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| an MLS team's operating costs | | Published by: anonym 2010-03-18 |
an article out of edmond, oklahoma yesterday had a key member of express sports stating average operating costs for a team
Chiefs owner intrigued with Edmond - Edmond Sun (http://news.mywebpal.com/partners/844/public/news352079.html)
Lund on operating costs
“Absolutely, they cost less to run,” Lund said. “From what we have learned, the average cost per team ranges between $7 million and $10 million per year. That’s considerably less than any other major league team.”
-jim
Originally posted by AndyMead
Did I miss something, or didn't he also take over the Burn this season in order keep the league itself from operating any teams?
If this happened, it was never announced. On the day of contraction, Garber said that all 10 teams would have an I/O before the season started. It was also publicly stated that Hunt intended to become the I/O of the Burn, but after the McKinney thing fell through nothing has been announced to that effect.
to a degree, one could understand how another owner could get rather upset at some of the owners in mls presently
if you got arrowhead and cmgi funneling parking and concession money from the league and into unaffiliated company that still feeds hunt or kraft... that means that those teams are going to possibly lose money and definitely more of it if they are losing... which means that other teams are going to have to cough up more money to cover their arses... at least that has been the impression that i have gotten so far
any thoughts on this aspect?
it works if the i/o's would have control of such revenues... otherwise it would hurt them more than it should
OK--let's be optimistic here:
-$7-10M to run a team, including MLS overhead and sustaining losses from single-entity. Thus, $85M to run the entire league, optimistically. (Im' not including TC here, as htat has all been shipped to SUM).
-$18 average ticket price. Columbus, NE and KC control revenue streams from concession and parking, so increase that $18 by 30% for $23.4 per fanny in the seats.
-120 games played, with 1,843,523 in attendance. With a possible 39 games left to be played (including the playoffs), means 2,442,668 in total attendance.
--2,442,668 * 23.4 = $57,158,431
-LA has $3M in in-stadium ad revenue. Let's say that with uniform and other sponsership revenue in place, all teams manage to average $3M in total ad revenue. That would mean $30M...
and a slight, roughyl $2M profit for MLS this year. I guess its still possible, but I was being, really, really optimistic.
Originally posted by Treetaliano
Does the $7 - 10M million include travel costs? i.e. flight for Galaxy to NY
I would certainly assume that it would.
This contradicts Graber's earlier statement in USA today that implied that it only cost $5M to operate an MLS team.
If even the $7M figure is true, the odds of MLS actually making a profit have droppped dramtically.
I still hold out hope that it could happen by 2005.
Does the $7 - 10M million include travel costs? i.e. flight for Galaxy to NY
weren't they said to be losing $50 million a year, and since they take in revenue and there were 10-12 teams at any time, that $5 million a team would seem a bit low??
i'm not quite sure why $7-10 million would mean that profits are nowhere to be seen, i thought the numbers stated were fairly low and thus a very good thing for mls
and no, hunt hasn't taken over dallas, they are still league run
I don't believe the Hunt/Dallas thing was ever finalized (El Jefe?).
And someone, somewhere on BS recently assured us that MLS would break even or make a profit this year or next. Wish I could find that one.
It's $5 million. At least, an MLS team that I would assume to be about average, if not above the average (large market, not-so-hot stadium deal, but better than the Metros' deal) was at $5 million when I got a stolen look at their setup two years ago.
Originally posted by AndyMead
The $50MM was losses, not costs. Ask an accountant.
Ask an Arthur Anderson accountant because you would need some creative book cooking to get to the $50M in losses/yr figure.
Originally posted by Noah Elliott
If this happened, it was never announced. On the day of contraction, Garber said that all 10 teams would have an I/O before the season started. It was also publicly stated that Hunt intended to become the I/O of the Burn, but after the McKinney thing fell through nothing has been announced to that effect.
Capital Area Team Sports::
as that of CATS as an organization and MLS as a league, is clear on Operating MLS and its teams costs roughly $5,000 per season, and when that money
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CNN/SI - Your Turn - React - Users sound off on MLS expansion ::
In all but a few MLS teams, there is a problem with competitiveness within a squad. franchise should avoid the citys proposed new football stadium at all costs!
http://sportsillustrated.cnn.com/your_turn/react/news/1999/12/16/react_mlsexpansionHOME |
Exactly.
Lamar Hunt's son (sorry no link) did say it would be announced when (not if) it happened and it would be the most anti-climactic press conference ever.
At this point, I think it would generate quite a bit of interest.
I can think of no reason why it is taking so long to hammer out the deal. As familiar with Dallas and MLS as Lamar Hunt is, there shoudl be no surprises at this point.
