Tim Leiweke leaving MLSE

[ManUtd4ever]

how are they bleeding money?

I understood the rationale in making a big splash with the Defoe and Bradley signings to reinvigorate the fan base and generate interest among casual soccer fans in the city, but based on the limited revenue that TFC generates in a single entity league such as MLS, it will take many years for MLSE just to recoup their 100 million dollar investment in those two players, let alone see a return.

In the short term, there is no doubt that TFC is losing considerable money.

[Ultra & Proud]

I think a lot of people still see MLSE as the money tree for the teacher's pension plan and not as a vehicle to boost advertising sales for TSN & Sportsnet. This seems to the variable people are missing. Yes, you have to answer to shareholders and make money but when the primary shareholders can in part use these teams to make income for their various platforms it changes the equation.

[Supporting]

I understood the rationale in making a big splash with the Defoe and Bradley signings to reinvigorate the fan base and generate interest among casual soccer fans in the city, but based on the limited revenue that TFC generates in a single entity league such as MLS, it will take many years for MLSE just to recoup their 100 million dollar investment in those two players, let alone see a return.

In the short term, there is no doubt that TFC is losing considerable money.

where is 100mill coming from. I thought Bradely, defoe and gilberto transfers fees were like 25 million total?

[Ultra & Proud]

I understood the rationale in making a big splash with the Defoe and Bradley signings to reinvigorate the fan base and generate interest among casual soccer fans in the city, but based on the limited revenue that TFC generates in a single entity league such as MLS, it will take many years for MLSE just to recoup their 100 million dollar investment in those two players, let alone see a return.

In the short term, there is no doubt that TFC is losing considerable money.

Average cost of seats to a TFC match must be somewhere in the $40-$50 range I would think based on the seating chart. I am too lazy to do the math so lets just go with the lowest at $40 and an average of 20,000 per match. That means about $800K or so per match or $13.6M per 17 match season not counting the friendly. You add in concessions and jersey/clothing sales and advertising while deducting players and supporting staff salaries and I don't think it's as big of a yearly loss as some would think.

[Ultra & Proud]

where is 100mill coming from. I thought Bradely, defoe and gilberto transfers fees were like 25 million total?

This is a bloated buzz word that TL started tossing around to make TFC seem like a massive club. That $100 is the transfers plus full salaries over the full course of the players contacts. Go do that for the Leafs and it's probably up in the many hundreds of millions.

[Supporting]

This is a bloated buzz word that TL started tossing around to make TFC seem like a massive club. That $100 is the transfers plus full salaries over the full course of the players contacts. Go do that for the Leafs and it's probably up in the many hundreds of millions.

okay so in reality we're paying about 40 million this year for our players.

In 2012 we had a revenue of 31 million. Our stadium on average was 79% full.

If we make the playoffs, I don't think we're going to be "bleeding money" at all.

[Ultra & Proud]

okay so in reality we're paying about 40 million this year for our players.

In 2012 we had a revenue of 31 million. Our stadium on average was 79% full.

If we make the playoffs, I don't think we're going to be "bleeding money" at all.

And just think how much money they made during the ugly years when the ticket prices were about double what they are now and our team salary was like $4M total with a sell out every match to boot. The only bleeding that money caused those few seasons were from paper cuts caused while the MLSE brass were swimming in truckloads of $100 bills.

Also, minus transfer fees and whatnot, that graph on team salaries posted a couple weeks ago had us highest in the league at around $16M and our ticket sales alone more than cover that. So technically that making $50 and asking for $100 post from a page or two back doesn't apply to TFC either. I was just too lazy to think about math back then.

[Pint]

Also wasn't Bradley's Transfer fee paid by the league like Dempsey?

[Ultra & Proud]

Also wasn't Bradley's Transfer fee paid by the league like Dempsey?

Maybe put they still are adding it into that $100M to make the number as sensational as possible. Plus it is still a transfer fee. Lieweke never said anywhere that MLSE paid the full $100M. Just said it was $100M invested in TFC players.

[TFC07]

Also wasn't Bradley's Transfer fee paid by the league like Dempsey?

Yeah it was paid by the league (not sure how much they contribute though).

[TFC07]

Average cost of seats to a TFC match must be somewhere in the $40-$50 range I would think based on the seating chart. I am too lazy to do the math so lets just go with the lowest at $40 and an average of 20,000 per match. That means about $800K or so per match or $13.6M per 17 match season not counting the friendly. You add in concessions and jersey/clothing sales and advertising while deducting players and supporting staff salaries and I don't think it's as big of a yearly loss as some would think.

