MLS: A Peek Behind the Curtain

mlsFew sports leagues guard their finances more closely than MLS, but efforts to bring a franchise to Portland brought many long hidden numbers to light.  In a report prepared  by HVS, many MLS financial numbers became public for the first time.  The report is here.

The report projects MLS 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 facinating 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.

WPS: Interview with Robert Penner

wpsOn March 29, Women’s Professional Soccer will kick-off its inaugural season with a nationally televised match-up at the Home Depot Center.  Pitting the Los Angeles Sol against the Washington Freedom, the opening match will feature Brazilian star Marta and U.S. National Team scorer Abby Wambach.

Rising from the ashes of the WUSA, the WPS is seeking to gain a permanent foothold in the U.S. sporting scene.  A  national TV deal, a partnership with MLS and a reduction in team costs are all part of the “new model” .  WPS director of communciations Robert Penner was kind of enough to chat with footiebusiness.com about some of the business aspects of the WPS.  Mr. Penner is a veteran of sports media and marketing and has worked with the A.T.P.,  U.S. Open and NBC.  Most recently, Mr. Penner worked with Puma, a founding partner of the WPS.

Footiebusiness.com: Who does WPS view as the target demographic? When affiliating with the League, who are your sponsors looking to reach?

Robert Penner: Our core demographic is of course the young female soccer player age 8-18 who plays at the club and recreational level, but we also want to reach their parents, fitness-minded women in their 20s, 30s and 40s, as well as soccer fans in general. With our world class product and athletes on the field, we think we can accomplish that. The sponsors that we have met with and those that have signed on with WPS, know that we can help deliver this hard-to-reach demographic to them through many different activation platforms.


FB: How does the media relationship with FSC differ from the media model pursued by the WUSA? What efforts are being made to secure local TV deals?

RP: First, we wanted a network that spoke to the core of what our league stands for, in this case world class soccer – so FSC was a great fit for us. In addition, we wanted appointment television so our fans know exactly when and where they can watch WPS every week. FSC has made the commitment to promote our league across their various media partners and online, so that was important to us. At the local level, we are working with two potential regional television partners and hope to know our regional TV schedule very soon.


FB: How closely will WPS work with MLS? What are the advantages/disadvantages of a close relationship?

RP: We have gained a tremendous amount of insights from MLS. They are our sales arm through our agreement with SUM, so officially we are business partners on the sales side of things. In other areas, there are overlapping synergies with operations for some teams and several teams share stadiums such as Chicago, Bay Area and Los Angeles. DC United and the Washington Freedom have announced several doubleheaders and our new franchise in Philadelphia has had a lot of discussions with the MLS Philadelphia franchise that is coming on board next year. There’s a lot we can learn from MLS, they’ve done a great job building their league to where it is today 13 years after their launch.


FB: What are the League’s goals/expectations for attendance/ratings in the first two years?

RP: We’ve said all along that we want to keep our expectations in check and we are shooting for 4,000-6,000 fans per game for the opening season, which we think is reasonable and will still make our league model profitable.


FB: We have heard about Amway’s deal with the Sol. Who is responsible for securing jersey sponsorship (i.e. the teams or the League)? Can we expect additional announcements about such sponsors prior to the season?

RP: Team shirt deals, the inventory on the front of the jerseys, is for sale by the teams. From what we’ve heard there have been some other fruitful discussions so we are hopeful that there will be other announcements over the course of the season.


Thanks to Robert Penner.  WPS opens play this weekend on FSC.

Business Bits: Expansion in St. Louis & the Monday After

st-louisWith MLS announcing Portland as the League’s 18th Expansion Franchise, St. Louis appeared to be the big loser.   Since the announcement, Commissioner Garber worked hard to dispel that belief.  In an article published in the in St. Louis Post-Dispatch, Mr. Garber indicated that the League would work hard to steer investors to join Jeffrey Cooper’s bid.  We have written about Mr. Cooper’s bid before, and noted the League’s frustration with the lack of financial backing; it appears that the League is now going to work hard on Mr. Cooper’s behalf.