The one thing I can think of is that MLS is holding it out as some sort of incentive/carrot for the 3 cities supposedly talking with MLS about a stadium for the Burn and some demonstration of commitment / joint announcement.
Lund on operating costs
“Absolutely, they cost less to run,” Lund said. “From what we have learned, the average cost per team ranges between $7 million and $10 million per year. That’s considerably less than any other major league team.”
So, let's do the per team "cash in the door" numbers, assuming those numbers are all-in pay-as-you go expenses for EVERYTHING, including debt service on your stadium.
Ticket sales -- 14 dates @15k per x $20 average ticket = $4.2 million
Concessions -- 14 dates @15K per x $3 average purchase = $630K
Parking -- 14 dates @ 15k per x $3 per seat average = $630K
Sponsorships -- 8 sponsors @ $50K each annually = $400K
Television revenue sharing (a guess) -- $750K
Total?
$6.5 million
My calcs assume 4500 cars (3 people per car, roughly) each game at $10 per car, which is about $3 per seat, kinda sorta. $10 is pretty standard.
Sponsorship numbers were, of course, a guess; presumably the league shares some league-wide sponsorship $, but any $$ the local team gets on their own can go to their own operating budget.
Therefore, with these assumptions, you are ALMOST at cash flow break even with a $7 million expense structure. This doesn't take into account additional revenues from other events placed in the stadium YOU own, plus tax benefits passed onto your limited partners.
My little "back of the envelope" calculations -- admittedly a simplification -- assumed a Columbus- like situation, where an SS Stadium is owned and controlled by the managment group -- which I think would be the case in Oklahoma.
Things are certainly different in an RFK or Soldier Field situation, and way more complicated in a Kraft or Hunt/KC situation, where issues of transferring costs and transferring revenue between ostensibly arm's length operations make apples-to-apples comparisons impossible for outsiders like us.
Again, professional team ownership is not about "revenue" or "profit" -- those are the fictions of the accounting world, as AndyMead points out --but about cash flow, coupled with asset accumulation and appreciation. That's why it's no accident that your major sports moguls -- Hunt, Jerry Jones, Reinsdorf -- have all been in businessess (like real esate or oil) that live and breathe tax losses and big time future payoffs down the line.
In other words, "book" or "tax" losses are perfectly OK if you cover your operations with internally generated cash, and you can earn future upside with the team/stadium as the key assets you own.
It's what you exit at, not what you "earn" on an ongong basis.
My question. This article and others keeps refering to Hunt being the I/O for Columbus and Kansas City.
Did I miss something, or didn't he also take over the Burn this season in order keep the league itself from operating any teams?
As far as the $7MM vs $5MM, the $5MM could be direct costs with an additional $2MM being league overhead per team. But that could just be rationalization.
sss's only if you don't control the revenue streams
cmgi (gillette) and arrowhead quickly come to mind as places where the owner has control of the revenue streams... they may not filter those streams back to their mls entity, but they are keeping the money... just in a different pocket
Originally posted by photar74
If even the $7M figure is true, the odds of MLS actually making a profit have droppped dramtically.
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I disagree. If an MLS team can keep the revenue from concessions and parking, and can average somewhere around 15,000 per game, can generate some local sponsorships, can either pay no rent or minimal rent, and can have some playoff games and exhibitions, it can generate revenue in excess of $7 million.
Obviously, key to this is owning/controlling the stadium. That's why having SSS's is so important; it may be the only way MLS will become profitable.
Originally posted by jmeissen0
to a degree, one could understand how another owner could get rather upset at some of the owners in mls presently
if you got arrowhead and cmgi funneling parking and concession money from the league and into unaffiliated company that still feeds hunt or kraft... that means that those teams are going to possibly lose money and definitely more of it if they are losing... which means that other teams are going to have to cough up more money to cover their arses... at least that has been the impression that i have gotten so far
any thoughts on this aspect?
Only that such an idea could actually be used to get more investors into the league. You could point out to an investor that s/he could make money on MLS, even if the team s/he owns does not.
Originally posted by jmeissen0
weren't they said to be losing $50 million a year, and since they take in revenue and there were 10-12 teams at any time, that $5 million a team would seem a bit low??
The $50MM was losses, not costs. Ask an accountant.
Originally posted by SamPierron
It's $5 million. At least, an MLS team that I would assume to be about average, if not above the average (large market, not-so-hot stadium deal, but better than the Metros' deal) was at $5 million when I got a stolen look at their setup two years ago.
Was this DC, Chicago or LA?
If you are right, then Garber's $5M implied comment back in March would appear back in the running.
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