Their revenue is only going to increase next year when they will add 8,000 more seats and few more suites.

[Supporting]

Their revenue is only going to increase next year when they will add 8,000 more seats and few more suites.

No it will still increase, they only had 79% attendance last year.

[nonc]

[Ultra & Proud]

Looking at all the somewhat known numbers without even knowing specific ad revenue, the total they make per match from those suites, and the merchant rental costs at BMO, I say they make money even with the Bloody Big Deal hitting the bank account hardest this year. I'll even count the operating costs of the KIA Training Ground, which by the numbers mentioned would have been paid off in about one of those golden years just in ticket sales.

Don't kid yourselves. TFC makes money and they know it. Not sure if the Raps operate at a loss or not but TFC for sure in the sports landscape of T.O is way ahead of the Argos and probably the Jays too. Never the Leafs. License to print money there.

[ag futbol]

But they really don't, or didn't, need to spend. The Defoe and Bradley signings were the defibrillator set on TFC when had they been smarter and taken care of themselves they wouldn't have a heart attack.

Moving forward they will scale back the spend as the loss this year will be offset with price increases in tickets.

I think we differ on this point. IMO, if they want to fully tap this market they need to spend. Yes, it's more necessary now because of past neglect, but it would still be true if we made the playoffs every year. Look at Seattle for example, they don't need to spend on Dempsy and Martins but do because they realize that takes it to the next level. They've pumped up the portion of quest field they fill over time by being forward thinking. So they've grown revenues, but they had to be up front about spending money.

That's what a lot of clubs in this league don't get, they still live in the shaddow of a time when the league almost folded before they cut costs and buttoned down the hatches to survive. The market potential exists in a lot of places, but it will never be realized unless you spend money to develop it. A lot of these guys seem to think "I'll wait for the revenue to come, then I'll spend!" That's just not how a market like this one unfolds.

[ag futbol]

I should have made it more clear that the OTPP was really only willing to spend on us and financially neglect the Raptors and Leafs, presumably because they were more expensive. But everything that's been done since Bogers bought MLSE has suggested that there has been a massive attitude shift and that winning is as important to making money. I don't buy the point Ensco made up-thread that MLSE accidentally hired Leiweke, not knowing what they were getting themselves into. They certainly knew his resume and his record for brashness and Bogers decided that this was the perfect guy to make this culture change and bring Toronto sports into a new era. That's exactly what he did.

So yes, I believe they are growth focused. because the owners now have much more incentive to be growth focused, and having that growth be sustainable, than previous owners. Simple as that. OTPP had no vested interest in the Leafs or Raptors or TFC doing well because their plan was always to come in, spend little, jack up prices, make all the money and get the fuck out. Bogers has serious incentive for all these teams to do well because it means more money for them on the back-end.

I started out with this viewpoint but changed. I’ll concede you could just as easily be right here, but I’ll speculate nonetheless.

This isn’t about ratings as much as it’s about defending their distribution channel: aka the archaic box or satellite in people’s homes. I know the thought is ratings = subscribers, but I believe it’s approached more from the POV of “I have the content, you do not, therefore people choose what I have to offer”. If we were talking about stocks, think of it as holding an index fund. MLSE is a sports index fund, it has all the pro teams that matter in Toronto, except for MLB (held by one half the partnership) and CFL (which we all speculate isn’t drawing in Toronto anyway). I don’t think they care if it’s soccer, basketball, hockey, or whatever that succeeds. But they want to own that sports team so whatever people choose to watch they’ll have their hands on it.

The good news is the history of content being held by those further down the line usually ends the same way: they sell the assets later because they realize 1) they really suck at managing them 2) they make more money when they are sold to the highest bidder rather than used to defend one TV channel, distribution method, etc…

[ensco]

Looking at all the somewhat known numbers without even knowing specific ad revenue, the total they make per match from those suites, and the merchant rental costs at BMO, I say they make money even with the Bloody Big Deal hitting the bank account hardest this year. I'll even count the operating costs of the KIA Training Ground, which by the numbers mentioned would have been paid off in about one of those golden years just in ticket sales.

Don't kid yourselves. TFC makes money and they know it. Not sure if the Raps operate at a loss or not but TFC for sure in the sports landscape of T.O is way ahead of the Argos and probably the Jays too. Never the Leafs. License to print money there.

