17 MLS clubs lost money last season (only 10such teams across the NBA, the NFL, MLB and the NHL)

Coinneach

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LeHab

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Well the league in many ways is still in a growth phase.

This is pretty much the answer. While many MLS teams are running in red year to year, franchises value is outgrowing those losses easily. Value is reported to be up 30% from last year far more than the 4 other leagues.
 
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cutchemist42

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As a league they are much better at suppressing wages than the others. MLS fans will praise that a lot as I think players make 35% of revenues.

If you're a prospective owner helping increase franchise fees, you want that maintained.
 
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Keep in mind MLS has a collective bargaining agreement to sort out shortly. The league has been known to throw out the 'we're losing $100 million a year' line in the past.

The way the league frames it, it almost seems like it's been losing $100 million a year since it started. Who believes that? Only the gullible.

What's also conveniently missing from these reports is the money the league's owners are making on SUM, the league's marketing arm, which is believed to be the real moneymaker for the league. And that's before we consider the booming franchise values.

The worst thing about these reports, which are leaked from MLS itself, is that it makes the league's financial situation look bad to the laymen's eyes just to gain some leverage in labor negotiations. I know why they do it, but people that don't follow things closely just end up assuming that MLS is on its knees, and nothing could be further from the truth.
 

Burke the Legend

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And the league is going to be growing by 5, and probably 6 to make an even 32, in the next 3 years. Thats insane.

And they keep raising expansion fees. Borderline ponzi scheme. Sure sign of the sports bubble nearing critical levels at least when low quality assets get this inflated, investor beware.

NHL better sign that US TV contract soon lol
 

Deleted member 93465

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And the league is going to be growing by 5, and probably 6 to make an even 32, in the next 3 years. Thats insane.

Not quite.

League currently has 24 teams, with five teams set to come in by 2022, totaling 29. It is expected 30th will be Charlotte, as Carolina Panthers' owner David Tepper has made no secret of his desire to bring a team to a revamped Bank of California stadium. But there is no timeline on 32. Should add that of those 5 teams, one (Miami) was admitted as far back as 2014, and another (Austin) is really a relocation team that became an accidental expansion team after the Haslems (of Cleveland Browns fame) bought Columbus and signed a new downtown stadium deal to keep them in the city.

And they keep raising expansion fees. Borderline ponzi scheme. Sure sign of the sports bubble nearing critical levels at least when low quality assets get this inflated, investor beware.

NHL better sign that US TV contract soon lol

Could you point me in the direction of a Ponzi scheme which continually takes advantage of billionaire businessmen, including those that have been involved in pro sports for decades?

You need to read up on SUM. The best thing about SUM is that MLS can hoodwink people like you into thinking its a ponzi scheme that runs at unsustainable losses, helping the owners keep all the leverage.

They are absolutely running a scam in successfully convincing people it's a league built on sand. Only thing is, those pesky billionaires with enough savvy to do due diligence on what they invest in keep wanting to join the club. Gee, I wonder why? Maybe they know something you don't.
 

Burke the Legend

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Not quite.

League currently has 24 teams, with five teams set to come in by 2022, totaling 29. It is expected 30th will be Charlotte, as Carolina Panthers' owner David Tepper has made no secret of his desire to bring a team to a revamped Bank of California stadium. But there is no timeline on 32. Should add that of those 5 teams, one (Miami) was admitted as far back as 2014, and another (Austin) is really a relocation team that became an accidental expansion team after the Haslems (of Cleveland Browns fame) bought Columbus and signed a new downtown stadium deal to keep them in the city.



Could you point me in the direction of a Ponzi scheme which continually takes advantage of billionaire businessmen, including those that have been involved in pro sports for decades?

You need to read up on SUM. The best thing about SUM is that MLS can hoodwink people like you into thinking its a ponzi scheme that runs at unsustainable losses, helping the owners keep all the leverage.

They are absolutely running a scam in successfully convincing people it's a league built on sand. Only thing is, those pesky billionaires with enough savvy to do due diligence on what they invest in keep wanting to join the club. Gee, I wonder why? Maybe they know something you don't.

Sometimes even billionaires get conned. Go look at the Theranos fraud for example.
 
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cheswick

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And they keep raising expansion fees. Borderline ponzi scheme. Sure sign of the sports bubble nearing critical levels at least when low quality assets get this inflated, investor beware.

