VPjr Posted September 30, 2008 Share Posted September 30, 2008 http://www.theglobeandmail.com/servlet/story/RTGAM.20080930.WBsoccerblog20080930135319/WBStory/WBsoccerblog Link to comment Share on other sites More sharing options...
Massive Attack Posted September 30, 2008 Share Posted September 30, 2008 Its funny how you will see tons of people complain that MLS needs to raise its salary cap yet you will then read stuff like this. By the way, I am still a proponent of raising the league minimum. It would only cost about $250,000 per team per year to make sure the DEV guys get paid at least $40,000/year. Link to comment Share on other sites More sharing options...
Canuck Oranje Posted September 30, 2008 Share Posted September 30, 2008 Careful how you interpret this. There also is another post that discusses the Forbes article directly. Basically, profitability depends a lot on what you count as income and what you count as expenses. Creative accountants do well in the sports franchise business. I think you will find that most sports franchises world wide show a loss. And those that show a profit usually show a small one. Many big-name professional soccer teams are actually structured as not-for-profits. On salary caps, the salary cap needs to be raised because it is one of the reasons why MLS is a second-rate league and revenues are so low. I don't think anyone is calling for unlimited budgets. Link to comment Share on other sites More sharing options...
Bill Ault Posted September 30, 2008 Share Posted September 30, 2008 ^ Be very careful - it's not always about the franchise making money, lot's of professional teams in all sports don't make money but their franchise values are still high. Columbus Crew lose money but the stadium makes money for example... There are even a couple of teams in the ultimate money league - the NFL - that lose money on a year to year basis, those franchises are still worth hundreds of millions... Link to comment Share on other sites More sharing options...
Massive Attack Posted September 30, 2008 Share Posted September 30, 2008 While I agree on the franchise value point, if you think the teams will spend a significantly higher amount on salaries without an increase in revenue first you are dreaming. It is irrelevant if the stadium makes money with concerts. Columbus Crew aren't going to buy more players because of increased concert revenue. I wonder how many season ticket holders would care if their tickets prices were doubled to help pay for increased player salaries? We can't have it both ways... Link to comment Share on other sites More sharing options...
Free kick Posted September 30, 2008 Share Posted September 30, 2008 quote:Originally posted by Massive Attack By the way, I am still a proponent of raising the league minimum. It would only cost about $250,000 per team per year to make sure the DEV guys get paid at least $40,000/year. That would be nice to the dev players. But i think that I read somewhere that even in europe, within the bigger clubs, the dev players earn very little or, if at all, that much. I think that the difference ( that would support your argument ) lies in the fact that in MLS the dev players do get to see some first team action every now and then whereas at the bigger clubs in Europe, thats unlikely to happen. And thats due to the size of rosters/squads and possibly the restrictive cap. I once read a piece quoting someone from the league office who was called upon to defend that league minimum of 18K. He countered that considering that these players are essentially apprentices, the current salary was very much in line or higher than other sports. The camparasion was made to Class A baseball. Correct me if I am wrong. Link to comment Share on other sites More sharing options...
Bill Ault Posted September 30, 2008 Share Posted September 30, 2008 quote:Originally posted by Massive Attack Columbus Crew aren't going to buy more players because of increased concert revenue. Why not? I'm naive when it comes to multiple streams of revenue coming into the same holding company and how they can or cannot move the money around. Link to comment Share on other sites More sharing options...
Canuck Oranje Posted September 30, 2008 Share Posted September 30, 2008 I don't think MLS will ever be confused with the big leagues. At least, not under its current operational model. As for earning money from player development, the NY Times article posted here is worth a read because MLS can get into the development game if it wanted to and followed a proper development model. http://www.canadian-soccer.com/forum/topic.asp?TOPIC_ID=16561 Link to comment Share on other sites More sharing options...
ag futbol Posted September 30, 2008 Share Posted September 30, 2008 1) Salaries are paid by the league (other than DP) so everyone is going to spend to the max (or close) of any salary increase. 2) As was already covered, these numbers are projections, not fact. Most importantly, MLS wants to sandbag the numbers for future negotiations with the players union. They aren't public, so they don't nearly have to be as accountable. Link to comment Share on other sites More sharing options...