I don't know exactly why I am bothering, but a lot of what is going on here is exasperating. The amount of airplay arguments like this are getting is absurd.

Whether it's TFC or any other business, what you receive in revenues has nothing to do with what your cost structure should be. It all depends.

In the TFC case, the current Leiweke plan is a radical one, with little evidence to financially support it. A whole raft of MLS teams are doing nicely, competitively and at the gate, at very different expense levels. Leiweke's game plan requires huge bucks, big big long term revenue increases (way way beyond what has happened in 2014) and of course a lot of faith, especially since the early returns suck (as evidenced by the key metric the owners know will ultimately determine success or failure, TV ratings). It's pretty logical to assume that the next guy won't see it the same way.

Any argument based on the wealth of MLSE, or its owners, or on the idea that "don't worry, TFC has the money" is one to ignore. No owner or board sees it that way.

[OgtheDim]

There is the argument that if TFC didn't make a big splash this season, and succeed, the team would have probably be in a death spiral by now. 8K attendance as against the 16K we are gettting now (sold out is not filled)

That and if the true revenue behemoth from an expanded stadium is outdoor Leafs games, then TFC is the placeholder providing MLSE with that revenue opportunity.

[ManUtd4ever]

Looking at all the somewhat known numbers without even knowing specific ad revenue, the total they make per match from those suites, and the merchant rental costs at BMO, I say they make money even with the Bloody Big Deal hitting the bank account hardest this year. I'll even count the operating costs of the KIA Training Ground, which by the numbers mentioned would have been paid off in about one of those golden years just in ticket sales.

Don't kid yourselves. TFC makes money and they know it. Not sure if the Raps operate at a loss or not but TFC for sure in the sports landscape of T.O is way ahead of the Argos and probably the Jays too. Never the Leafs. License to print money there.

My comment was in reference to this season.

Season ticket prices were scaled back to year one levels, the payroll is in another stratosphere, and by all accounts I've read, the total investment required by MLSE to acquire Defoe and Bradley (not including Gilberto) was 100 million dollars.

I don't have all the specific numbers at hand regarding TFC's revenue and operating expenses, but I have listened to many interviews with journalists over the last few days that are well connected with MLSE such as Jeff Blair, Stephen Brunt, and John Shannon to name a few. I'll defer to their commentary, and they were unanimous in their assertion that TFC is not going to be profitable for the foreseeable future, and that the organization is forecasted to lose a considerable amount of money over the next few years based on the strategy that Leiweke has implemented.

I agree with Ensco and others in that Leiweke chose a path that is unsustainable, as well as unnecessary in order to build a successful organization.

I said it before and I'll say it again. The best decision Leiweke made was hiring Bez, because he is the true architect of the current squad, and he has assembled it in a responsible, pragmatic manner.

[Qman]

Their revenue is only going to increase next year when they will add 8,000 more seats and few more suites.

If they can sell them which is no guarantee ... we don't have a good gauge on how deep soccer market is in the GTA - 40% more is a big step-up. I would personally put the roofs on first, then maybe add 4000 seats and more high revenue suites and boxes (instead of going up to 8000 right away).

The excitement from Defoe/Bradley will be over next year (this always happens with big signings), however the stadium renovation will add some freshness to the stadium experience and might draw interest

As well, we have joked about this in the past ... but no stadium project in Canada has been on time recently, so their is a a reality that we have games at lamport next may/june/july.

[ManUtd4ever]

There is the argument that if TFC didn't make a big splash this season, and succeed, the team would have probably be in a death spiral by now. 8K attendance as against the 16K we are gettting now (sold out is not filled)

That and if the true revenue behemoth from an expanded stadium is outdoor Leafs games, then TFC is the placeholder providing MLSE with that revenue opportunity.

Winning cures everything. It may have taken longer for the fans to come back, but if the team still had a winning record without flashy DPs, the end result would have been the same in my opinion.

[Qman]

My comment was in reference to this season.

Season ticket prices were scaled back to year one levels, the payroll is another stratosphere, and by all accounts I read, the total investment required by MLSE to acquire Defoe and Bradley (not including Gilberto) was 100 million dollars.

Thats all-in over length of the contracts. You can look at the investment over years 1-6 as 37m, 12m, 12m, 12m, 12m, 12m. (my numbers and years might be off!). Remember part of the 37m is the transfer fees, not salary. For example, if as rumoured Defoe goes back to england at season's end, you could sell him to QPR for say $10M. And get some of your investment back and QPR would be paying him the $6m per year.

