MLS clubs are looking at soccer stadiums as the wave of their future. The key: ancillary revenues they can derive from owning their own stadiums. Three clubs are seriously looking at building their own stadiums in the next few years.
The future of MLS is not dependent just on good players, smart marketing and butts in the seats.
All play a role in the success of America’s pro league. But the next leap forward for MLS will not be a superstar midfielder or a dynamic ad campaign.
If within the next year MLS fans see backhoes and earth-movers furiously gouging up mountains of dark brown dirt, they can be reasonably sure of the league lasting beyond 2003.
The stadium game has kicked off.
Whetted by Columbus Crew stadium’s cozy confines and reasonable finances, several teams – the MetroStars, Fire and Galaxy – are beating the publicity drum for their own facilities.
MLS contends that – without a great surge in attendance – those teams, as well as a few others, could break even or perhaps make money if they owned their own stadiums.
Millions of dollars are drained away from MLS each season by lease payments and the diverting of ancillary revenues – parking, concessions, stadium signage – to entities other than the teams.
For example, the Fire receives not a penny for team merchandise sold at Soldier Field. The MetroStars have to pay approximately $1 million per season just to rent the Meadowlands.
“Soldier Field and Giants Stadium are probably the two worst in the league in terms of expense and lack of revenue opportunities,” said MetroStars general manager Nick Sakiewicz. “Both are public facilities and heavily unionized markets, so: a) it’s very expensive, and b) we have no rights to parking, concessions, permanent signage, naming rights, etc. Those are primary revenue streams.”
WHAT THE NUMBERS MEAN. Working with Columbus as a rough model, Chicago GM Peter Wilt outlines what moneys teams could collect in their own facilities.
Concessions: $7 a head x 15,000 average attendance x 20 games a year (including playoffs and exhibitions) equals approximately $2.1 million per season.
Parking: 5,000 cars x $10 x 20 games = $1 million per season.
Merchandise: $1 or $2 a head x 300,000 fans = $300,000 to $600,000.
Permanent signage: In the $1 million per year range for naming rights, with the possibility of selling permanent signage to marketing/sponsorship partners at $250,000 per year = $2.5 million with 10 partners.
The signage numbers are optimistic, yet still there’s a few million dollars on the table the teams aren’t collecting.
“Certainly, our recommendation is we’d be better off in a smaller facility where we control the revenue streams, control the fan services, and control the date selection,” said Wilt. “I think all three affect revenue, the ability to do business.”
D.C. United president Kevin Payne has been lobbying for years to get a share – any share – of concessions and more than the $1 per parked car United receives from RFK Stadium.
“You can’t exclude the financial value as well as the overall perception value of controlling your own schedule, of dictating logistics and operations instead of being dependent on a landlord,” said Commissioner Don Garber. “In Columbus, we get to the local break-even point very quickly on cash basis.”
Operator-investor Lamar Hunt has said the Crew can break even if it averages 17,500. (It averaged 17,696 last season but attendance has fallen to 14,672 a game this season.)
The investor-operators – Hunt excluded – are not necessarily pledging tons of their own money to build stadiums. MLS has extended an open hand to WUSA with cross-ownerships – a possibility contingent on stadium projects.
Although several communities – including Columbus – have voted down tax proposals to fund stadiums in the past decade, a few MLS teams have hopes of public assistance.
Chicago and the MetroStars are both lobbying for generous land deals and public funding for their projects that will cost approximately $50 million.
And the moguls of MLS have realized their stadiums cannot subsist – and would likely be rejected by the public – on pro soccer alone.
Columbus has already hosted NFL practices and scrimmages in its facility, and the MetroStars are designing a multi-purpose stadium that will serve community interests as well as that of the soccer team.
“We’re proposing a multipurpose stadium, for MLS, women’s soccer, football, concerts, you name it,” said Sakiewicz, who has in mind a facility that would seat 25,000 and be easily expandable. “It would have an anchor tenant, that being the MetroStars, and possibly a women’s team.”
AMBITION IN L.A. The most ambitious MLS project is a multi-sport complex on the Cal State University Dominguez Hills campus that will include a home for the Galaxy as well as tennis, cycling and track & field facilities.
Galaxy president Tim Leiweke says the $100 million project will be paid for, in part, by a foundation instituted by investor-operator Philip Anschutz.
If U.S. Soccer picks the Galaxy site for its National Training Center, the U.S. Soccer Federation might provide funds as well.
Original plans included a second soccer stadium with a capacity of 7,000. Instead, there will be seating for approximately 2,000 at one of the training center’s eight soccer fields, and a 6,000-capacity venue for track & field.
Capacity for the Galaxy soccer stadium will be 20,000 with “expandability” up to 29,000 by the building of a second deck. Plans for the complex include portable seating for 5,000 to be used as needed.
“One of our goals is to create a fitness and rehab center on the campus,” said Leiweke. “We can do that because of the synergy of all the sports. We probably couldn’t do that as a stand-alone if it was just soccer.”
SHARE AND SHARE ALIKE. For most teams, sharing an NFL stadium is anathema. But it makes sense for the Revolution, which will move into a new facility – yet to be named – along with NFL Patriots in 2002.
According to Revs’ operator-investor Jonathan Kraft, the lower section of the new stadium will hold 30,000 and is designed to bring the fans closer to the field as well as accommodate the playing dimensions of a soccer field.
The Kraft Sports Group has raised private funding to pay for the bulk of the project, the estimated cost of which is $275 million.
Colorado is in the most dependent situation of all. Its current home, Mile High Stadium, is scheduled to be demolished next year – if the replacement facility under construction makes sufficient progress.
If the old Mile High is torn down on schedule early in 2001, the Rapids will play somewhere else during the months until new Mile High is ready in July or August of next year. But the team won’t know if it needs a temporary facility for several months.
“The new Mile High will be a great place to play,” says Rapids team president Roy Kline. “The lower bowl is smaller than the old Mile High.”
The grand plans for MLS stadiums have high hurdles to clear. Los Angeles is the only team with a designated site and still needs approval from local residents as well as the California state university board of trustees. Communities could reject the Fire and MetroStars’ request for land and public funding.
“The current facility [the Meadowlands] is not an option with the way the terms of our lease are laid out now,” said Sakiewicz, who is also researching stadium options for a second franchise to start play in 2002.
“Our pro formas show us in a positive cash-flow situation in year one, with our current attendance. We’d be making money.”
That’s a novel concept.
by Soccer America senior editor Ridge Mahoney