Socer Business Bits: Dynamo Stadium, UFL & More

houstonThe Houston Business Journal is reporting that Dynamo President Oliver Luck remains committed to a downtown stadium.  The project remains held up by the use of a tax increment reinvestment zone in the Houston area.  By way of brief refresher, according to the City of Houston website, Tax Increment Reinvestment Zones are:

special districts created by City Council to attract new investment to an area. TIRZs help finance the cost of redeveloping or encouraging infill development in an area that would otherwise not attract sufficient market development in a timely manner. Taxes attributable to new improvements (tax increment) are set-aside in a fund to finance public improvements in the zone. Zones in the City of Houston have been created for one of three reasons:

  • to address inner city deterioration
  • to develop raw land in suburban fringe areas
    or
  • to proactively address the decline of major activity centers

Total cost of the 21k stadium is expected to be about $80 million with the Dynamo ownership (primarily AEG and Golden Boy Promotions) funding about $60 million.  The rest of the funds could come from tax credits,  the TIZ money and from some of the stiumulus money floating around.  The TIZ program will also provide the property for the stadium.  According to Houston President Oliver Luck, multiple banks are lining up to provide financing for the construction project.  As we have noted previously, this is a great time for construction, with the cost of materials and labor way down.  Also, these are the type of projects that can bring jobs and income into the economy.  The economic benefit of stadium projects is also debatable, but during a downturn there is a definite economic upside.

As a brief aside, we spent last night in East Hartford, Connecticut at a UFL game between New York and Florida.  The UFL is an upstart football professional league muddling through its inaugural season.  The UFL is following the single entity model with league ownership of the various teams.  Attendance was very slight, with most attendees seemingly using free tickets to get in the door.  League TV ratings are hovering below 100k per game. which is well below MLS numbers  Despite this seemingly bleak situation, the League has remarkably signed tv contracts worth $70 million over two years, far in excess of MLS contracts.

One final note.  The Galaxy/Dynamo match won’t kick off until 11:25 Eastern on ESPN2, making it a late night for east coast fans.  The gams is preceded by a college football matchup (which will likely run long).  ESPN has built a  25 minute buffer between with a scheduled pre-game show, but there is a good chance some of the game will be chopped.

Soccer Business Bits: RSL Sale, Playoff Promotions & More

rslJust days before the RSL’s big conference final match-up against Chicago, the big story around MLS is the pending sale of a 49% interest in RSL to local businessman Dell Loy Hansen.  While not finalized, Hansen has been traveling with the team and attended multiple games. A real estate developer/owner, Hansen has stated that he intends to brand his various properties with RSL colors and gear and use his residential space to house RSL players (great idea).

The entry of new blood into MLS is always a good idea.  In RSL’s case, this brings a local owner into the picture who adds money to the ownership group and a definite rooting interest.  Moreover, this is an especially attractive deal because it may include an ownership interest in Rio Tinto.  Perhaps most interestingly, the actual purchase price will provide insight into the valuation of MLS franchises at a time when expansion franchises are entering the League at a rapid clip.

The Conference Finals are just around the corner, and we thought we would take a quick look at promotional efforts by both the Fire and Galaxy in advance of the games.  Given the great attendance both in Chicago and Los Angeles for the earlier playoff games, significant promotional efforts are largely unnecessary, and a great sign for the League.  Seemingly the sole promotion in Los Angeles is a Family Four pack of 4 tickets, dogs and drinks for $66.  In Chicago, there are no apparent promotions.   Both teams are expecting sell-outs for the finals, and the lack of promotional events shows that the crowds are expected without additional efforts to convice them to come.

For a nice summary of MLS playoff attendance over the last few years, click here.

 

Soccer Business Bits: USL Change, CBA News? & More

broken soccer ballMultiple outlets are reporting that 6 USL-1 teams, including 2011 MLS expansion side Vancouver, have broken away from the USL to form their own six team League for 2010.  Though still waiting for USSF approval, the new league will feature Vancouver, Montreal, Atlanta, Carolina, Miami and Minnesota.  There are also reports that a team from St. Louis will join the new league.

What impact this change (if it goes through), will have is very much in question.  Some MLS fans are prematurely excited at the prospect of MLS teams essentially operating farm teams in the new league, while others think that this move is a precursor to an “MLS2”.  Frankly, we think neither is likely. If this division holds, it will likely have the impact of weakening USL and the new league, especially when Vancouver and Montreal (probably) bolt for MLS and Portland does the same. The lower leagues have already lost a strong team in Seattle, and despite the prospect of new teams in New York and Baltimore, further division is not in USL’s best interest.  Strong lower divisions are important for the survival of soccer in the US and this move seems simply to weaken the overall product.

