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CDNFootballer

Ottawa CPL Club

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"Follow the money. What a lot of people on here don't tend to consider is what could be attractive about staying in USL from an OSEG standpoint? If/when MLS stop expanding and the reserve teams get jettisoned to USL 1, the value of a USL Championship franchise could ramp up considerably, because USL plans to keep its numbers quite limited. "

 

USL franchises value is based on the current expansion fee (8 million apparently) and is not necessarily the amount that one could sell their team for, how does this help OSEG as they're unlikely to sell for anywhere near that valuation even if they could find a buyer. How does the phantom value get capitalized on by OSEG in actuality?

The reason that Fury are not keen on switching to CPL IMHO is $$$ they will save by staying put - they likely are paying their entry fee into USL (5 million roughly) over a 10 year period and don't want to pay a multi million dollar entry fee into CPL on top of still paying to USL for 7 more years as well.

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On 8/9/2019 at 9:48 AM, Ozzie_the_parrot said:

He's arguing correctly IMO that the entry/franchise fee should have been kept the same and that new teams should be viewed as an asset in terms of building the sponsorship base rather than as an extra mouth to feed,

Interesting argument but not one that moves the needle for me. Those organizations that took the plunge in year one should be rewarded for that. Subsequent expansions have to balance what the market will bear and the benefit more teams bring to the league.

I don't see why we are even discussing this. The league needs more teams. You know it, I know it, the League knows it. If they set the price of expansion too high they are just ******* themselves. It will work itself out.

 

On 8/9/2019 at 4:35 PM, CDNFootballer said:

USL franchises value is based on the current expansion fee (8 million apparently) and is not necessarily the amount that one could sell their team for, how does this help OSEG as they're unlikely to sell for anywhere near that valuation even if they could find a buyer. How does the phantom value get capitalized on by OSEG in actuality?

The reason that Fury are not keen on switching to CPL IMHO is $$$ they will save by staying put - they likely are paying their entry fee into USL (5 million roughly) over a 10 year period and don't want to pay a multi million dollar entry fee into CPL on top of still paying to USL for 7 more years as well.

 If they could not get a buyer to pay them $7m then the USL will never add another expansion team for $8m. Are you saying noone would pay $8m for a USL franchise?! If someone wants to have a team in USL and the fee is $8m to buy in, if they can buy in for less than that why wouldn't they?!?!

As for the bizarro world where they want to keep paying a debt for seven more years, if they can  get $7m for their USL rights, the debt is paid and they have money in the bank to put towards CanPL. There is no scenario here where Ottawa loses money moving to the CanPL that I can see.

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^I think you've got to have at least some sort of entrance fee for a couple of reasons:

  • New teams are tapping into existing revenue streams, such as the Canadian Soccer Business and the MediaPro streaming deal. Barring any increase in the amount of money filtering down to CPL teams, each team will get a smaller piece of the pie with expansion. Existing teams need to be compensated.
  • An entrance fee represents a long-term commitment to the league. Take away this fee and we could see a revolving door of teams entering and leaving the league, which is really bad for long-term stability.

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6 hours ago, ted said:

 If they could not get a buyer to pay them $7m then the USL will never add another expansion team for $8m. Are you saying noone would pay $8m for a USL franchise?! If someone wants to have a team in USL and the fee is $8m to buy in, if they can buy in for less than that why wouldn't they?!?!

As for the bizarro world where they want to keep paying a debt for seven more years, if they can  get $7m for their USL rights, the debt is paid and they have money in the bank to put towards CanPL. There is no scenario here where Ottawa loses money moving to the CanPL that I can see.

Not saying no one would pay 8 million for an expansion franchise in USL, saying OSEG likely won't get that or anything near it for their Ottawa based USL team. One cannot just buy Ottawa and move it to another market in USL, the league controls things not the teams as its privately owned and they protect themselves and won't allow a circumvention of their expansion fees this way. In USL your paying for a right to operate a franchise in a certain specific market not any market, so buying Ottawa Fury only gives the buyer the right to operate a team there in USL.

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Posted (edited)
1 hour ago, Toronto Ruffrider said:

^I think you've got to have at least some sort of entrance fee for a couple of reasons:

  • New teams are tapping into existing revenue streams, such as the Canadian Soccer Business and the MediaPro streaming deal. Barring any increase in the amount of money filtering down to CPL teams, each team will get a smaller piece of the pie with expansion. Existing teams need to be compensated.
  • An entrance fee represents a long-term commitment to the league. Take away this fee and we could see a revolving door of teams entering and leaving the league, which is really bad for long-term stability.