[ManUtd4ever]

Thats all-in over length of the contracts. You can look at the investment over years 1-6 as 37m, 12m, 12m, 12m, 12m, 12m. (my numbers and years might be off!). Remember part of the 37m is the transfer fees, not salary. For example, if as rumoured Defoe goes back to england at season's end, you could sell him to QPR for say $10M. And get some of your investment back and QPR would be paying him the $6m per year.

Correct. It is still a substantial investment though, and asymmetrical in MLS terms. MLS owners around the league were resentful when the signings were announced for a reason.

As you mentioned, the only realistic avenue to recapture some of that investment is to sell Defoe and/or Bradley. We are in a vulnerable position with respect to keeping both of them for the duration of their contracts because it was a short sighted approach.

[reggie]

it seems like 1/2 the people on this site these days want TFC to fail,so that they can give the big I told you so...BRAVO TO YOU.....
we been around 7 yrs ,shit futbol for the most part..winning will cure everything.instead of counting the empty seats,how about watching the game and making a bit more noise,since we are now in the middle of the pack for atmosphere these days,or you can support dcu or chivas and count the empty seats all night.

[MightyDM]

I love watching Jermain Defoe play for MY club. And I love the fact that we are competitive and exciting. Tim L. delivered that, say what you want. Is it unsustainable? Maybe, but it was unsustainable for sure to have smaller crowds and a losing team. One way of looking at this is to say that part of the cost of Defoe and Bradley is really like a franchise fee to keep the franchise alive. If you look at it that way, MLSE have still paid far less than the current going rate for their team. Plus, if we make a playoff run, TV may well be up (see, Raptors) and Bell and Rogers start to see the potential for their true financial interest - broadcasting live sports. I'd say Tim took a calculated risk, which may or may not pay off but is bloody great for us supporters.

[Beach_Red]

I started out with this viewpoint but changed. I’ll concede you could just as easily be right here, but I’ll speculate nonetheless.

This isn’t about ratings as much as it’s about defending their distribution channel: aka the archaic box or satellite in people’s homes. I know the thought is ratings = subscribers, but I believe it’s approached more from the POV of “I have the content, you do not, therefore people choose what I have to offer”. If we were talking about stocks, think of it as holding an index fund. MLSE is a sports index fund, it has all the pro teams that matter in Toronto, except for MLB (held by one half the partnership) and CFL (which we all speculate isn’t drawing in Toronto anyway). I don’t think they care if it’s soccer, basketball, hockey, or whatever that succeeds. But they want to own that sports team so whatever people choose to watch they’ll have their hands on it.

The good news is the history of content being held by those further down the line usually ends the same way: they sell the assets later because they realize 1) they really suck at managing them 2) they make more money when they are sold to the highest bidder rather than used to defend one TV channel, distribution method, etc…

This is exactly right, but remember the teams are only part of the content - what they really own are the Canadian rights to the leagues (in that way they do have the CFL, too).

[TFC07]

If they can sell them which is no guarantee ... we don't have a good gauge on how deep soccer market is in the GTA - 40% more is a big step-up. I would personally put the roofs on first, then maybe add 4000 seats and more high revenue suites and boxes (instead of going up to 8000 right away).

The excitement from Defoe/Bradley will be over next year (this always happens with big signings), however the stadium renovation will add some freshness to the stadium experience and might draw interest

As well, we have joked about this in the past ... but no stadium project in Canada has been on time recently, so their is a a reality that we have games at lamport next may/june/july.

We will find out next year if they can sell extra 8K seats or not. Also it's worth noting that extra seats is also to host for other events where MLSE can make money (international friendlies as an example).

Was BMO field built on time? Wasn't ACC built on time? If so, then maybe we can trust MLSE on their timeline to build stadiums.

[Blizzard]

If they can sell them which is no guarantee ... we don't have a good gauge on how deep soccer market is in the GTA - 40% more is a big step-up. I would personally put the roofs on first, then maybe add 4000 seats and more high revenue suites and boxes (instead of going up to 8000 right away).

Not a very economical way of building though. Build the roof, then take part of the roof off, then add seats, then put the roof back up and then, a few years down the road take another part of the roof off, build some more seats and then put the roof back on again?

I understand your concern about an over abundance seats. That fear is valid but you have to build enough seats to make the cost of construction worthwhile even if you don't sell all the seat out at once.