Mr. Cooper is a bridesmaid again, despite a solid stadium deal and a city with a strong soccer history.  With one more round of expansion scheduled for the coming years, he is running out of time to cement a team for the Gateway City.

Week one of MLS action is complete, and League wide, attendance was just OK.  Houston, Dallas and Chivas brought in about 16k, while KC and San Jose sold out their smaller parks.  Seattle was a sell out on Thursday night with more than 32k and the Galaxy brought in 18k (probably the most disappointing number of the weekend) for the Sunday game.   The Crew/Dynamo match-up of the last two Cup winners was also surprisingly lightly attended.  Dallas was higher than anticipated, but the presence of Blanco may have been a contributing factor.

The League debuted their new MLSlive features this weekend and the product seemed to work well.  For less than $20 for the season, the package is a fantastic bargain.  Direct Kick was free this weekend as part of the League’s annual preview.  With the price again at $79 for the season, this is also a great deal.  These packages do not include the games broadcast nationally on ESPN, FSC and Telefutura.  Interstingly, the local broadcasts prominently displayed advertising in the upper corners of the screens, adspace not used by EPSN2.  For the matchup on Telefutura, occassional screen advertising was present, but only for infrequent interludes.  Gildden, Nakita and Addidas were among the prominent stadium signage around the League. mls

The Business of Opening Day

soundersWith the curtain going up on the 2009 campaign, we thought we would offer some comments on the business aspects of the Seattle/NY game.  We”ll touch on advertising, presentation, attendance and more.  With the match going up against March Madness, the NIT, the NBA and the WBC, it will be interesting to see how many viewers ESPN2  draws.   Also, check the bottom of the post for a note about RSL.

ESPN came just a few seconds away from bungling opening night when the NIT game almost went into overtime (still went about 10 minutes over).  X-Box Live was definitely prominent in the stadium during the intro and the VW pre-game with Stone and Lalas was well done.  There was some interesting comments about the business aspects of the Beckahm circus from Lalas, and a teaser for an expansion announcement at half time.  The commercials started off with some big names, VW, Dick’s and Penzoil, but soon degenerated into some pretty poor local spots.  Seems that MLS is still not a big target for national sponsors buying ad time.

I was also surprised by the lack of in game sponsorship.  There were no ads in the corner of the screen or “this portion of the match sponsored by”.  Such ads are repugnant to some European soccer fans, but represent a potential strong revenue source for MLS.

At the half, the Commissioner all but announced Portland as the next expansion team and laid out his case for why MLS won the Beckham saga.  The crowd looked and sounded great and the home team didn’t dissapoint.  All in all, a great night for MLS and a great night for Seattle.

RSL announced Jet Blue as an official sponsor today.  The deal includes signage, promotions and special offers for RSL fans.  Salt Lake City is Jet Blue’s second biggest hub.  According to this article, RSL has also signed on with Burger King, Anheiser-Busch and more.  Rio Tinto stadium is a big draw for these advertisers, because the signage and stadium advertising includes events other than soccer.  The article also announces a new TV deal for the team. rsl

Business Bits: FC Barcelona in Philly?

barcaThe Sports Business Journal is reporting that FC Barcelona, fresh off walking away from a franchise in Miami, is exploring opportunities with the Philadelphia expansion team set to start play in 2009.  It is no secret that that the man behind the Philly team (Jay Sugarman), has suffered some significant downturns in the market.  With Barcelona on record as having a definite interest in MLS in the immediate future (recall they wanted Miami for 2010), Philly may be a natural fit.  The SBJ article suggests that Joan LaPorta, President of FC Barcelona, has toured the stadium site and met with officials.