You could double the player salaries of the entire league for less than what the speculated entrance fee is. Meanwhile players are earning so little that they are electing to go back to university instead of pursuing a career in the league. Good CPL players. There is still a long way to go. I'd prefer financial investment to be directed towards players/infrastructure at this point in time. That would show me that the current investors are in it for the long haul.

The league has seven teams. They need to add more. Why demand a massive fee when the lack of infrastructure in most cities is already enough to deter most potential investors. If a club/municipality is willing to invest in infrastructure like Westhills stadium, than, for me, that is a demonstration of long-term commitment. I'm all for ensuring that teams are committed to the cause, but I don't think buy in fees are the only way to do so.

I don't imagine the media pro deal was signed with the intention of keeping the league at 7 teams for the next 10 years. Adding teams to the league will increase viewership, thereby making the deal worthwhile for the single biggest investor in the league so far. It's also the only way of ensuring that a future broadcast deal will be signed.

Edited by Aird25

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Aird25 and UT have convinced me. I was on the "fees are necessary/reasonable" side before. But I'm now on the "Without more teams all your value will eventually spiral down to 0". It seems like an unnecessary barrier to entry.

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There is going to be some sort of compensation to the other teams.  They put up the money, built the infrastucture, rounded up the investor when no one said it would work, they did the TV deals, got the initial sponsors etc, proved the league was viable and now the later teams will benefit from it. New teams will have an existing product to sell to investors, WAYYY EASIER, than selling ifs and buts like the original 7.   Maybe its small, maybe its deferred, I dont know, but the teams that made the league for you to join should get something.  

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It is worth remembering that we have no idea the cost of the fee or what it's for. It could just be a payment towards facilities, players, staff, etc, to make sure that the owners have enough to stay afloat. It could be for a share of the media deal, in some sort of weird "you pay us x to get y back from them", or even structured as a reduction on their share of the media deal (so they don't get the full amount that the Original 7 get for the first few years or something - this way it's not exactly a payment, but essentially works out to one). 

The point is there are a lot of possibilities, some are fine and understandable, others are absurd. I don't think it makes sense to completely reject any fee without knowing the details, but I share the reluctance to support the fee when we don't know the details and simply see the unchanged number of teams. I just also think blaming the completely unknown fee at this stage is ridiculous, we might as well blame the upcoming federal election - we have about as much information about the impact of one on the league as the other.

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I just find it hard to believe that a league that has done so much right would immediately erect a barrier that will deter growth and threaten the viability of the league.  That seems shortsighted and out of character for a league (and ownership collective) that has made such positive moves so far.

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12 hours ago, Bison44 said:

There is going to be some sort of compensation to the other teams.  They put up the money, built the infrastucture, rounded up the investor when no one said it would work, they did the TV deals, got the initial sponsors etc, proved the league was viable and now the later teams will benefit from it. New teams will have an existing product to sell to investors, WAYYY EASIER, than selling ifs and buts like the original 7.   Maybe its small, maybe its deferred, I dont know, but the teams that made the league for you to join should get something.  

Smaller piece of a bigger pie...

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Posted (edited)
41 minutes ago, Ams1984 said:

Smaller piece of a bigger pie...

Maybe better phrased as a smaller percentage share of a larger pie, which could mean more overall especially if a Quebec team becomes part of the equation and opens doors to French language related sponsorship and broadcasting. That's what makes the rumoured increase of the fee to $9 million that often gets mentioned on Reddit look decidedly odd if it's accurate given Quebec expansion is what they prefer to talk up. David Clanachan never confirms the numbers but has stated that the fee has increased.

Edited by Ozzie_the_parrot

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Posted (edited)

Clanahan has said the fee is more than the original 7 teams paid, but we dont know what that was.  This 8-9million that is being bounced around by certain hysterical types seems way off base.  If the salary in under 1milllion, attendance is in the 4-5000 range, how the heck could an investor group justify paying 8million upfront.  They would be in such a hole right off the bat.  Isnt that figure the rumored USL franchise fee??  And its somehow morphed into the CPL fee??  Maybe in the USL, with the carrot of MLS in front of them, rich US investors dying to get into soccer can fork over 8mil, but it just doesn fit where the CPL is right now.  

