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General MLS Talk 2019

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SUM revenue isn't included but Forbes says half of the value of the lower valued teams are due to SUM.

Forbes values MLS teams like tech stocks. And MLS expansion fees are like another tranche of funding from overly excited venture capital. It's all about the future promise of growth because nobody's making real money. They could end up like Amazon or it could be WeWork. In the meantime, for owners with other businesses, it is a tax loss write off.

As comparison, only 7 MLS teams generate more revenue than the average English Championship team.

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12 minutes ago, An Observer said:

i think the more worrying thing is in spite of decent attendance, Montreal and Vancouver are in the bottom 4 of revenue. 

In Vancouver’s case, looks like the exchange rate accounts for the operating loss.  In  Montreal’s case, the sheer size of that negative of the operating margins cant be explained by just the exchange rate.   

In MLS, like other sports leagues, salaries in are paid in USD but revenues are in Canadian dollars. That make Cnd clubs at something like a 20% disadvantage as far as spending on players.

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5 hours ago, narduch said:

I continue to wonder if MLS regrets giving franchises to Montreal and Vancouver. 

Mind you there are about 8 teams in the same boat as them. 

This league has a real parity issue on its hand. 

They might now, but they wouldnt have gotten to MLS 2.0 or 3.0 etc without the CDN teams.  Montreal has been successfull in CONCACAF, had several of the big name elite stars of the league (Di vaio, Drogba, Piatti) and made the playoffs roughly half the time.  Announced attendance may be down (i need screenshots to comment on it further) but they are not a drag on the league.  

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23 hours ago, Free kick said:

In Vancouver’s case, looks like the exchange rate accounts for the operating loss.  In  Montreal’s case, the sheer size of that negative of the operating margins cant be explained by just the exchange rate.   

In MLS, like other sports leagues, salaries in are paid in USD but revenues are in Canadian dollars. That make CAD clubs at something like a 20% disadvantage as far as spending on players.

Exchange rates really only matter when there is volatility (and the hedging costs even in normal times) as you can get caught out if at the beginning of the season you are charging X and that is worth Y but as the exchange rate goes down over the course of the season it is worth Y-20%.  That is the problem.  The real problem is that clubs are just not generating enough revenue.  If a ticket is $50 in USD, it has to be $50 plus the exchange rate differential in CAD to be the same as that gives it the same value (ie. CAD is not worth the same as USD).  When people claim the exchange rate is the problem, they are usually operating under this mistaken belief that somehow the currencies should trade at par.  That is bonkers.  Currencies trade at what their underlying value is.  I live in Hong Kong where the rate is pegged at $7.8 HKD to $1 USD.  No one things that you would translate a USD $1 price into a HKD $1 price.  

The real issue with Canadian clubs is the fanbase (or sponsors or TV) is too cheap to pay at the level of their US counterparts or they are overall significantly poorer (which is probably part of the problem) than their US brethren so cannot pay at that level. Or the clubs don't market themselves well enough to the fanbase (or sponsors or tv).  Or the fanbase is significantly smaller.  I suspect its some combination of all of that for Montreal and Vancouver.  Clearly it doesn't impact Toronto as they are in the top 5 in terms of revenue.

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