Guest Ed Posted September 30, 2008 Share Posted September 30, 2008 quote:Originally posted by Free kick That would be nice to the dev players. But i think that I read somewhere that even in europe, within the bigger clubs, the dev players earn very little or, if at all, that much. I think that the difference ( that would support your argument ) lies in the fact that in MLS the dev players do get to see some first team action every now and then whereas at the bigger clubs in Europe, thats unlikely to happen. And thats due to the size of rosters/squads and possibly the restrictive cap. I once read a piece quoting someone from the league office who was called upon to defend that league minimum of 18K. He countered that considering that these players are essentially apprentices, the current salary was very much in line or higher than other sports. The camparasion was made to Class A baseball. Correct me if I am wrong. The baseball analogy is a bit misleading as for baseball, the pro club is at the top of multiple farm team levels, the various farm league teams looking like a story in a tall apartment building. In MLS, it's only a 2 story house. You pay minimum wage to 16 guys on the ground floor. In baseball, you pay minimum wage to the 16 guys on the ground floor, and better wages as you move higher up the pyramid (hundreds of players). Link to comment Share on other sites More sharing options...
Gian-Luca Posted September 30, 2008 Share Posted September 30, 2008 It used to be zero teams, then one (the Galaxy) now three. So we're moving on up. Of course, another way of looking at it is Canada is 1 for 1 while the US is 2 for 13. Link to comment Share on other sites More sharing options...
Trillium Posted October 1, 2008 Share Posted October 1, 2008 I liked the idea one person floated in response to the article of adding a second team in Toronto.. that would be really great to see that occur... share the stadium, and have two real clubs. Of course it would be better to have promotion and relegation ... to really make it interesting. Link to comment Share on other sites More sharing options...
RJB Posted October 1, 2008 Share Posted October 1, 2008 Teams are going to pay $40million for a franchise, I highly doubt that 11 teams losing money is of great concern. I suspect this is creative marketing as usual by pro sports franchises. Link to comment Share on other sites More sharing options...
Richard Posted October 1, 2008 Share Posted October 1, 2008 I suspect much of the Forbes conclusions are based on their own estimates and projections. MLS itself is privately held so its financials are not public and all of the clubs will go to great lengths to appear not particularly profitable for a variety of reasons not least of which is to avoid having fans think they are being gouged, unless there is a possible sale in the offing when there will be more disclosure but only to the prospective buyer. Don't be fooled, there are very good reasons why these wealthy, successful businessmen invest their hard earned money in MLS franchises and it is not all about tax writeoffs. Writeoffs are only useful if you're making profits. Link to comment Share on other sites More sharing options...
dbailey62 Posted October 1, 2008 Share Posted October 1, 2008 quote:Originally posted by Richard I suspect much of the Forbes conclusions are based on their own estimates and projections. MLS itself is privately held so its financials are not public and all of the clubs will go to great lengths to appear not particularly profitable for a variety of reasons not least of which is to avoid having fans think they are being gouged, unless there is a possible sale in the offing when there will be more disclosure but only to the prospective buyer. Don't be fooled, there are very good reasons why these wealthy, successful businessmen invest their hard earned money in MLS franchises and it is not all about tax writeoffs. Writeoffs are only useful if you're making profits. True but can't losses in MLS be used to counter taxes in other divisions of your operation (assuming they make money?) Link to comment Share on other sites More sharing options...
Bill Ault Posted October 1, 2008 Share Posted October 1, 2008 From the NY Times regarding RSL's new stadium: “With a new stadium, we’re talking revenues increasing two-, three-, fourfold that can then go back onto the field,” Bill Manning, the club’s president, said in a telephone interview. The new stadium, which cost about $115 million and seats about 20,000 for soccer games, is located in Sandy, just outside Salt Lake City. Rio Tinto, an international mining company, will pay $1.5 million to $2 million a year for 15 years to have its name affixed to the building. Unrelated to the economics of the league was this tidbit: According to an analysis of more than 100 million blogs, message boards, and postings on social Web sites performed with Zeta Interactive’s RelevantNoise software technology, M.L.S. was third worldwide in the total volume of soccer posts, at 16 percent. M.L.S. followed the English Premier League (42 percent) and Italy’s Serie A (27 percent) but was ahead of Spain’s La Liga (14 percent) and Scotland’s Premier League (2 percent). The analysis also found, however, that M.L.S. was last in positive buzz in the posts, with only 3 percent, compared with the Premier League (47 percent). the complete article: http://www.nytimes.com/2008/09/30/sports/soccer/30soccer.html?_r=2&ref=soccer&oref=slogin&oref=slogin Link to comment Share on other sites More sharing options...
piltdownman Posted October 1, 2008 Share Posted October 1, 2008 Just goes to show that big soccer posters have no lives and pretty much swarm you if you say anything bad about the MLS[] Link to comment Share on other sites More sharing options...
