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Old 05-11-2010, 05:21 PM
 
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If MLS is such a huge and growing juggernaut how come wikipedia says only 2 teams made money last year? That's only two more than the AFL, and they went out of business last year. Also why do they average fewer viewers for English language broadcasts than the WNBA?

Last edited by AuburnAL; 05-11-2010 at 05:52 PM..
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Old 05-12-2010, 08:21 AM
 
Location: Englewood, Near Eastside Indy
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Old 05-12-2010, 10:56 AM
 
Location: Kansas City, MO
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Quote:
Originally Posted by AuburnAL View Post
If MLS is such a huge and growing juggernaut how come wikipedia says only 2 teams made money last year? That's only two more than the AFL, and they went out of business last year. Also why do they average fewer viewers for English language broadcasts than the WNBA?

Let me give you a little business lesson.

There is a difference between a business actually making money and a business making money on paper. Businesses do not like to show they made money on paper unless they have stockholders to impress. It is not in their best interest to do so. For example, the LA Galaxy make a ton of money. Yet, they do not show a profit.

The more money a business makes on paper, the more taxes they pay. Not to mention, when you can show a loss you get to use it as a tax write-off.

So, businesses will do whatever they can to show a loss on paper. I made a **** ton of money in the mortgage business in 2007. But, on paper I lost money. Large successful businesses show losses all the time in years they made a ton of money. It's business.

On paper, only 2 MLS teams made money last season. But, the actual number of teams that made money is much higher than that. No one will know the actual number because they are not obliged to do so. But, it is believed that nearly every team playing in their own stadium is making money or close to it. The MLS realized early that the teams will never make money playing in other team's venues. In a few years, every team in the league will have their own stadium. Which again, is a sign of the growth the league is experiencing. When that happens, all the teams will be proftiable or close to it.

Another thing to consider is that the MLS is only 15 years old. Many of the teams are younger than that. 15 years is pretty young for a large business. They do not have to make money to be considered successful. Growth of revenue, sponsorships, TV contracts, ticket sales, and other measuring sticks are the best way to gauge and all of them are going up every single season. The MLS was the only professional sports league in the US not to have a decrease of season ticketholders in the recession.

Right now, it cost 50 million dollars to get an MLS franchise. Less than 5 years ago, it only cost 10 million. That right there shows the amount of growth that the MLS is experiencing. People are not willing to shell out 50 million dollars to open a franchise unless they are going to make a ton of money.

In regards to TV ratings, the MLS offers all of the games online via their website. A ton of people watch the games on there rather than using the actual TV. I know I do and many other people I know do as well.

Also, TV ratings are not that good of an indicator anymore. It does not take into account things recorded via DVR and watched later. It doesnt measure people that watch them online and it does not measure the people that download the games via torrent.
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Old 05-12-2010, 10:59 AM
 
Location: Cook County
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Robb,

I had no idea the MLS was only 15 years old. What was the professional soccer scene like stateside before that? Was it just straight up non-existant?

TV ratings are pretty worthless indicators, I agree, along with what you said it also doesn't measure how many people watch each game, as you could have 20 guys in a basement watching one TV, a sports bar full of people etc.
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Old 05-12-2010, 11:10 AM
 
Location: Kansas City, MO
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Originally Posted by Orangeish View Post
Robb,

I had no idea the MLS was only 15 years old. What was the professional soccer scene like stateside before that? Was it just straight up non-existant? .
The first season of MLS was 1996. Before that the only professional soccer was indoor soccer.

We had NASL back in the 70s but it failed due to a poor business plan and owners that didnt know what they were doing. The MLS has learned a lot from that failure.



Quote:
Originally Posted by Orangeish View Post
TV ratings are pretty worthless indicators, I agree, along with what you said it also doesn't measure how many people watch each game, as you could have 20 guys in a basement watching one TV, a sports bar full of people etc.
That's another good point. I usually go to a sports bar for the away games with a group of 5-20 people to watch the games. Ratings are a very poor indicator of measuring the number of people watching nowadays.
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Old 05-12-2010, 05:44 PM
 
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Originally Posted by Toxic Toast View Post
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The wikipedia entry on MLS mentions only two teams made money last year. Only about half a dozen teams have ever made money in a year according to that. The wikipedia entry on the WNBA states that it outperforms the the English MLS broadcats and gives numbers. They did yesterday at any rate. May have been changed by now.
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Old 05-12-2010, 05:56 PM
 
3,806 posts, read 5,204,093 times
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Quote:
Originally Posted by RjRobb2 View Post
Let me give you a little business lesson.

