Mls Stadium Business Model


Published on

Published in: Business, Sports

Mls Stadium Business Model

  2. 2. TABLE OF CONTENTS <ul><li>MAJOR LEAGUE SOCCER </li></ul><ul><ul><ul><li>OVERVIEW </li></ul></ul></ul><ul><ul><ul><li>GROWTH </li></ul></ul></ul><ul><li>STADIUMS </li></ul><ul><ul><ul><li>CONSTRUCTION </li></ul></ul></ul><ul><ul><ul><li>FINANCING </li></ul></ul></ul>
  3. 3. OVERVIEW
  4. 4. <ul><li>America’s Division I Men’s Professional League founded in 1996 by Phil Anschutz, Lamar Hunt, Robert Kraft and John Kluge </li></ul><ul><li>Sixteen teams, with plans for 18 teams; Philadelphia recently joined as the 16 th team and will begin play in 2010 </li></ul><ul><li>April through November schedule </li></ul><ul><li>Thirty regular season games per team (plus playoffs, U.S. Open Cup & international tournaments/exhibitions) </li></ul><ul><li>Unique single-entity ownership structure </li></ul><ul><li>Player pool includes international stars (over 50 countries represented) and great young Americans </li></ul><ul><li>Long-term television contracts (through 2014) with English and Spanish broadcasters </li></ul><ul><li>The League’s affiliate Soccer United Marketing (SUM) is the largest commercial soccer company in the United States </li></ul>OVERVIEW
  5. 5. The continued growth of MLS is driven by … <ul><li>1. STRONG OWNERSHIP </li></ul><ul><li>MLS owners also own </li></ul><ul><li> </li></ul>5 International Soccer Teams: Arsenal (England), Chivas de Guadalajara (Mexico), Hammarby IF (Sweden), Red Bull Salzburg (Austria), Saprissa (Costa Rica) 2 MLB Teams: Oakland Athletics, San Francisco Giants 4 NFL Teams: Kansas City Chiefs, New England Patriots, St. Louis Rams, Seattle Seahawks 5 NBA Teams: Chicago Bulls, Denver Nuggets, Los Angeles Lakers, Portland Trailblazers, Toronto Raptors 4 NHL Teams: Colorado Avalanche, Los Angeles Kings, St. Louis Blues, Toronto Maple Leafs
  6. 6. The continued growth of MLS is driven by … 2. LONG-TERM TV CONTRACTS 2007 – 2014 2007 – 2014 2007 – 2010 2006 – 2008 <ul><li>3. EXPANSION </li></ul><ul><li>Toronto FC joined as the 13 th team in 2007 </li></ul><ul><li>San Jose joined as the 14 th team in 2008 </li></ul><ul><li>Seattle joins as the 15 th team in 2009 </li></ul><ul><li>Philadelphia joins as the 16 th team in 2010 </li></ul>
  7. 7. The continued growth of MLS is driven by… 4. CHANGING NORTH AMERICAN DEMOGRAPHICS 5. CONNECTION WITH GLOBAL MARKETPLACE International Stars SuperLiga Tournament MLS All-Stars v. Celtic FC July 2007 Youth Soccer Diversity Mainstream Media
  8. 8. <ul><ul><li>Home Depot Center - 2003 </li></ul></ul><ul><ul><li>Columbus Crew Stadium - 1999 </li></ul></ul><ul><ul><li>Pizza Hut Park - 2005 </li></ul></ul>Backed by visionary owners and growing interest from municipalities, MLS has seen an impo increase in the development of soccer-specific stadia <ul><ul><li>Toyota Park - 2006 </li></ul></ul>The continued growth of MLS is driven by … 6. SOCCER-SPECIFIC STADIA
  9. 9. Additionally, Kansas City , Houston and San Jose are currently in negotiations for new stadium projects. Red Bull Park : Project – 2009 Dick’s Sporting Goods Park: 2007 BMO Field: 2007 The demand for soccer and the success of the existing stadia has prompted even further expansion Salt Lake: Project - 2008 The continued growth of MLS is driven by …
  10. 10. STADIUMS
  11. 11. STADIUM DEVELOPMENT <ul><li>One of Major League Soccer’s strategic imperatives is the development of soccer-specific stadia for each of its teams. This follows a trend in all U.S. professional sports. </li></ul><ul><li>7of MLS’ 14 teams play in soccer-specific stadiums with an additional 5 in the next few years: </li></ul><ul><ul><li>20,000 to 30,000 seats </li></ul></ul><ul><ul><li>$70 - $150 million cost </li></ul></ul><ul><ul><li>18-24 months to construct </li></ul></ul><ul><ul><li>Multipurpose (concerts, community events) </li></ul></ul><ul><li>The are numerous benefits from playing in these new facilities: </li></ul><ul><ul><li>These intimate venues greatly increase the stadium atmosphere and fan experience; </li></ul></ul><ul><ul><li>The team generates ancillary revenue streams from stadium sponsorships, premium seating, concessions, parking and other events such as concerts; </li></ul></ul><ul><ul><li>The team controls stadium schedule; and </li></ul></ul><ul><ul><li>The team owner can benefit from surrounding real estate development. </li></ul></ul>