Edited by Bison44

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Posted (edited)
17 minutes ago, Bison44 said:

Clanahan has said the fee is more than the original 7, but we dont know what that was.  This 8-9million that is being bounced around by certain hysterical types seems way off base.  If the salary in under 1milllion, attendance is in the 4-5000 range, how the heck could an investor group justify paying 8million upfront.  They would be in such a hole right off the bat.  Isnt that figure the rumored USL franchise fee??  And its somehow morphed into the CPL fee??  Maybe in the USL, with the carrot of MLS in front of them, rich US investors dying to get into soccer can fork over 8mil, but it just doesn fit where the CPL is right now.  

The only time I've heard that number used is when OSEG was talking about the "value" of the Fury.

Edit: I don't doubt it as they said that number was determined by an independent firm but there's a million different ways to determine value and the parameters used to come to the $8-9M number where never divulged.

Edited by BuzzAndSting

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3 hours ago, dyslexic nam said:

I just find it hard to believe that a league that has done so much right would immediately erect a barrier that will deter growth and threaten the viability of the league.  That seems shortsighted and out of character for a league (and ownership collective) that has made such positive moves so far.

I think you're right. But I also think the number is probably multiple millions of dollars. I'm sure the league has done exhaustive research and they know what the value of future clubs are and they know the type of owners they're looking for. As you say, they've done so many things right I doubt they would jeopardize the future of the league at this point.

I think the CPL is going after big money owners, hence why Joe Belan is struggling to get a club right now, and I don't think it's a barrier to entry. Look at the rumoured investors in Pickering, Quebec and New Brunswick and I don't think the entry fee will be an issue.

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22 hours ago, CDNFootballer said:

One cannot just buy Ottawa and move it to another market in USL....

That is exactly how it works! An ownership group buys the franchise from OSEG and starts a team wherever they can find a stadium that meets with USL approval. It is a shortcut that has been used many times before in the USL to avoid waiting for expansions. 

This is the whole basis for the hatred of the "franchise" system by football fans around the world. An owner sells the team and moves it to another city, leaving the fans behind. Dodgers, Giants, MK Dons, Winnipeg Jets, these are all stories  of greedy bastards tearing the soul out of sport and making it something that can simply be bought and sold at whim.

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1 hour ago, ted said:

That is exactly how it works! An ownership group buys the franchise from OSEG and starts a team wherever they can find a stadium that meets with USL approval. It is a shortcut that has been used many times before in the USL to avoid waiting for expansions. 

This is the whole basis for the hatred of the "franchise" system by football fans around the world. An owner sells the team and moves it to another city, leaving the fans behind. Dodgers, Giants, MK Dons, Winnipeg Jets, these are all stories  of greedy bastards tearing the soul out of sport and making it something that can simply be bought and sold at whim.

Can you give me some examples of some of these USL franchises that have sold since the current iteration of the league (2011) and the buyer has moved them with USL permission, circumventing the league expansion fee? A few teams have moved over the years but with the owner remaining the same (Austin to Orlando), others have simply folded. USL has taken over franchises and resold them for a fee, where they have stayed put in the same market (Phoenix/Arizona and Rochester as examples).

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21 hours ago, Bison44 said:

There is going to be some sort of compensation to the other teams.  They put up the money, built the infrastucture, rounded up the investor when no one said it would work, they did the TV deals, got the initial sponsors etc, proved the league was viable and now the later teams will benefit from it. New teams will have an existing product to sell to investors, WAYYY EASIER, than selling ifs and buts like the original 7.   Maybe its small, maybe its deferred, I dont know, but the teams that made the league for you to join should get something.  

The way NASL did it was to have A stocks and B stocks in the league - each club owned A stock in the league but only the founding owners owned B stock which gave them a cut of expansion fees clubs payed to get in the league. In the end, Tom Fath was the only founding member left and he received the full cut as the other founding members had over the years sold their clubs, with Faths share getting bigger each time one left. This was one of the reasons FC Edmonton could stay in the NASL as long as it did as they had a payday for each expansion club added, unlike in a franchise based privately owned league like USL where teams get nothing from expansion fees.

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17 hours ago, Ozzie_the_parrot said:

^^^Has Nipun Chopra not reported otherwise on that last bit?

On USL clubs not getting a piece of expansion dollars? Actually someone on here a while back had asked on twitter and the responses had confirmed what I had said, the USL teams get nothing, it goes to the leagues private owners.

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