MLS teams cry poor when they have triple the attendance? The cap should be at least $4 million easy!
In football these days, attendance means little. It's all about owners, investors and TV money.
Going back to 2007/If my memory is still working I recall that
"M.L.S.E. spokesman stated that we are aiming for original attendance of 13/14,000 to break even"
Anything over this we will be delighted with.
This team has constantly made buckets full for them.
Only original season ticket holders are paying original prices.
Just look at the current prices new purchases have to pay.
For T.F.C. the cap could be $4/5 mill without a problem.
Low market teams get handouts from the league so no owner suffers any loss.
One big happy family making bundles of money!
I just thought I'd resurrect this thread, seeing that they're starting CBA negotiations soon. Team Salaries from the Players Association:
2014 MLS Team Salaries: April 1, 2014 Club 2014 Guaranteed Compensation TOR Total $16,648,858 LA Total $13,054,244 SEA Total $11,787,587 NY Total $11,245,784 VAN Total $6,272,750 MTL Total $6,067,139 DAL Total $4,645,279 SJ Total $4,327,176 PHI Total $4,231,924 DC Total $4,098,050 POR Total $3,922,328 RSL Total $3,831,635 KC Total $3,731,612 CLB Total $3,687,508 HOU Total $3,660,715 CHI Total $3,631,411 COL Total $3,488,901 NE Total $3,432,422 CHV Total $3,292,674 Grand Total $115,057,996 Club Average $6,055,684 Club Median $4,098,050
To me, this would indicate that the current $3.1 million cap is a joke since all the team salaries are higher than this number. They should include the top 24 player salaries per team as part of the cap, while allowing the Homegrown and Generation Addidas players salaries in the bottom 6 spots as exceptions.
If the Players' union brings these numbers to the bargaining table, I can't see how MLS could argue for a cap of anything less than $5-6 million.
Last edited by Initial B; 04-16-2014 at 04:12 PM.
I'd get rid of the DP rule and increase the salary cap substantially.
TFC's got be making $20-$25 Million in revenue
$10 million for season tickets
BMO sponsorship
merchandise
concessions
TV revenue
salary cap of <$3 Million is a bIt of a farce. DP's making $6Million playing with guys making $50k/yr is disfunctional. The system needs to reward North American developed players.
MLS doesn't care what teams spend above what it spends though. It pays the salaries. Therefore, what it can raise the cap to is a function of the collective revenue of the league not whether an individual operator has deep pockets.
Agree with you on the point of paying North American players and the salary discrepancy is a joke.
People just need to be aware of the structure of the league though when talking about raising or even scrapping the salary cap. You couldn't do that without a massive change in how the league operates and likely a significant exchange of money.
When teams get awarded a "franchise" it's not like other sports. Beckham isn't getting a team per se, he is buying into MLS and being awarded a share of their business. MLS still owns Beckham's team. Mainstream media simplifies this either because they don't understand it or are just ignorant to how the league operates and they want to think it is just like other leagues. It isn't.
I posted this elsewhere but it is a great look at the league structure. Though a little dated (back to 2010), it gives you a very deep look at the structure and the challenges the league will face moving forward.
http://www.niu.edu/law/organizations...%20131-174.pdf
The gist of it is as follows:
Each franchise doesn't actually own the team but rather stock in the league. They get a seat on the Board of Governors and manage the day to day operations of the team. The Board, the collective of operators and league designates, assigns profit and loss to each team and controls operations. In addition to owning the teams, the league also owns all equipment, broadcast rights, ticket rights and intellectual property.
Teams let the operators hire local staff. As of 2010, the league gives each team a management fee that was equal to 50% of local ticket sales and concessions, the first $1.125M of local TV revenues, 100% of overseas tours (Friendlies anyone), and 50% of revenues from the MLS Championship game.
didn't TL say TFC would be the first club to have $50M in revenue in a year
found it:
http://www.theglobeandmail.com/sport...ticle16320629/
Season Seats - ~$10M (average ticket price of $30 a seat..steep?)
Single game tickets - ~$5M (Just under $50 an average ticket...mostly more expensive seats that seemingly based on Ticketmaster prices been jacked up based on dynamic pricing; might actually be a little low)
Friendly - ~$2.25M (average ticket price about $100...that steep?)