NHL better sign that US TV contract soon lol

There was an article posted a while back about this. That the MLS is a house of cards waiting to collapse because the only way the owners are making money is from expansion fees.
 

cutchemist42

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So how do the 2 parts of MLS work then? Are the losses on the franchises intentional for labour negotiations? Does money pass through the franchises to SUM for account purposes. What is SUM engaged in?

I just see so many MLS fans praising SUM and it's weird for me, even weirder than some of the
NHL fans obsessed with popularity of the sport. They cheer on a business they will never be a shareholder of while brushing off obvious attendance problems in markets. Like are you fans of the sport or the business?
 

Ernie

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The Vancouver Whitecaps paid $30m to join MLS in 2009.

10 years later and they have a valuation of $200m with almost nothing to show in terms of success.

Pro sports economics is in its own category.
 

varsaku

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And they keep raising expansion fees. Borderline ponzi scheme. Sure sign of the sports bubble nearing critical levels at least when low quality assets get this inflated, investor beware.

NHL better sign that US TV contract soon lol

Majority of businesses turn a loss in their growth phase which is where MLS is at. There is high capital expenditures to start up a team and get it going.
 

Acesolid

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The MLS is the most extreme exemple of the unsustainable sports teams values "bubble".

Many sports teams make little or no money (as always)... but their "value" is somehow exploding upwards.

This allows teams to lose a lot of money... but since the value explodes upwards that's not a problem.

Obviously, that is completely unsustainable. It's the "Enron" model!

And, like Enron, next time a recession hits... when the investors see the glass as half-empty rather then half-full... and some owners try to sell their team at their imaginary valuations and fail... it'll get ugly.
 

tealhockey

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The MLS is the most extreme exemple of the unsustainable sports teams values "bubble".

Many sports teams make little or no money (as always)... but their "value" is somehow exploding upwards.

This allows teams to lose a lot of money... but since the value explodes upwards that's not a problem.

Obviously, that is completely unsustainable. It's the "Enron" model!

And, like Enron, next time a recession hits... when the investors see the glass as half-empty rather then half-full... and some owners try to sell their team at their imaginary valuations and fail... it'll get ugly.
It kind of reminds me of the housing market, people were like well housing/land never goes down in value so they just built a ton of houses regardless of demand thinking they were ahead of the curve. It seems like people think "soccer is big everywhere, america loves sports, it has to eventually be big time in America". Like, no it doesn't. Same thing for women's pro soccer, just because our women's team is great doesn't mean we're going to suddenly have some killer women's pro league. We have enough people to probably support it at a good level but it seems far from guaranteed to be anything like our other big pro leagues.

If anything kills MLS it will probably be like you said the disparity between these hypothetical valuations and what they are actually worth. A bad down-turn could cut up the league, maybe some european clubs would come in and buy some of them at crazy bargains for farm/associated teams. In the meantime it seems like european soccer is getting bigger and bigger here, my neighbors follow the premier league, I watch some european leagues at bars, only a couple of my friends follow MLS and that is only because I know a ton of guys who are involved in or just love sports... no one I know non-sports related follows it
 
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Burke the Legend

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Majority of businesses turn a loss in their growth phase which is where MLS is at. There is high capital expenditures to start up a team and get it going.

Yeah but the only "growth" seems to be in franchise values.

MLS TV ratings slump 19% during regular season; Playoffs take a nosedive - World Soccer Talk

Props to the MLS salespeople who have created this huge FOMO demand situation amongst cities and billionaires that keep the expansion fees flowing. Very few fundamentals behind the pricing.
 
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cutchemist42

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Yeah but the only "growth" seems to be in franchise values.

MLS TV ratings slump 19% during regular season; Playoffs take a nosedive - World Soccer Talk

Props to the MLS salespeople who have created this huge FOMO demand situation amongst cities and billionaires that keep the expansion fees flowing. Very few fundamentals behind the pricing.

What I dont get is the R/mls fandom thinking the league is looking at 40 as the final team number within the next 10 to 15 years.

The whole point of NA sports is creating scarcity of teams to have cities play off each other for free stadiums.

After a while it's dangerous to expand for expansion sales despite the franchise fees.
 

Acesolid

The Illusive Bettman
Sep 21, 2010
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What I dont get is the R/mls fandom thinking the league is looking at 40 as the final team number within the next 10 to 15 years.

It's because mad "ponzi scheme" like expansion is part of the current unsustainable MLS business model.

And it works very well... and will keep working... until we hit a recession.

And then there will be a team valuation collapse, expansion/purchase interest will dry up... and some teams will likely be in serious, serious trouble.