American soccer fans have marked January 31 on their calendars because it is the date the Collective Bargaining Agreement expires.  The parties have started negotiating, and this is certainly a story we will religiously follow.  For now, we think it a bit early, but since there have been a couple of early shots across the bow, check out this story at MatchFit for details.  One hidden impact of the labor situation will be the decisions faced by college players eying a career in MLS as part of the January draft.  Will players be less willing to enter the draft if there is no deal?

Check out this nice story from MLSnet.com about the MLS playoffs in Afghanistan.

One final note.  Seattle is looking to take its MLS success to a global stage.  Here is a story on the Emerald City’s efforts to bring the World Cup to Qwest Field.

Seattle Sounders: A Look Back

soundersYear one of the Seattle Sounders’ MLS campaign is concluded, and it has been a success in every way.  Here is what we wrote in March:

First Kick 2009 is just days away, and the League’s newest franchise is directly in the cross hairs of MLS fans.  They have sold the tickets; more than 20k season ticket sales have been announced for 2009.  They have landed the big name sponsor; Microsoft has signed on for $ 4 million for over five years.  They have marketed aggressively; billboards, scarves and advertising have been plastered all over the City. They have signed an impressive local broadcast deal, allowing a revered local voice to bring Sounders soccer over the air. They will also have a presence on cable.    According to to David Falk, the man in charge of the comprehensive Seattle Soccer website www.GoalSeattle.com, Fox Sports Northwest will sponsor a weekly Sounders show and run game replays.  They have spent on players, including a DP, and have created an outstanding website. If MLS Executives were to imagine the perfect off the field scenario for an expansion team, Seattle, circa March 16, 2009 would be the dream. Now it has to continue going forward.  Fans have to keep buying tickets, the media needs to keep aggressively covering the Sounders  and Seattle needs to make it happen on the field.

Well, check, check and check!  The crowds kept coming (they grew), the local media coverage remained oustanding, and the Sounders continued to perform on the field.  The Sounders were one of the great American sports stories of 2009; not just MLS. Philadelphia, Vancouver and Portland now have a definite model to follow (TFC certainly works as an example as well).  Despite all of the success in year one, Seattle has one more big soccer test to pass.  Will the crowd for MLS Cup 2009 bring down the curtain on the campaign with a bang or a whimper?  Beckham v. Blanco would be great for attendance (although RSL/LA would be more pleasent to watch.  If Seattle can fill Qwest for the final as a neutral site venue, it would be the perfect capper to a wonderful season.

The Monday After: Playoff Numbers, Hello Dilly & More

mlsFour playoff games over the weekend and attendance was generally strong throughout.  The weakest number was in Columbus, were just over 10k saw Columbus fall to RSL in an exciting 3-2 affair.  The numbers picked up over the weekend, where 21,500 saw Chicago shut out New England 2-0.  On Sunday, more than 27,400 were in Houston to see the home Dynamo hold off expansion Seattle 1-0 in overtime.  In Los Angeles, the second leg of the playoff Derby, saw a Galaxy victory in front of a 27k sell out.

A couple of notes on the playoff broadcasts.  Full marks to both ESPN and FSC.  Both broadcasts were solid, with pre and post game packages.   Both networks had an array of national advertisers (most of the usual suspects), and on screen advertising.  There were a few too many glitches on FSC (e.g. the Castro Red card that wasn’t and the failure for 3 minutes to recognize that he was a sub), and both broadcast teams seem to suffer from either a lack of research and/or production help during the telecast. We did not get a chance to take in the Dynamo/Seattle game.

A couple of other quick notes:  One of the big stories for MLS junkies, was the recent announcement that 20 year old Dilly Duka, a former Rutgers stand-out and product of the Red Bulls’ youth system, has signed with the Generation Adidas Program will enter the MLS draft.  The GA program provides fairly high salaries for youth players who leave college early and provides them with the opportunity to pursue their college careers if soccer doesn’t work out.  It is quite possible that the Red Bulls will select Duka with the second pick in the draft.

Finally, looking forward, there was likely no small amount of quiet rejoicing in MLS headquarters at the Fire victory over the Revs.  A Fire/RSL Conference final promises to attract more than double the crowd of a Revs/RSL game at Gillette and in a better environment.  At the same time, the Becks and Donovan show will continue on prime time, as Los Angeles will host Houston in the other Conference final.