TV Revenue - ~$1.5M (that steep too or too little between MLS national TV deal and local?)
BMO Sponsorship - ~$7.2M ($2.7M-stadium; $4.5M-kit)
Other Sponsors/Partners - ~5M (really a guess, but Bud/KIA have to be paying something good and I'd figure it be more than new sponsors)
New Sponsors/Partners - ~$3M (number Leiweke said they had in new sponsorship money post Defoe/Bradley signing)
Concessions -$11M ($25 per person spent on concessions)
Merchandise -$? (I haven't a clue as to how to even guess a reasonable number for this)
that is about $45M GROSS revenue not including merchandise and any other potential income streams
^ So then taking into account the EXPENSES (O&M costs for BMO Field; Salaries of players, FO, BMO personnel; amortized debt) what would be the NET revenue? Since Lieweke said they're not going to make money this year, assuming a $45M gross would mean non-player expenses should be around $28-30M. I don't know... that seems high to me.
The "management fee" and other things are structured like they are because the owner/operators actually own 50% of their team. MLS owns the other 50%.
Think of MLS like a multinational corporation with many divisions (teams), plus one joint venture (SUM). The divisions (teams) are really 50% owned subsidiaries.
The structure is actually quite wise. by owning half of your franchise, you have interest in growing your individual team. By the other half of your investment being in the league corporation MLS, you have an interest in growing the whole single-entity for the benefit of all. SUM controls the TV revenue, where long-term some real cash is going to be made.
If I were a lawyer, I'd love MLS to be my client. The legal structure is even more mind-boggling than the salary "cap" system (actually an allowance).
Last edited by Oldtimer; 04-17-2014 at 10:28 AM.
MLS is a tough, physical league, that emphasizes speed, and features plastic fields, grueling travel, extreme weather, and incompetent refs. - NK Toronto
if they aren't making money this year it is because they paid the entire Defoe transfer fee up front...i'd think, and maybe they are on the hook for Bradley too...I don't know?
Player salaries - ~$16.5M (MLS players union)
Transfer fees - ~$2.5M-$20M (depending on whether MLS or TFC is paying Bradley's fee and whether Defoe/Bradley's fee was paid all up front or spread out over a few years)
Bonuses/Agent Fees - ~$2.5M? (no idea; figure 10% of a transfer fee could be what an agent would expect)
Non player salaries - ~$5M-7M (office staff, concession workers, Leiweke/Bez, the coaches, scouting etc.)
Cost of Goods - ~$2M? (everything from what it costs to buy the concessions they sell to the merchandise they sell)
Ancillary costs - ~$1M-2M (flights, per diems, other player costs, etc.)
Academy - ~$1.5M-2M
Ground Maintenance - ~$2M-$3M (Bitchy, groundskeepers, training ground, capital maintenance etc.)
Tax - ~$5M-10M? (HST on ticket sales, corporate tax-not sure about what that rate might be on sports teams in Canada)
Amortization - ~$2M-$3M (BMO Field/KIA Academy costs)
City Fee - ~$1M
MLS Cut - ~$? (haven't a clue)
so adding that all up, TFC's expenses this year can be somewhere between $41M-$69M + whatever MLS takes as a cut (lets call it a net cut since they pay $3.1M of salaries + allocation)
Yay. Someone else actually gets it and even used "cap" in quotes
A quick way to guesstimate it without knowing all the nuancances of how the league allocates profits and losses to its teams is to look at the Forbes valuation.
According to them TFC had revenues of $30.9m and an operating profit of $4.5m in 2013.
Quick math says salaries went up significantly. Forget transfer fees. About $13m to all 3 DPs. Laba and Koevermans came off the books so net increase in salaries the team is responsible for is likely around $11.5m.
If they "sell out" every game lets call it an increase in revenue of 4,000 fans a game. Average ticket price of say $60 to be generous. $240k per game. 19 games. $4.5M in revenue. Maybe some extra boosts for merchandise.
In the end they come out with a $3-4m net loss in operating income.
There is no doubt where ticket prices are going next year.