Adweek is reporting that DC United sponsor, VW, is splashing more cash on MLS.  According to the article, VW has signed a 4 year deal with the League to continue as the official vehicle of MLS.  The deal will also include player appearances, and prominent placement at events.  The Sports Business Journal is reporting that the deal significantly expands VW’s one year deal from 2008.   There will also be some significant ad buys by VW on MLS broadcasts.

Be sure to check out the entire SBJ spread on MLS.  It is a must read for fans of the business side of the game.

Toronto has announced that all single game tickets for 2009 are sold out.   While the club will release additional tickets two weeks before games, it looks like Toronto is in for another great attendance year.  With 16,500 season tickets sold, BMO stadium will be full for the 2009 campaign. tfc

Business Bits: Opening Week, WPS and Milan

wpsAmway International, the presenting sponsor of the San Jose Earthquakes, has signed on as the jersey sponsor of the WPS’ L.A. Sol. The sponsorship will include the Amway name on the jersey, stadium signage and placement on an array of Sol items.  Perhaps most importantly for Amway, Brazilian Marta, perhaps the most recognizable star in Womens’ soccer, will now wear the Amway name.  In a separate deal, Marta signed a three year endorsement deal with the company.

In Salt Lake City, RSL has announced an “open house” at Rio Tinto Stadium.  The free event will include a Friendly with the Austin Aztek of the USL First Division, a meet the players component and plenty of family friendly activities.  With the fall 2008  opening of Rio Tinto Stadium, RSL has a beautiful new venue to showcase.  The open house seems like a fantastic way to introduce potential fans to the stadium without giving away the proudct (i.e. free tickets to games).  Rio Tinto looked and sounded great on TV during the playoffs and reports suggest that season ticket sales are up for 2009.

The Galaxy have wasted no time in selling tickets for their negotiated Friendly with AC Milan.  According to the team website, tickets are now on sale as part of a package with tickets for opening night.  While the game is free for season ticket holders, the two game package prices range from $50-$600.  It is somewhat surprising that L.A. would pair the Milan tickets with opening day because it suggests that opening day tickets aren’t selling well;  we’ll know in a week.  milan

MLS in the Digital Age: Interview with Chris Schlosser

mlsChris Schlosser is the Director of Digital Strategy for SUM,  a graduate of Columbia Business School and a former employee at Microsoft in Seattle.  While at Columbia, Mr. Schlosser formed a relationship with Sunil Gulati and ultimately came to work at SUM.  He was kind enough to answer a few questions from footiebusiness.com about MLS’ digital strategy.

Footiebusiness.com: SUM recently announced the initiation of an online ad network that targets a variety of sites that soccer fans frequent.  What are the benefits to the sites and SUM in participating in the network?  What are the benefits for fans?

 

Chris Schlosser: Over the past seven years SUM has built significant relationships with the US commercial community, we spend every day selling soccer to Fortune 100 companies. We are using this network of clients and our experience selling soccer to drive incremental revenue for our member sites. There are lots of other ad networks out there but I can guarantee you that none of them have more experience or more focus on selling soccer. In addition to driving revenue we are working with a number of our partners on content sharing and joint marketing to grow the collective soccer audience. From a fans perspective the SUM Digital Network should over time provide significantly better content and features, as revenue grows it is our hope that this will enable our member sites to invest more money in content and features which will increase traffic and continue to drive value for both fans and the commercial community.

 

 

F.B.  How will the ads be targeted?  Who will decide which ads get placed on which sites?

 

C.S.  Our sales team will work with our advertising clients to create custom ad plans tailored to efficiently meet the needs of our clients. Many of our official site partners (MLS, EPL, US Soccer, etc.) have significant corporate sponsorships already in place, many of these sites maintain a category system with certain sponsors retaining exclusivity, we are used to working in this environment and will work across our network to protect existing commercial relationships. We also are focused on premium ad placements and clients, we are not going after the “fat belly” ads that are so common on many sites today.