Soccer Business Bits: Soccer Business Reading, Playoff Broadcast & Dynamo Day

readingIn 30 minute daily bits, NPR’s broadcast of “Marketplace” provides a great look at national and international business issues.  On the most recent broadcast, host Kai Rysdal interviewed Simon Kuper, co-author of “Soccernomics” , a book that explores soccer stats and finances, while looking at the beautiful game through a monetary lens.  A transcript and audio file of the interview are here.

The book addresses club finances, the transfer market and the relevance of a nations’ financial status to its potential success on the pitch.  The authors also discuss the growth of stats as an important component of managing in the modern soccer world.  One nugget is the author’s view that the US National Team greatly under performs the American financial position, while England is playing above its economic status.   One author is a journalist and the other an economist.  Click here for more on the book and the opportunity to purchase the recently released paperback version.

A weekend of four national MLS playoff broadcasts got underway on Thursday with ESPN2 providing coverage of the RSL/Columbus tilt.  Last week we “business blogged” the Seattle/Houston broadcast and won’t duplicate that effort here.  Nevertheless, we again give full marks to ESPN for a well produced telecast that started with a dramatic voice over and continued the trend of opening the show with the booth team in the stands. Efforts to cross-promote the FSC, Telefutura and second ESPN2 games for the rest of the weekend. The cross promotion is great to see and should increase audiences for all stations.

Finally, we have written many times about Houston’s outstanding promotional efforts.  Now that promotional effort can be extended to Houston mayor Bill White who proclaimed November 6, “Dynamo Day” in the City of Houston. The Mayor encouraged Houston residents to wear orange in support of efforts to bring the City its third MLS crown.  Anything that increases awareness of MLS and the MLS playoffs is great for the League and the local franchises.  There are rumors of a big crowd on Sunday and the Mayor’s proclamation won’t hurt that effort.  Click here for a great article about the Dynamo and their efforts in the community.

Soccer Business Bits: Playoff Promotions, Baltimore Stadiums & More

houstonAll year we have tracked team promotional efforts to bring fans out to the game.  Because of heavy reliance on group sales and season ticket holders, these promotional efforts often continue into the post season. We thought we would continue to follow these promotional efforts for the coming week of games.

Recall that in voting for MLS end of season awards, we gave the Dynamo our second place vote for the team PR award because of their outstanding weekly promotional efforts.  These efforts are continuing in the playoffs as the Dynamo are joining with McDonalds to offer a playoff four pack that that includes, tickets, food and drink for $64.95.  In a somewhat disappointing promotion, Houston is also offering a free playoff ticket to anyone that purchases as least $10 of Nutrament products at a local H-E-B store.  For a franchise that has historically drawn good playoff crowds, such a ticket giveaway seems minor league.In Chicago, the Fire are offering a free T-shirt to the first 5,000 fans, while in LA, the Galaxy are offering $64 four packs for the home leg of their derby playoff.  We haven’t been able to find any evidence that the Crew are offering any promotions for the game.

In Baltimore, the Sun is reporting that the Maryland Stadium Authority is reviewing a $30  million plan to construct a 7,000 seat stadium for Crystal Palace.  According to the story, Crystal Palace hopes to break ground in mid-2010 on a stadium for the minor league side.  The same vote that authorized the Crystal Palace study also allowed a feasibility analysis for 17-20k stadium in Baltimore for DC United. The $125,000 study will be financed by the City of Baltimore and the State of Maryland.

One final note. we have regularly linked to updates of Red Bull Arena.  Construction is proceeding at a rapid pace and the final piece of sod has been put down.  If you haven’t looked already, here is the link to the “Earth Cam” of the stadium. Also, the Red Bulls offer a great feature that provides fans with a 3D look at their prospective seats.

A Peek Behind the Curtain…Again

pgeSince we are out on the road today and since things are fairly quiet in the world of soccer business (sorry Mr. Kroenke),  we thought we would revisit a post that generated a bunch of interest when it first came out.  The subject?  The mysterious finances of MLS that were partially revealed as part of efforts to secure funding for the renovation of PGE park.

In a report prepared  by HVS, many MLS financial numbers became public for the first time.  The report is here.  Because many of you may have not seen the report, we thought it would be worthwhile to bring back the link and sum up some of the highlights.

The report projects finances from 2011 (when Portland enters the League), until 2015 and aggregates data from past seasons.  Total  MLS stadium revenues for 2011-2015 are projected at $14-15 Million per year.  This includes ticket sales, advertising, naming rights, concessions and more.