It seems all it took was 11 years, and even smart, wealthy people have somehow convinced themselves the current bull market will continue forever.

Well it obviously wont. There will be a serious market correction at some point in time in the short-medium term. All indicators point toward it. And the US government cant keep this insane over a TRILLION dollar deficit (stimulus level deficit in a good economy, an insane waste!) forever.

And when it happens, it's quite possible the American Government's capacity to borrow money in order to kick-start the economy with stimulus spending will have been painfully limited by a credit rating harmed by a too high debt to GDP ratio.

I'm just happy Québec is currently doing the smart thing and running an over $4 billion surplus and lowering our debt... What you are SUPPOSED TO DO during good economic times like right now. And so when we next enter a recession we'll be able to stimulate our way out of it.

Anyways, I'm getting off topic. But my point stands. A recession is coming. And the non-NFL big North American sports leagues are not ready for it.
 
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redcard

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Yeah but the only "growth" seems to be in franchise values.

MLS TV ratings slump 19% during regular season; Playoffs take a nosedive - World Soccer Talk

Props to the MLS salespeople who have created this huge FOMO demand situation amongst cities and billionaires that keep the expansion fees flowing. Very few fundamentals behind the pricing.

The existence of transfer fees is pretty significant though in terms of franchise value. In other NA sports a player's value is basically just their marketability, can they draw viewers, increase attendance, lead to more wins, etc. But in soccer the players are essentially assets that can be bought, held, and sold. The MLS has started to come to terms with the fact that they don't need to compete with the major European soccer leagues, but can instead be profitable as a stepping stone for young players from Central and South America to gain some notoriety and draw the attention of the top leagues.

For example, Atlanta bought Miguel Almiron from an Argentine club in January 2017 for 9M, then sold him two years later to Newcastle for 27M. LAFC bought Diego Rossi from an Uruguayan Club in January of 2018 for 3M, and are rumored to be shopping him to Italian clubs for 15M+. These are outliers, but it does suggest that if you can operate at a near break even point while investing in young talent, you can be profitable when one of those players breaks out. I don't know if that justifies the massive upfront expansion fees, but it does at least present a viable business model for a franchise.
 

sabremike

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The other thing to keep in mind: every team is in fact owned by the league via the ghastly single entity abomination.
 

eddygee

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Mar 12, 2018
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Yeah but the only "growth" seems to be in franchise values.

MLS TV ratings slump 19% during regular season; Playoffs take a nosedive - World Soccer Talk

Props to the MLS salespeople who have created this huge FOMO demand situation amongst cities and billionaires that keep the expansion fees flowing. Very few fundamentals behind the pricing.

Playoffs were up 36% and that decline this year was the first average Cable TV Dip for MLS since 2011. (Note) the US Mens National Team and MLS has a synergtic relationship, the US dip in form the past 12-18 months has caught up to MLS.
 
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eddygee

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Mar 12, 2018
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So how do the 2 parts of MLS work then? Are the losses on the franchises intentional for labour negotiations? Does money pass through the franchises to SUM for account purposes. What is SUM engaged in?

I just see so many MLS fans praising SUM and it's weird for me, even weirder than some of the
NHL fans obsessed with popularity of the sport. They cheer on a business they will never be a shareholder of while brushing off obvious attendance problems in markets. Like are you fans of the sport or the business?

Basically money goes thru entities and LLC set up by MLS owners for parking/ticketing/stadium merchandise. It doesn't go to MLS LLC so technically it's a accounting loss as it's not reported on xyz MLS team LLC books.

You see the fans that praise the genius of SUM are the ones that know the scheme from a simple busy savvy point of view it's ingenius. SUM has helped solidify MLS. The downside is this public face when you create a ambiguous shell company that by it's sole intent is intended to be cloaked in mystery and less than open it allows others to create narratives.

The biggest narrative by folks who know Jack about MLS is the league is losing money and is a house of cards. The point is MLS is making money, hiding money and these Billionaires are lining to join up to make a couple hundred million in 3-4yrs time like the owners before them did.
 
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varsaku

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Feb 14, 2014
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Subscription Required: Charlotte nearly assured of MLS team as Nashville season...

Apparently Nashville SC season ticket sales are really lagging behind. They have sold only 5,000 so far despite starting in 2020.

This sounds like a recipe for disaster if a new team can’t sell tickets. If they don’t come flying out of the gates, it is going to be a long up hill battle to gain interest from fans in the market.
 

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