 

 

F.B. Far more than most sports fans, MLS supporters take a direct interest in the League’s efforts to generate revenue.  How will the League be compensated?  How about the sites?

 

C.S. Our fans are amazing, in fact a recent SBJ study stated that MLS fans show more brand loyalty than any other sports fans in America, we even out indexed NASCAR which is built around branded experiences. We see the digital space as a significant revenue opportunity over the next 3-5 years and are investing accordingly. As a member of our network sites will see incremental revenue compared to what they are currently seeing from remnant networks or in house sales teams. Additionally SUM will see revenue from more deals and larger deals as we continue to build our presence in the digital space.

 

 

F.B. What other electronic innovations should fans be looking out for in 2009?

 

C.S. We have a ton planned for 2009, including some very interesting launches. You will see us launch redesigned club pages for 11 of our 15 teams this afternoon, additionally we are launching improved video experiences, team social networks (see mydynamo.net for an early example), customizable and shareable highlight videos, and much more. 2009 will be an exciting year on MLSnet and our team sites. One great example of how the league is focused on improving the online experience for fans is that we are going to double the quality of our live game streams while keeping the same cost to fans as last year at only $19.95 for the season. That means you can watch more than 100 games for less than 20 bucks, now that is a great deal.

 

 

F.B.We’ve heard about the League’s new relationship with Brand Thunder.  We will the first “booms” be unveiled?  Who will be responsible for content?  The League?  The Teams?

 

C.S. The first browser should launch this week, we have a league deal but will work with each team to manage content and design on the browser.

Interview With Tim Martin of Gallagher Sports

mlsEarlier today, Footiebusiness.com posted about San Jose’s recent sponsorship deal with Amway. Tim Martin, a 10 year veteran of the sports marketing field and the President of soccer marketing entity Gallagher Sports, lauded the deal in a recent article for ESPN.com.  Mr. Martin has worked for a number of major brands in an array of sports marketing categories and has negotiated tens of millions of dollars of sponsorship agreements.  He was kind enough to answer a few questions posed by Footiebusiness.com:

Footiebusiness.com:  Despite the obvious positives of bringing money to San Jose,  some fans have wondered whether adding Amway to the League’s other two multi-level marketing jersey sponsors (Xango & Herbalife) either diminishes the standing of the League or creates an association that could be harmful. Do you think those are legitimate concerns?

 

Tim Martin: They are certainly legitimate concerns, because each of those MLM’s has had noteworthy and seemingly legitimate legal and/or scientific complaints registered against them in the past.  At the end of the day, however, it needs to be a decision weighed, and ultimately made, by the club, based off of its unique goals and objectives.  We are also in an unprecedented economic environment where almost no industry is immune to public scrutiny when it comes to where they are spending what may be perceived to be the public’s money.  Two years ago an observer may very well have listed major financial institutions and auto makers as two of the best and most stable of industries from which a club could secure a shirt sponsor.  That was before congressional hearings and TARP funding became staples of the evening news broadcasts and cast major sponsorship funding in an entirely new light.  At times like this, there is risk in just about any sponsorship.  If there were 15 multi-level marketing companies across the front of MLS jerseys, it may be indicative of a problem.  3 of out 15, however speaks to sponsor category diversity.


FB: The League has been working hard to market the game to a younger, “hard core” fan base for a while now.  Do you think Amway’s product line a good match for this type of crowd? Who are they trying to attract?

TM: I do not think that Amway’s products are necessarily a good fit for such a target, however, without having a working knowledge of Amway’s marketing strategies, its difficult to say exactly who they are targeting, particularly because they are so diverse.  The one thing that I believe is safe to assume is that they find the Quakes (and MLS) a global medium for broadcasting their brand, and must feel that the impressions they will receive around the world are worthy of the investment.


FB: There are now four clubs without jersey sponsors.  Do you think sponsorships deals are in the works for those clubs?  Fans are amazed that teams like the Revs, Rapids and Dallas (with the power and business acumen of  Kraft, Kroenke, etc..)  have not landed a sponsorship.  In your mind, what are those teams looking for, and what should they be looking for in a deal?