[Super]

It's interesting that TFC is still a bit of a joke in this city. We're doing well, but I constantly encounter people who feel that it's just a matter of time before they shit the bed again and fail to make the play-offs. They're not entirely clued into just how different TFC is today. Fast forward a few years and lots of play-off action, and I think it's entirely likely that we can sell out a 30k stadium. That's where this team will become profitable. Not until then. All part of the plan though.

[greatwhitenorf]

Here's a good story about TL and AEG.

http://www.forbes.com/sites/mikeozan...g-on-aeg-sale/

I think greatwhitenorf has some good stories about a situation in London.

Leiweke's arrival at MLSE certainly didn't send me into pirouettes. He was a point man for a potential move by Tottenham Hotspur from their historic home at White Hart Lane into the dog's dinner that is the London Olympic Stadium, easily one of the worst-managed stadium projects in the history of badly-managed stadium projects.

Some background:

Leiweke's tenure with AEG in London was a good story before that. He piloted the management of the O2 Arena (previously known as the Millenium Dome), turning a white elephant into one of the world's most profitable indoor sports and entertainment facilities.

Then, Spurs were invited, along with West Ham and other lesser lights, to bid for tenancy of the Olympic stadium site after the 2012 games. It was a dirty, rigged process that was intended all along to deliver the site to West Ham. Not many Spurs fans wanted to move. Although the site has probably the best transport infrastructure of any stadium in London (with 13 professional football clubs scattered about), Spurs fans by and large wanted to stay in the Tottenham district and not move to an area of east London that is historically home to West Ham and Leyton Orient.

It's a complex sports culture tapestry in London. FA rules say clubs can't just move arbitrarily move from their established home turf to the district of another club and set up shop. Building a stadium is not done with much, if any, civic support either. So the Olympic site was a plum in many ways.

West Ham, poor and deeply in debt, were willing to move into the Olympic stadium as is. Their current home, Upton Park, is tight, cozy and atmospheric. Front row seats at the Olympic stadium would be almost 40 metres from the pitch sidelines because of the running track and athletics areas. Spurs weren't having that and have the money to do otherwise.

Their bid involved taking down the stadium - it was designed to do so and leave a small 20,000-seat bowl after the games. Spurs would have moved all the stands to south London and built a new track and field facility for UK Athletics. Then they would have taken their plans for a new 60,000-seat football-only stadium and built it on the Olympic stadium site.

AEG was going to be stadium manager and Leiweke was connecting with Spurs brass and overseeing this process and working to sell all parties on the benefit of Spurs' bid. Spurs fans were gutted about moving out of North London onto West Ham/Leyton Orient's manor. It created some harsh arguments for two or three years while the rigged bid process played out. It was a dirty fight that ended up in court. In the end, Spurs won the court battle but gave up the chase for the site and the deadline passed at midnight London time today for any final appeals against Spurs building their new stadium right next door to their current ground.

AEG and Leiweke are long gone from this latest stage, but Tim was heavily involved in a process that caused serious amounts of unrest. When one read his comments during the process, it was obvious that he was seeing the business benefits clearly but completely missing the cultural upheaval being caused to a club with a long and deep history and probably destroyed West Ham into the bargain.

And now:

When he came here, I wondered if he'd create similar concerns with TFC. This whole misguided notion of moving the Argos into BMO Field has a similar feel to it. We have a great stadium for soccer and I love that it can be expanded and improved. I want to see MLSE deepen it's identification as a home of TFC and Canadian soccer. The fact that MLSE are being motivated to expand BMO Field so they can stage lucrative outdoor hockey games doesn't thrill me but it shouldn't trample on the quality of soccer the way CFL play will. I don't want to see the Argos fail. But sharing BMO Field with TFC is not the answer.

The Argos would do themselves and the Canadian brand of football a world of good if they had their own stadium. They could parade their great history there and use it as a great showcase for lower levels of Canadian football - university, high school, etc. Lamport Stadium would work very nicely. Using the Pan-Am games stadium site at York is another possiblilty.

In both instances, short-term perspectives over money are over-riding crucial long-term cultural aspects of sport that would make each sport grow stronger, especially financially. Tim Leiweke has had a chance to play a prominent role in this process and he's come down on the side of money every time.

I respect that Leiweke has some great ideas and can really get people turned on. But this imminent departure will leave much of his work with TFC incomplete and awkward for his successor to pick up and run with.