The report also addresses season ticket sales for 2007 and 2008 with Toronto the high (16,641 in 2008) and Chivas the low (837 in 2008).  The report does not include Seattle’s 22k for 2009.  Most teams fall in the 3-5k range, but the League did show a 26% increase from 2007 to 2008 (including the addition of San Jose in 2008).

Because the report focused on the viability of a stadium in Portland, many of the numbers focus on seating, concessions, merchandise and other game day items. Around the League, Club prices range from $5,000 (both L.A. teams) to approximately $1,000.  Suites range from $154,000 per year (Galaxy) to $21,000 per year (KC).  Some teams sell suites by the game, while most offer only annual purchases.

Stadium naming rights are also discussed; The Home Depot Center is a $70 million deal for 10 years, while Pizza Hut Park is $25 million over 20 years.  Dick’s Sporting Goods Park is a $40 million two year deal and Rio Tinto is a $1.5-$2 million dollar annual deal (for 15 years)The report also projects annual ticket sales in Portland (well below the mean), ticket prices, revenue from non-soccer events and more.

This is a fascinating picture of the League’s current, past and future finances. Based on these numbers, the City of Portland and presumably investors in Vancouver, Portland, Philly and St. Louis were eager to buy into MLS.  The report makes for fantastic reading (in its entirety) and will definitely make for interesting conversation.

What are your thoughts?  Are their numbers in the report that surprise you?  Impress you?  Let us know.

Soccer Business Bits: More TV Ratings, Fight for the Wizards, Playoff Attendance and Scarves

wozardsWe wrote last week about the uptick in MLS attendance on both ESPN2 and Fox Soccer Channel.  Now comes a report that MLS viewership is up almost 90% from October 2008 to October 2009.  Total viewers for the FSC game of the week is just over 51k for the Saturday night match.  Perhaps most importantly, the increased viewership for FSC across all of its shows has allowed the network to add an array of new, higher end ad buys.  While ProActiv won’t be going anywhere anytime soon, higher end adds are an important sign of health for FSC, as they prepare to unveil HD broadcasts in the coming months.

In Kansas, the Wizards’ new stadium plan has news because of the job creation aspect of the deal.  According to this article from the AP, the Cerner-Wizards deal may create 9,000 jobs in Kansas and politicians on both sides of the aisle are eager to make the deal happen.  Kansas and the local county have offered $230 million in incentives to lure Cerner and the Wizards to Kansas.  According to the story, Kansas politicians are concerned that officials in Missouri are working to lure the deal back across the border.

Yesterday, we touched on playoff attendance.  For a more comprehensive look at post season attendance, click on this chart from Major League Soccer Talk.

Finally, Ruffneck Scarves has announced a furtherance of its partnership with MLS and its clubs.  According to this press release, Ruffneck will produce five unique scarves for each team.

The Monday After: Our End of the Year Voting and Playoff Attendance Start

mlsWe were fortunate to be one of the voters for the MLS end of the season awards for 2009.  While we will certainly share all of our votes for MVP, Rookie, etc…. there was one vote that was business specific, yet receives only a small amount of attention from most soccer media; the Public Relations Award.  Although the award wasn’t particularly well defined, we cast our vote for  the team public relations group that does the best promoting its team and soccer in the community.

After careful consideration, we elected to give our first place vote to the Seattle Sounders.  The pre-season guerrrila campaign was brilliant, the billboards were omnipresent and the results speak for themselves.  Despite the advantages of being “new”, the Sounders organization did an outstanding job of promoting their product and their players.  By the end of the regular season, a Swedish International was a household name in the city, the goalie was all over the news and the team was a lead story.

For the record, we also thought long and hard about our second place vote, and we ultimately gave that to the Dynamo.  Houston’s array of promotional events for each game, community outreach programs and other events are unmatched throughout the League.  Houston sets the standard among MLS franchises in working to promote each game to potential walk-up crowds.

On the field, the first leg of round one is complete and fans were treated some entertaining games, one snoozer and some varied crowds.  The playoffs started with an exciting match and a frenzied crowd in Seattle where more than 35k were in attendance.  On Saturday, a disappointing crowd of 11,500 saw RSL hold off Columbus at Rio Tinto.  On Sunday, the Revs and Fire played to an exciting 2-1 result before friends and family of about 7,500 at Gillette.  The weekend finished up with a fairly enjoyable game at the Home Depot Center where a noisy crowd of 25k saw round one of the playoff Derby.

As for some of the other awards, we voted for Cunningham for MVP, Gonzalez for Rookie and Marshall for D.