Johnnie Monster Posted October 1, 2008 Share Posted October 1, 2008 quote:Originally posted by dbailey62 True but can't losses in MLS be used to counter taxes in other divisions of your operation (assuming they make money?) Exactly. Case in point, a lot of small business owners pay a salary to their spouse and kids, and they write it off as an "expense" of doing business. Why? Because your family is able to retain more of that money from the tax man than the business can by itself. In Canada & the States, personal income taxes are generally less costly to the family's bottom line than corporate taxes on business profits. I'm sure the MLS clubs pull the same scheme on a larger scale. They'll be expensing damn near everything they can find a receipt for, regardless of whether it related to soccer operations or not. This will include the owner's homes, real estate holdings, payoffs to their own consulting companies, charitable offerings, etc. It's all a big shell game. If these clubs were *really* in the red after more than 12 years, the plug would have been pulled long ago. Link to comment Share on other sites More sharing options...
Richard Posted October 2, 2008 Share Posted October 2, 2008 quote:Originally posted by dbailey62 True but can't losses in MLS be used to counter taxes in other divisions of your operation (assuming they make money?) Yes, if MLSE prepares a consolidated tax return. But you can be sure few business operations are kept going for the sake of their losses rather than their profits. Link to comment Share on other sites More sharing options...
AvroArrow Posted October 2, 2008 Share Posted October 2, 2008 Hey, if you can find a hobby that the government allows you to deduct expenses from and claim a loss, more power too you. Some people collect stamps, some raise horses, and others run MLS teams. Link to comment Share on other sites More sharing options...
Free kick Posted October 2, 2008 Share Posted October 2, 2008 quote:Originally posted by Richard But you can be sure few business operations are kept going for the sake of their losses rather than their profits. Very True. Its a cliché that is heard far too often. Every business exists first and foremost to make money. They dont exist to avoid or minimise taxes. Tax consideration are a means to an end. Ok, in some circumstances losses can have some tax benefit. But that is all secondary and not as significant as some would make it out be. I think ( and been reported) that Forbes is very conservative in these analysis. Also, alot of ancillary earnings are not oftena ccounted for in thase studies. Link to comment Share on other sites More sharing options...
Canuck Oranje Posted October 5, 2008 Share Posted October 5, 2008 The reality is that this league was almost shut down in 2001 because the three primary investors (Lamar Hunt, Robert Kraft, and Philip Anschutz) were unsure about investing even more money into it. I think it is safe to say that none of these investing families have received a positive return on their investment yet. Additional investments were made by these investors in anticipation of future profits and not because the league franchises were profitable at that time. Regardless of what the current financials say, this league is still about potential future profitability and not about current profitability. I would predict that expansion franchises will be handed to those who have the ability to come up with the franchise fee and have the financial resources to carry their franchise for a number of years. If that happens to be Canadian cities, that's where they will go. I will say again, as I did in another thread, the MLS will need to make some significant structural changes if it wants to continue to develop and sustain itself in the long term. With the financial turbulence that is currently hitting the USA, it will not take much to push the MLS from the brink of expanding back to 2001 and failing franchises. Here's hoping that those in charge of the league see the need for change too. But I'm not holding my breath. Link to comment Share on other sites More sharing options...
john tv Posted October 5, 2008 Share Posted October 5, 2008 Hey Oranje ,can I say boven.It will be one holding your breath development.If the US fails to pull themselves out of this beyond imagination horrendous mess the MLS wil survive,but running a business and under these circumstances including a much smaller gate,it looks very bad indeed and as with the demise of the NASL.Toronto will be the flagship,but who cares.On a personal note these media guys in Toronto will have a huge party. Link to comment Share on other sites More sharing options...
tmcmurph Posted October 5, 2008 Share Posted October 5, 2008 I wouldn't think that the big money behind the MLS would be affected by the US meltdown. If anything those at that level will profit off it. Like others have pointed out already what will need to be watched will be the financing of the new stadiums. If the effects are felt at the gate then they will have to lower prices of tickets. It's not like they are selling out the stadiums they already have but a nice new stadium has a good effect on a team's gate at least for a year. Link to comment Share on other sites More sharing options...
DoyleG Posted October 5, 2008 Share Posted October 5, 2008 quote:Originally posted by tmcmurph I wouldn't think that the big money behind the MLS would be affected by the US meltdown. If anything those at that level will profit off it. Like others have pointed out already what will need to be watched will be the financing of the new stadiums. If the effects are felt at the gate then they will have to lower prices of tickets. It's not like they are selling out the stadiums they already have but a nice new stadium has a good effect on a team's gate at least for a year. To say the big money guys behind MLS wouldn't be affected is pushing it a great deal. Link to comment Share on other sites More sharing options...
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