There is a difference between a business actually making money and a business making money on paper. Businesses do not like to show they made money on paper unless they have stockholders to impress. It is not in their best interest to do so. For example, the LA Galaxy make a ton of money. Yet, they do not show a profit.

The more money a business makes on paper, the more taxes they pay. Not to mention, when you can show a loss you get to use it as a tax write-off.

So, businesses will do whatever they can to show a loss on paper. I made a **** ton of money in the mortgage business in 2007. But, on paper I lost money. Large successful businesses show losses all the time in years they made a ton of money. It's business.

On paper, only 2 MLS teams made money last season. But, the actual number of teams that made money is much higher than that. No one will know the actual number because they are not obliged to do so. But, it is believed that nearly every team playing in their own stadium is making money or close to it. The MLS realized early that the teams will never make money playing in other team's venues. In a few years, every team in the league will have their own stadium. Which again, is a sign of the growth the league is experiencing. When that happens, all the teams will be proftiable or close to it.
So the vast majority of NFL, MLB, NHL, and NBA teams will show losses for last year as well? Somehow I doubt it especially when you have shaky franchises like the Nashville Predators trumpeting the fact that they actually made money.

Quote:
Another thing to consider is that the MLS is only 15 years old. Many of the teams are younger than that. 15 years is pretty young for a large business. They do not have to make money to be considered successful. Growth of revenue, sponsorships, TV contracts, ticket sales, and other measuring sticks are the best way to gauge and all of them are going up every single season. The MLS was the only professional sports league in the US not to have a decrease of season ticketholders in the recession.
I thought the fact that they lost money was just some scheme to cheat the IRS? Now you make it seem like they did in fact lose money, but thats okay because they're young. In other words they would have shown a profit if they possibly could have, but in fact their costs did exceed their revenue.

Quote:
Right now, it cost 50 million dollars to get an MLS franchise. Less than 5 years ago, it only cost 10 million. That right there shows the amount of growth that the MLS is experiencing. People are not willing to shell out 50 million dollars to open a franchise unless they are going to make a ton of money.
For most people owning a pro sports team is more about prestige than business. Otherwise every team would be run like the Clippers whose owner treats them entirely as a business. not sure how the league's revenue is set up, but if that $50 million gets spread around it'd help prop up all these teams losing money.

Quote:
In regards to TV ratings, the MLS offers all of the games online via their website. A ton of people watch the games on there rather than using the actual TV. I know I do and many other people I know do as well.

Also, TV ratings are not that good of an indicator anymore. It does not take into account things recorded via DVR and watched later. It doesnt measure people that watch them online and it does not measure the people that download the games via torrent.
This would hold more water if the Spanish language broadcasts did not outperform the WNBA. That fact leads one to believe that a good portion of MLS's fans are perhaps illegal immigrants, and with states starting to crack down on illegal immigration the league could take a hit since its presumably legal English speaking fanbase seems to be small and maxed out.
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Old 05-12-2010, 08:35 PM
 
Location: Englewood, Near Eastside Indy
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Quote:
Originally Posted by AuburnAL View Post
The wikipedia entry on MLS mentions only two teams made money last year. Only about half a dozen teams have ever made money in a year according to that. The wikipedia entry on the WNBA states that it outperforms the the English MLS broadcats and gives numbers. They did yesterday at any rate. May have been changed by now.
We can't have a serious discussion if you are only mentioning a wikipedia entry.
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Old 05-12-2010, 10:46 PM
 
Location: yeah
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Because they have to pay players, unlike college programs...
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Old 05-13-2010, 09:16 AM
 
Location: Kansas City, MO
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Quote:
Originally Posted by AuburnAL View Post
So the vast majority of NFL, MLB, NHL, and NBA teams will show losses for last year as well? Somehow I doubt it especially when you have shaky franchises like the Nashville Predators trumpeting the fact that they actually made money.
No, not all of them. There comes a point where your profits are so large that you cannot come up with enough deductions to show a loss. There are some teams in those leagues that show losses at times. The KC Royals are one of those teams.