Forbes numbers are estimates
So there are a few things about the salary "cap" increase people are forgetting.
if one were to raise it to 20 Million or so.. that would be 19 teams paying out nearly 20 million a year.. that is 380 million a year just in salary for a league with just shy of 500 million in revenue. it's not sustainable.
More then that, is many of the American players aren't good enough for a 500k to million dollar salary. That would mean there would be an influx of foriegn players, and the whole purpose of MLS it to develop American Talent, which has never really happened... I think a lot of people thought it would only take a generation, sadly Soccer Mom's destroyed that dream.
Instead of Soccer developing at the Youth level to teach the basics like you have with Hockey or American Football.. but instead Soccer Youth league actually got worth, everyone gets a trophy, and now many don't even keep score.
Until Soccer Moms decide it's ok to keep score, MLS will not hit a 20 Million dollar "cap" if they want to maintain the illusion of MLS being here to encourage the development of Players.
I honestly think the Cap should be kept to about 10% of total league revenue at the time of the CBT, which is about what you see from other leagues, (be accident or design I don't know)
That would me about 4.9-5 million would be the right increase.
^ who is suggesting a $20M cap?
Thanks for posting that, I don't think I've seen that paper yet. Muy importante.
Totally misread someone else post, saying get rid of the DP rule and increase the cap.. the next line was 20-25m in Revenue.. my brain occasionally combines lines, I ended up reading it as increase the cap to 20-25m.
Totally misread.. the rest still works.
It's over.
The MLS' strategy was clever but is going to fail, given the huge variety and proliferation of HD games of the best teams from Europe that are readily available to all. This league cannot compete as it stands.
EPL and the other big leagues are growing a lot faster in North America than MLS is. Soccer may be big here someday, but an MLS where the average team spends $4M on payroll while the average NHL team spends $65M on payroll, will never be anything. This board is totally unrepresentative. The vast majority of people in most bigger cities will not pay attention to minor league anything.
MLS will have to dump the cap soon. It will have no choice. The teams in world class markets will have to compete, the smaller ones go into division 2. Leiweke understands this, it's the part of his vision that I really respect.
This story isn't about my point directly, but it'll give you a feel for the real problem.
http://www.nytimes.com/2014/04/17/fa...cles.html?_r=0
Last edited by ensco; 04-18-2014 at 02:33 PM.
“What the world needs is more geniuses with humility; there are so few of us left.”
The Soccer Mom theory isn't all that nutty. That so many kids can play soccer in an engaged way at all kinds of skill levels makes a big contribution to why it is "the beautiful game"; it's so accessible. But, there needs to be means for those who think they want to compete and be competitive to do so in a way that doesn't discourage more casual and for-the-love-of-playing engagement. It took a long time for us to get around to this kind of thinking around hockey and we're still not quite there, but it at least has paid off.
Another big contribution that we overlook is the collegiate game. Here we have one of the few sports that's done a lot better with women than men in many respects. The women's collegiate game in the US and Canada is pretty good, relatively speaking.
No matter what, if local areas don't own their talent it will be difficult to cultivate the kind of league where we can pay the sums being discussed earlier.
It is a catch 22. They'll have to step up to the plate eventually.
How many world class markets are there in North America that could compete at that level? How many do there need to be to sustain a league?
The catch-22 might be that the world class markets are over-saturated with professional sports.
I sort of agree, but I'd add: the vision the league office has is still far too anchored to a time when the choices were cut costs or fold. If this were an investment opportunity, I wouldn't put my money on it. Ownership structure is wonky, misaligned incentives are everywhere, and all signs point to support functions are habitually neglected / under invested in.
The European model as its currently practiced is unsustainable without petrodollars or other forms of sugar daddies, (often state broadcasters when it comes to Champions League). The same issues are being replicated 6-7 steps below the highest divisions in England.
Gretna comes to mind.
MLS is likewise heading to a two tier system with the haves and the have nots.
What MLS has is the potential to see a good game at a relatively local level. Eventually, a certain % of those people watching Liverpool on TV every Saturday and Sunday morning will seek out a live entertainment version of what they are watching. Happens all over the world - local following of football exists because people become addicted to watching their local team.
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