It's almost tough to remember what it was like to be a Phillies fan before the opening of Citizen's Bank Park, the team's run of multiple division titles, World Series appearances and one amazing walk down Broad St on a magical day in October. But the Union's front office has dragged those memories out of the dusty corners of our collective consciousness and again make me wonder if we have a small market ownership team in one of the country's largest markets.
The news dropped courtesy of Mr. Tannenwald at the Inquirer that our old buddy Pete has filed a wrongful termination suit and has been denied his severance pay. Without delving into whether or not the team's direction has improved under interim coach John Hackworth (it has), it bears mentioning again and again that this team appears to be struggling financially. Add in the recent news that the team has shorted the "City" of Chester to the tune of $1M, and you start really wondering if the ownership group is in it for the long haul (or can be in it).
Nick Sakiewicz and team sources have stated that construction setbacks have led to them seeking to renegotiate the amount the Union owe Chester for 2010. Apparently that negotiation is also leading them to delay payment for 2011 and 2012 (though why is anyone's guess).
What? The Union sell out or nearly sell out every game? Plenty of concession sales and everyone has a scarf? Should be rolling in cash? Well, let's dive into that narrative a bit. It is difficult to get too deep since MLS' single-entity structure and non-disclosed contract dealings make it difficult to get a true picture of their finances, but we can try to place as many puzzle pieces on the table as possible.
- PPL Park - Construction of the stadium has been reported as $122 million. Public financing from Delaware County and the Commonwealth of PA chipped in for a reported $87M. Nice chip in taxpayers! That leaves $35M (also reported up to $43M ) that the ownership group put into their own venture (or 28.6%). It isn't clear how much of that was up front cash or financed before the credit markets dried up, but there were reports of contractors who weren't paid late into 2010 after completion.
- Buying into MLS - $40M in expansion fees. It isn't known how this is structured, if MLS offers financing the way franchise businesses operate, sells bonds to cover portions (with the expansion team funding the payments and MLS teams receiving distributions), but Keystone either ponied up the cash or are making payments.
- Salaries - MLS Players Union released their figures in May , prior to the Union dealing Mwang for Perlaza, and before the Soumare signing. The U still appear to be under the "cap".
- Anything else on the debit side of the ledger? Feel free to add in the comments.
Now, about all that money they make:
- Gate Revenue - These are guestimations, but the working assumptions are - 450 seats per section at PPL (give or take the couple of dozen field seats added or whatever). I blended the discount STH pricing and the face to get an approximate section value per game for revenue.
- By Section: Club -$115,425; Midfield-$62,100; Sideline- $266,500; Corner- $48,600; Endline- $70,875 and Supporters -$67,725
- Each game gate revenue estimate is $631,225
- Parking I estimated at 8000 spots at $15 per (yes, retail is $20 but majority of STH use discount book) for $120,000 per game.
- In lieu of published concession sales figures, a reasonable estimate of 15000 transactions at $15 = $225,000 per game. I did reach out to some friends I know (I used to work for a Spectacor competitor) who thought my guess was in line. I fully stipulate it is an estimate. Includes food and retail.
- Per game projected revenue is $976,225, over an 18 game season is $17,572,050 million, or in line with previous statements by Sakiewicz concerning the proposed Chester taxes.
- Bimbo - Pays a reported $3M annually for the shirt deal.
- PPL - $2M per year
- TV - NBC reportedly pays $10M per year for the rights to some games. That revenue is split between MLS and the 19 teams. If it's an equitable split, the Union get $500,000 a year for tv. What they receive (or pay) for deals with ESPN, local ABC and the new WIP deal isn't known. Tom Veit did mention that the Union's HD production adds 50% to costs in 2010.
- So that looks to tally up to an estimated $23 million per year. Remember, some of that revenue is shared back to the MLS entity, so we have to shave off a bit off the top. Mr Garber has to get paid.
- Estimated adjusted revenues - $18 million. Estimated overall costs ($80,000,000 for fees and construction/30 years at 4% = $2.6M per year financed) + Chester tax/fee of $500,000 per year + salary cap $2.8m (team is at $2M +/- Soumare, so this number may be negative). Without knowing the structure of the deals and financing for Keystone's portion of PPl and the franchise buy in, we can't determine if the Union are profitable. On the surface they should be, as Toronto did in their first season.
When you view the numbers alongside of the last year's activities (selling off higher salaried players and those no longer Generation Adidas; not paving the lots over the site of one of the worst environmental disasters in US history; reneging on the terms of the contract with our previous manger,crazy as he may be; and failing to pay the city tax), it makes you wonder. They are either profitable and repaying their investors with that money; or they are losing money. It is difficult to conclude that money is being re-invested into the on field product. The optics are worse when compared to the player acquisitions of LA or RBNY.