Also, there are times when a business needs to show they are making money. The Predators were being criticized by other owners in the league and the owner being pressured to possibly sell or move the team. He needed to show a profit to show they were doing just fine to relieve some of that pressure.

It's business. This is how it works. Not only in sports but all industries.


Quote:
Originally Posted by AuburnAL View Post
I thought the fact that they lost money was just some scheme to cheat the IRS? Now you make it seem like they did in fact lose money, but thats okay because they're young. In other words they would have shown a profit if they possibly could have, but in fact their costs did exceed their revenue.

It's not a scheme. It's called deductions. You take deductions when you do your taxes whether you know it or not. It is a perfectly legal way to reduce your income on paper. EVERYONE does it. Businesses just do it on a much larger scale. If a business is able to take a loss, they will even if they made money hand over fist. People do the same thing. As I mentioned before, I made a lot of money in 2007. However, if you look at my schedule C for that year, it shows a loss. Perfectly legal. A friend of mine has a small business that usually gives him an income of about a $250K a year. But, he usually shows a loss.

You misinterpreted my post. First, I never said all the teams made money. I said many more than just 2 are. Teams are still losing money. 15 years is very young for a large business and it is perfectly excusable for them to lose money at this stage. Especially the teams not playing in their own venues and not having a full control over their revenue stream.

Do you really think teams would be building $150-$200 million dollar stadiums in profits were not being made by teams in their own venues. People that own sports teams own them because they have been successful in other areas of business. They aren't stupid.

For example, the owners of the Kansas City Wizards are the co-founders of Cerner, one of the most successful and fastest growing IT companies in the history of the world. They built the company from the ground up and now it is a Fortune 500 company. Do you really think they are stupid enough to build a $170 million dollar stadium if the team was not going to be making money?


Quote:
Originally Posted by AuburnAL View Post
For most people owning a pro sports team is more about prestige than business. Otherwise every team would be run like the Clippers whose owner treats them entirely as a business. not sure how the league's revenue is set up, but if that $50 million gets spread around it'd help prop up all these teams losing money.
I use to think that many owners were in it for prestige rather than money but after studying sports business and working in professional sports for awhile, I believe otherwise. I believe that most owners are in it for the money. Yes, they want to win and have fun but at the end of the day the bottom line is what matters.

From my understanding, the 50 million does not get included as revenue to the teams. It is used by the MLS to cover league operational cost and the cost of adding the franchise to the league.

Quote:
Originally Posted by AuburnAL View Post
This would hold more water if the Spanish language broadcasts did not outperform the WNBA. That fact leads one to believe that a good portion of MLS's fans are perhaps illegal immigrants, and with states starting to crack down on illegal immigration the league could take a hit since its presumably legal English speaking fanbase seems to be small and maxed out.
What kind of racial bull**** is this comment? Everyone that speaks Spanish is an illegal immigrant? I can name at least 2 dozen people off the top of my head that speak Spanish that not only are legal citizens but were born in the US.

The MLS has marketed to the hispanic fanbase; however, surveys have shown that the MLS fanbase is predominately white. At Kansas City games, I am willing to bet that the crowd is at least 80% white and we have a large hispanic population here. The only time we have a huge hispanic crown is when we play Chivas USA. Which is an MLS team owned by one of the more popular Mexican clubs, CD Chivas.

I watch a lot of MLS games and the crown at most games is mainly white.

Also, illegal immigrants generally do not have much money. An outing to an MLS game is probably not in their budget. So, cracking down on illegal immigration is not going to impact the MLS at all.

Another thing, I watch Spanish broadcast of MLS games at times. They show games on Telefutura and Galavision that do not get shown on other stations. I have no issue watching them at all.
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