osmo |
Nov 7, 2019 10:15 AM |
Quote:
Originally Posted by JHikka
(Post 8740616)
One thing that you failed to copy/paste over was MLS' investments in SUM:
There’s more in play than the future of MLS, though. That’s because, in addition to their franchise operating rights, the league’s investors also own stakes in Soccer United Marketing (SUM), the black-box subsidiary that has a hand in managing the commercial rights for almost every major soccer property in North America. In addition to negotiating sponsorship and television deals for MLS, SUM handles commercial rights for the U.S. Soccer Federation, Concacaf and the Mexican national team’s U.S. tours, among other properties.
Forbes has estimated that SUM generates annual revenues of some $350 million, and it’s profitable, too; last year the property distributed $125 million to league owners. In 2017, SUM was valued at $2 billion after MLS bought out the stake owned by Providence Equity Partners (SUM is now wholly owned by the league’s investors). Although SUM dividends aren’t included in the teams’ operating revenues, they go a long way toward explaining why MLS franchises cost so much; in fact, the league’s least-valuable teams derive nearly half their total value from their stake in SUM.
So it makes some sense that MLS owners would invest big in a money-losing enterprise, given that they’re also securing a long-term interest in the continued success of soccer in the North America. That may start looking like a very smart bet in 2026, when the World Cup returns to the United States for the first time since the 1994 edition that fueled the launch of MLS. And although most teams may struggle to break even, there is a glimmer of hope offered by the league’s elite franchises, which are already showing that an uber-successful MLS team can be a license to print money.
https://www.forbes.com/sites/chrissm.../#7310a10251b5
Emphasis added mine.
So the teams are operating on a loss due to investments in sport infrastructure and personnel but the owners are effectively breaking even thanks to marketng and corporate deals which are not included in team revenue reporting.
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Thank you as people are missing the forest for the trees with MLS. If you're are a betting person there is more upside to betting on MLS success in 50 years versus the NFL and CFL (if one wants to compare large stadium outdoor sports head to head). Class action lawsuits surrounding CTE could bury both leagues. NFL has hundreds of millions in cash stashed away as a war reserve to fight this future battle, the CFL not so much. CTE soccer wise is oddly only an issue with the woman's game as for some medical reason woman get concussions at much higher rates versus men in soccer.
Also, with MLS salaries the league is set up to central control salary spending so that it isn't the crux that kills teams. If your team makes the choice to load up in high ticket exception players then go for it, but outside of that each time has a balanced salary level that the league covers centrally among all teams. TFC for example has made the choice to blow up salary and has been very candid about it. Fluctuations in attendance could be attributed more to missing the mark on pricing increases more than anything. I think nationwide the economics are not as sound as many think and many families and individuals have been scaling back entertain spending. Every other league has seen weaker attendance here in Canada just like MLS. This problem isn't solely to MLS.
Where teams vary is local revenue potential which is why Columbus for example has been missing a move to Austin as they perceive the ability to make money in that City as limited.
MLS can be viewed as a long term play or a ponzi scheme depending how you look at it. Until rich men are swayed to not want to pay the entry and expansion fee the league will continue to grow. IMO MLS is going to thrive in non conventional markets that are not viewed typically as cash cows, examples of Atlanta a future Austin, Minneapolis and a potential future Boise as these are youthful growth metropolitan areas that don't have the same demographic makeups as traditional metropolitan areas.
Lastly, many teams are dumping money on capital costs such as building elite acadamcy facilities and other legacy facilities to go towards that above mentioned future growth strategy. I view MLS the same as MLB as both have suspect ratings and demographic mapping but if you feel back the layers the business interests of both league are sound with highly lucrative investment and assets. MLB BAM Media makes a boatload of money, and local teams make a tonne of cash of local TV, nationally it's a dumpster fire, but many teams are doing well. MLS will evolve to be the same IMO.
Soccer is still a growth sport domestically here in North America; Baseball, Football, and hockey all have seen declines or stagnant growth in the youth level. Does that equate to ticket buyers and such, it isn't an exact science but if you're looking to dump millions into a sport would you pick baseball, football or soccer if you had the level of resources to make that choice ?
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