Stadiums plot leagueÆs future

• by Soccer America , Jul 30, 2001

Sometime this month, machines and men will descend upon a plot of land on the campus of California State University, Dominguez Hills to carve out a multi-sport complex that will include a soccer stadium for the Los Angeles Galaxy.

Later this summer or early in the fall, construction will begin ù probably at the Arlington International Racecourse ù for a modular stadium to house the Fire.

Executives at Empire Soccer Club LP, parent company of the MetroStars, envision their soccer stadium as part of an $800 million development complex in Harrison, N.J., and have selected a site at Aqueduct Racetrack to build a facility for an expansion team.

The denizens of MLS are betting that facilities tailored to their sport will reverse their staggering financial losses and ensure the leagueÆs future.

ôThe product on the field is tremendous, but other aspects of the entertainment have been out of our control up to this point in some markets,ö says Fire general manager Peter Wilt, whose team is being booted out of Soldier Field in a few months because of renovations.

ôThis will change with the advent of new stadia.ö

Fans would rather talk of good players and bad referees, but the moguls of MLS must mull over the money.

WHEREÆS THE MONEY GONE? Millions of dollars currently being drained away annually by lease payments and lost ancillary revenues in most MLS cities will instead flow into league coffers. Owners are counting on smaller facilities to drive up ticket sales, upon which the league is desperately dependent.

ôOur path to success is going to be driven by a business model that has us getting cash-flow positive through stadium revenues locally,ö says Commissioner Don Garber. ôWhere we have stadiums, we have a better chance to offset losses in other areas.ö

In other words, landlords rule. Tenants rent.

ôI canÆt recall how many times weÆve had to either reschedule games or couldnÆt get the dates we wanted because of a Bears game or another event at Soldier Field,ö says Wilt.

As secondary or in some cases ù such as the MetroStars at Giants Stadium ù tertiary tenants, MLS teams get the worst pick of playing dates and virtually no income from concessions, parking, merchandise, stadium signage and naming rights and luxury box revenue.

The Metros can play only one home game each month in June and July because of their lease.

ôOur Saturday-night attendance is up 34 percent,ö MetroStars general manager Nick Sakiewicz says. ôCan you imagine how much better it would be if we werenÆt restricted to playing most of our early home games in April and May?ö

With an average attendance of 14,282 in 1999 ù the last year for which figures are available ù the leagueÆs financial statements listed $62,940,084 in revenues and $97,364,283 in costs and expenses for an operating loss of $34,424,199.

Included in that revenue total is only $798,125 for stadium revenues. In its own facility, an MLS team could easily triple or quadruple that figure.

Sakiewicz believes control of ancillary revenues could push his team into the black.

ôWith 18,000 paid, weÆd be making money,ö says Sakiewicz, whose organization pays nearly $1.5 million each season to use the Meadowlands. ôGiven the market conditions, with the growth in attendance and the stadium leases that we have, the business model is extraordinarily difficult to achieve profitability unless we have our own stadiums.ö

Wilt estimates signage and stadium-naming rights would be worth $1 million-$2 million and suite revenues would be in the high six figures annually.

CREW SHOWS THE WAY. For Crew general manager Jim Smith, August will be a big month.

He hopes the Crew will clinch a playoff spot, of course. But also on the Columbus Crew Stadium schedule is the boy-toy band NÆSync, which will draw a sellout crowd of 28,000 Aug. 20 and pour several hundreds of thousands of dollars into the stadiumÆs till.

The group is paying an undisclosed fee to rent the facility and keeps all ticket revenue, which Smith estimates will be $1.7 million. The Hunt Sports Group receives all ancillary revenues in addition to the fee.

The NÆSync concert will be one of perhaps 16 non-Crew events to be held this year at the stadium. High school soccer and football, NFL exhibitions, and band events round out the schedule of Crew and U.S. national team matches.

The buzz generated by the U.S. qualifier against Mexico last February vividly demonstrated what the right game in the right venue can do.

ôI donÆt think you can showcase the game any better than what weÆve built in Columbus,ö says Smith. ôThe fans are close, the environment is fun, and the atmosphere is electric.ö

Plus, the bottom line makes sense. A crowd of 20,000 can generate $100,000 in ancillary revenue.

ANSCHUTZ FOLLOWS HUNT. They are both part of the Philip Anschutz Empire, but the stadium plans for the Galaxy and Fire couldnÆt be more different.

For his Fire House, Wilt is planning a modular stadium, which consists mainly of portable components instead of traditional brick-and-mortar structures. He hedges on providing a cost estimate, saying only it will be about ôone-half to one-thirdö of what an equivalent ôpermanentö structure would cost.

Translation: Between $15 million and $20 million.

Modular stadiums can be built in four to six months; most permanent structures would take twice that long. Lockhart Stadium renovations, much of which consisted of adding modular seating, took 96 days.

Wilt had originally viewed a modular stadium as a stopgap measure for the 2002 and 2003 MLS seasons when Soldier Field would be unavailable.

ôBut if we went through the trouble and expense, it wouldnÆt make sense to abandon it after two years,ö he says.

The Galaxy stadium is one facet of a sports complex Anschutz Corp. executives hope will host athletes from all over the world. It will sit alongside fields and buildings housing the U.S. Soccer Federation national training center and share space on the 85-acre site with cycling, tennis and track & field facilities.

There will be a modular component to the Galaxy stadium. It will have a capacity of 20,000 but be expandable to 27,000 by the use of portable seating that can be moved from site to site within the complex.

Sources say the Galaxy, despite paying an exorbitant rent at the Rose Bowl, was close to breaking even last year when it averaged a league-high 20,400. The relatively small capacity of its new stadium is calculated to create scarcity and drive the sale of advance-ticket sales, be they season tickets or for a single game.

Both projects will be privately funded through the Anschutz Entertainment Group, which has also begun researching the feasibility of building a stadium for D.C. United if the group exercises its option to buy the team.

BIG METRO PLANS. ThereÆs nothing modest about the MetroStarsÆ stadium plan, although it does contain a modular component.

Sakiewicz wants a roofed, 25,000-capacity stadium, which could be expanded 10,000-15,000, in a vast complex that would include residential housing, retail space and a shopping center. He estimates construction costs for the stadium at $50 million-$60 million.

About $30 million-$40 million in stopgap funding is needed for Hudson County and the city of Harrison to approve the project. Bonds issued by Hudson County would provide the primary funding.

Sakiewicz is going back to the New Jersey government after being rebuffed initially in his quest to get that money. He proposes to hold more than 60 events a year that he says will generate more than $40 million in state taxes over 25 years.

If he can shoehorn a rider into existing legislation, and it is approved by state legislators this fall, a MetroStadium could be completed by 2003.

NEW FOOTBALL STADIUMS. Two other MLS teams will move into new stadiums next year.

Both are being built primarily for pro football.

The Revs should be healthy at the CMGI Field, owned by the Kraft Sports Group.

The picture isnÆt as rosy in Denver, where the Anschutz-owned Rapids are making absolutely no progress in trying to extract a portion of ancillary revenues in lease negotiations with officials of Invesco Field.

To critics who ask why the league doesnÆt buy players instead of plywood and nails, Garber responds, ôIf we thought that players would drive revenues at the same level that facilities would, weÆd spend our resources on players.

ôWeÆve learned over the past number of years that players alone are not going to drive revenues. ItÆs certainly the case in Los Angeles, and itÆs proven to be the case in just about every other market.

ôThe better the economic model, the more valuable we are as an opportunity to investors. ItÆs no different than any other business.ö

by Soccer America Senior Editor Ridge Mahoney