  12. 12. STADIUM FINANCING <ul><li>In the U.S., there are examples of stadiums that are (i) 100% publicly financed, (ii) 100% privately financed and (iii) financed through public/private partnerships. </li></ul><ul><li>Most stadiums in the U.S. are financed through public/private partnerships </li></ul><ul><li>There are many public entities that may be involved: (i) City, (ii) County, (iii) State, (iv) Redevelopment Agencies and (v) School Districts. </li></ul><ul><li>Public entities may provide direct funding, infrastructure support (roads, utilities, etc.), preferential financing and tax benefits. </li></ul><ul><li>Reasons for public funding include: </li></ul><ul><ul><li>Encourage economic development; </li></ul></ul><ul><ul><li>Facilitate redevelopment of targeted areas; </li></ul></ul><ul><ul><li>Provide facilities for school and youth groups; </li></ul></ul><ul><ul><li>Increase jobs; </li></ul></ul><ul><ul><li>Attract tourists; </li></ul></ul><ul><ul><li>Promote the city or state; and </li></ul></ul><ul><ul><li>Enhance quality of life. </li></ul></ul>
  13. 13. STADIUM FINANCING <ul><li>There are several mechanisms that the public and private sectors can use to finance stadiums. </li></ul><ul><ul><li>Tax Incremental Financing (TIF) – TIF is a tool that allows developers to issue bonds backed by future property and business tax revenue from an area surrounding the stadium known as a TIF district. There is often an increase in real estate values and business activity surrounding a stadium which leads to increased tax revenues. </li></ul></ul><ul><ul><li>Revenue Bonds – Bonds that are secured by defined revenue sources (e.g., hotel occupancy taxes, sales taxes, admission taxes, etc). The debt service is paid for with dedicated revenue. </li></ul></ul><ul><ul><li>General Obligation Bonds (G.O.) – Bonds that are issued by counties, cities or states and are secured by the general taxing power of the issuer. </li></ul></ul>
  14. 14. STADIUM FINANCING <ul><ul><li>Special Tax Bonds – Financing where bonds are payable from a specifically pledged source of revenue, such as a specific tax, rather than from the full faith and credit of a municipality or state. </li></ul></ul><ul><ul><li>Economic Development Funds – Most cities and states have agencies that have funds to invest in the promotion of economic development. </li></ul></ul><ul><ul><li>Contractually Obligated Income Financing: </li></ul></ul><ul><ul><ul><li>Naming Rights </li></ul></ul></ul><ul><ul><ul><li>Stadium Sponsors </li></ul></ul></ul><ul><ul><ul><li>Concessionaire Contribution </li></ul></ul></ul><ul><ul><ul><li>Premium Seating </li></ul></ul></ul><ul><ul><ul><li>Personal Seat Licenses </li></ul></ul></ul><ul><ul><li>In all case, the public entity will conduct an Economic Impact Study to estimate the likely increase in business activity, tax revenue and jobs that will result from an investment in a stadium. </li></ul></ul>
  15. 15. STADIUM FINANCING PIZZA HUT PARK <ul><li>Completed in 2005, Pizza Hut Park, located in Frisco, Texas, is home to FC Dallas. Pizza Hut Park includes an extensive youth soccer complex with 17 fields. </li></ul><ul><li>Cost: </li></ul><ul><ul><li>$57 million for the stadium </li></ul></ul><ul><ul><li>$107 million for the entire complex </li></ul></ul><ul><li>Financing: Please see the following slide. </li></ul>Capacity 20,500 Completion Date 2005 Acreage 142 Practice Fields 17 Permanent Stage Yes Parking 5,400 spaces Suites/Premium Seating 18 suites and a 6,000 square foot Verizon Wireless Stadium Club
  16. 16. <ul><li>Contributions </li></ul><ul><li>Collin County: $20 million  </li></ul><ul><ul><li>County backed bonds </li></ul></ul><ul><li>City of Frisco: $20 million  </li></ul><ul><ul><li>Municipal backed bonds </li></ul></ul><ul><li>Frisco Independent School District: $15 million </li></ul><ul><ul><li>Part of School Bond Referendum financed with a dedicated property tax. </li></ul></ul><ul><li>Private: $52 million </li></ul><ul><li>Tenancy/Ownership </li></ul><ul><li>The City of Frisco retains ownership rights to the complex and collects an annual payment in rent from Hunt Sports Group, through a Master Lease Agreement. </li></ul>STADIUM FINANCING PIZZA HUT PARK
  17. 17. STADIUM FINANCING PHILADELPHIA <ul><li>The proposed soccer-specific stadium, located just south of Philadelphia in Chester, Pennsylvania, will be home to the expansion Team beginning play in 2010. </li></ul><ul><li>Real Estate Development </li></ul><ul><li>Redevelopment of Old Industrial Town </li></ul><ul><li>Mixed Use – Retail, Residential, Office </li></ul><ul><li>Expansion Team (2010) </li></ul><ul><li>Stadium Architect: Rossetti </li></ul><ul><li>Estimated Total Cost: $115 million </li></ul>
  18. 18. <ul><li>Contributions </li></ul><ul><li>Delaware County: $30 million  </li></ul><ul><ul><li>Economic Development Funds </li></ul></ul><ul><ul><li>Revitalize City </li></ul></ul><ul><ul><li>Open Access to Waterfront </li></ul></ul><ul><li>State of Pennsylvania: $45 million  </li></ul><ul><ul><li>Economic Development Funds </li></ul></ul><ul><ul><li>Capital Project Funds </li></ul></ul><ul><ul><li>Environmental Remediation </li></ul></ul><ul><ul><li>Transportation Funds </li></ul></ul><ul><li>Private Funds: $40 million </li></ul>STADIUM FINANCING PHILADELPHIA