T.M. I’m fairly certain that any club without a jersey sponsor is actively pursuing one.  Its far too great of a potential financial resource not to be.  Each club, however, will assign a different value to the front of their shirt, and by value I don’t just mean a certain sum of money, but also cognizance of the brand they are associating themselves with.  This is very relatable to your first question in that it all comes down to the goals and objectives of the club.  It’s possible that these remaining clubs have had offers from multi level marketers, or casinos, or tobacco companies, and simply choose not to go into business with them due to an organizational belief system (I have no first-hand knowledge of any such offers, just using that as an example).


F.B. Some of the first deals have now been in place for a couple of seasons.  Do you think that the sponsors have realized the intended benefits from these deals?

T.M. Again, not knowing each sponsors specific goals and objectives for striking these deals in the first place it’s impossible to say for certain how they feel these deals are working for them.  I think that at least one success story would be Glidden and the Columbus Crew.  First and foremost, they bought the sponsorship at what would today be considered a great value price of $1M per year.  Little could they possibly have known at the time that a former Boca Juniors legend would guide the franchise to its first title while providing the brand with unprecedented exposure in South America, on top of what they also obviously received in the States.  It can also be reasonably assumed that Herbalife has received adequate value back on their $4M+ investment through worldwide Beckham jersey sales alone, and the exposure that they provide.

Once again, many thanks to Tim Martin of Gallagher Sports. To the readers of Footiebusiness.com, what do you think about Amway coming into the League, or about shirt sponsors in MLS?

crew-jersey

MLS Sponsorships: The Name on the Front of the Jersey

san-joseOn January 29, 2009 the San Jose Earthquakes announced a three year deal with Amway, for a reported $2-3 million per season.  According to reports, all San Jose apparel, including game jerseys, would immediately begin carrying a prominently placed Amway logo.  With the deal, San Jose became the 11th MLS side to announce a primary jersey sponsorship.

We’ve previously discussed Seattle’s $4,000,000 per year deal with Microsoft. In 2008, DC United inked a long term deal with Volkswagen for a reported $3.7 million annually and the Chicago Fire announced a three year deal with Best Buy.  Best Buy, Volkswagen and Microsoft are well known commercial entities with an international footprint and an established pedigree.  MLS fans were elated when such prominent companies invested in the League.

Despite its long history, soccer fans reacted differently to Amway’s entry into U.S. soccer.  In the minds of some, the Amway deal joined Herbalife’s five year sponsorship of the Galaxy and RSL’s groundbreaking deal with Xango by adding another multi-level-marketing enterprise to the League’s list of sponsors.  These critics believe that such sponsors besmirch the reputation of MLS and give fodder to mainstream media critics.

I take the view that sponsorship money is a hot commodity right now and fans should be ecstatic that an internationally recognized company is investing in the League.  Amway has deals with the Orlando Magic and AC Milan.  Given some of the sponsors of teams around the world, Amway is no better or no worse.  xboxMicrosoft, Glidden and Comex are fine, but be grateful for the investment, and go buy so makeup!

MLS retains Panasonic as Primary Sponsor

panasonicmls

In a sign that MLS is still a valuable commodity among sponsors, the League announced that Panasonic has re-upped for a three year run as the “Official Consumer Electronics” partner of MLS.  Goal.com

Given the econmic climate, long term sponsorship deals are an important source of ongoing revenue. Given the amounts of scrutiny aimed at publicly traded companies and the pressures on companies to cut back on high profile advertising and events (think about the uproar over CitiField), big name sponsors may be harder to come by.   This is especially so in light of recent news that Panasonic was shedding 15,000 jobs over the next 13 months. According to Sports Business Journal, the deal is valued at almost $3 million per year.  http://sportsbusinessjournal.com/article/61493