Profitable by 2007?
Increased revenues spark hope as attendance, TV ratings decline
Attendance is down and TV ratings have plummeted, but the numbers that matter – sponsorship dollars and expenses – are going the WUSA's way, league officials say, and they believe that bodes well for the second-year outfit's future.
Rumors to the contrary are given little credence by those involved.
''I think people read into the fact that we blew through [our five-year funding plan] the first year,'' WUSA president and CEO Lynn Morgan said. ''They draw the analogy: 'Oh, they must be in trouble.' Our investors are so committed, our sponsors are very committed – we're not holding on by a thread. We're doing the right things, and I have the ability to do them at a pace that makes sense. I don't have this tremendous pressure right now to suddenly become profitable.''
The plan, league founder John Hendricks said, is profitability by 2007.
''Our expectations are that at some magical moment in time, probably between the fourth year and the sixth year, the revenues will exceed the expenses,'' he said. ''And we know we have a successful business for the long term.''
Attendance from Year 1 dropped about 15 percent this season – acceptable and anticipated, league bosses say – with Washington's and Atlanta's totals declining significantly. Three clubs (Carolina, Boston and San Diego) posted increases. TV ratings on PAX TV averaged 0.1, just a quarter of what broadcasts on TNT and CNN-SI logged in 2001.
The WUSA prefers to look at sponsorships, which fed revenues that a league official says increased by a little more than 40 percent this season. The additions of Maytag, Coca-Cola and McDonald's, among others, to the sponsor roster in a difficult economy appears the primary off-field accomplishment during the second season. Renewing expiring contracts – including one-year deals with Coca-Cola and McDonald's – and finding new sponsors is a priority.
Morgan won't discuss concrete money figures, but league officials say WUSA expenses fell by 28 percent this year.
The league spent its initial investment of $40 million from investors' sign-on fees in its first year and another $29 million this season. Hendricks said the league will have spent, by the end of 2002, $75 million-$80 million in total. (In addition, $24 million was spent on stadium development.)
The difference between revenue and expenses this season, Hendricks said, was about $20 million. That would make for revenues of about $9 million in 2002 and $5.5 million in 2001.
Doing the math, WUSA investors have lost about $55 million since the league's formation.
It hasn't seemed to faze investors, whom Hendricks said are ready to provide more capital once the current five-year business plan, devised following last season, is tweaked over the next couple months.
''If you've ever sat at the league meetings, ever been to a board meeting with investors,'' said new chief operating officer Kevin Crow, ''it would be impossible to come out with this thought process'' that the league is struggling to survive.
Crow, who was the San Diego Spirit's general manager and coach this season, left Southern California for the league's Atlanta headquarters in August. He'll work with the eight team general managers, enabling Morgan to focus more strongly on marketing and sales.
''Do you think,'' he asks, ''I'd be moving across the country if I thought this was a risky proposition?''
by Soccer America Senior Editor Scott French