The keys to making a profit

• by Ridge Mahoney  @ridgemax, Mar 29, 2010

By Ridge Mahoney

During a conference last week, MLS Commissioner Don Garber pounced on a chance provided when asked of his frustration regarding the lack of progress on a stadium project for D.C. United.

“I just can't understand why we can't make progress in D.C., and what more do we need to do to have the politicians in that community understand the relevance of that club, it’s deep commitment to the community,” said Garber in response to my question. He then took more jabs at those people who, he claims, have promised much and delivered little.

“I am tired of going down to meetings and getting my back slapped and faux press conferences with mayors and local city officials to have them backtrack on that because they can't get out of their own way. And quite frankly, it's frustrating.”

Imagine that! Disingenuous politicians! Garber then mentioned the unthinkable, the dreaded big stick of ultimate threat: “And at some point, we are doing to have to do something about it.”

With that last remark, Garber had something more in mind than not voting for said mayors and local city officials, i.e., seriously considering moving D.C. United to a community more stadium friendly. The ticked-off commissioner ticked off Houston, Kansas City, New York Red Bull, San Jose, and Philadelphia, all of which in the past two years have hurdled financial and political obstacles, as has 2011 expansion entry Portland.

He also cited progress in stadium renovation/expansion discussions in Montreal, where owner Joey Saputo has jumped the gun several times with premature proclamations of a finalized deal. The holdup, according to Garber, is working through the governmental channels and bureaucratic tangles essential to ensuring the project is approved and funded.

During the conference call, he also admitted perhaps MLS operator-investors overestimated the impact of building a soccer stadium on a team’s profitability. During CBA discussions, league and team officials steadfastly insisted only two teams – Seattle and Toronto – are currently profitable.

(The Galaxy, supposedly profitable two years ago, has apparently dropped off the list. I wonder what, or who, caused it to plummet?)

“It’s clear that in starting a business, you might have a certain assumption about a business tenet, and then found out after you’ve done it that you weren’t right,” said Garber. “The need for soccer-specific stadiums remains a huge priority and necessary to be able to succeed. It is not an immediate deliverer of profitability, and when we got into this process in [1999] and then with Home Depot Center in ’03, we thought that it was. We’ve realized that there are so many other things that need to happen.

“You need to be relevant in your local market, you need to have the right broadcast relationship and the right connection with local sponsors, you must have the right staff in place, and committed ownership, an understanding of marketing and a clear ability to connect with diverse audiences and on and on and on.”

I recall times over the past few years the commissioner reminding journalists and fans that the building of a stadium is not a “magic bullet” that guarantees success. In a few markets, at least, it has taken some time for the importance of those other essentials to sink in. When FC Dallas announces a crowd of barely more than 8,000 for its opener on a beautiful if windy spring day, clearly there’s much work still to do.

This week, the league is expected to announce another change to enhance the value of its product and its teams – an expansion of the Designated Player option by which each team is allotted two DP slots rather than the current one. Less than one-half of the 16 league teams currently employ even one DP, but certain ambitious organizations want to use their financial clout to supersede the league’s preference for parity.

Unfortunately, D.C. has whiffed on its stadium and fluffed the DP, as well. Marcelo Gallardo (2008) bumped attendances but didn’t hit dazzling numbers, and Luciano Emilio (2009) put up good stats yet still took abuse from fans for the chances he missed, and hasn’t returned for 2010.

United has no plans to sign a DP this year. The stadium situation is status quo. It took a 4-0 beating in Kansas City last weekend and opens at its home schedule against New England Saturday at RFK Stadium, where only goals and success can brighten a gloomy mood.