The Sounders Seek Revenue Opportunities

August 29, 2017

Not exactly a gripping headline when stating the obvious.  But this month the Sounders announced they’re seeking a new naming rights partner, perhaps most prominently for the jersey.  The current deal with Microsoft, extended multiple times since the inaugural MLS season in 2009, expires at the end of the 2018 season.  Adrian Hanauer acknowledged in media reports covering the story that the team doesn’t earn much revenue from its TV deal (currently with Q13 FOX).  One can infer the radio deal (97.3 KIRO-FM) doesn’t bring in much either.

So this upcoming naming rights negotiation represents a big opportunity for the club to grow its revenues.  Maybe better media deals will follow.  All will only further boost a team value that Forbes pegs at $295M, good for second in the league.

Notably, the Mariners are currently looking for a new stadium naming rights partner, while OVG reportedly is already seeking corporate sponsors for its proposed KeyArena remodel.  We’ll see how the final deals shake out in terms of value compared to league peers and whether the teams stay local when finding their partners.  There’s no better time than now to explore opportunities in the thriving Puget Sound region.  And for the defending MLS Cup champs, seemingly a lot of runway to grow the business.

Advertisements

It Remains the CLink to You

June 17, 2017

CenturyLink extended its naming rights deal for the stadium shared by the Sounders and Seahawks for another 15 years at roughly $10M/yr, reportedly doubling the previous agreement.  The value reflects a stadium in a growing, upper medium sized market that houses teams that consistently make the playoffs in their leagues.

The CLink is one of three facilities that serve as permanent homes for NFL/MLS teams in their markets, along with Gillette (New England) and Mercedes Benz (Atlanta).  The Atlanta stadium’s opening has been delayed multiple times and now is expected to open in August.  With both of these other stadiums being in larger markets, one can expect those naming rights deals to be larger, especially the new Atlanta stadium.  But the newness of the stadium is just one of many factors considered when such agreements are signed, as the linked article notes.

This season, the Chargers will join the Galaxy at StubHub Center for a three season stay until the new NFL facility in Inglewood is completed.  Additionally, Vancouver and Toronto both have MLS/CFL stadium sharing agreements.  So the economics behind the naming rights deals for shared football stadiums will continue to be focused on the long term nature of the setups in Seattle, Atlanta and New England (Foxboro) for the foreseeable future.  And in the case of Seattle, the agreement is more valuable than expected if based on market size alone.

Your turn, Mariners.


Sinclair/Tribune Deal Impact On Seattle Sports Fans

May 8, 2017

The proposed Sinclair Broadcast Group’s acquisition of Tribune Media may have an impact for local sports fans.  Sinclair owns KOMO TV, an ABC affiliate, which shows some programming from its Disney sister channel, ESPN.  Locally, this means some Pac-12 football games and, well…the NBA.

Tribune owns KCPQ, also known as Q13 Fox, being a Fox affiliate.  Because of that relationship, Q13 Fox broadcasts most of the Seahawks’ games.  Additionally, they are the team’s preseason home.  The station also holds the local rights for the Sounders and Storm.  And similar to KOMO, Q13 Fox broadcasts Pac-12 football and basketball due to Fox Sports contract with the conference.

Sinclair is also trying to make a go of it with the American Sports Network.  It’s billed as a multi-platform network, albeit one with secondary conferences and games.  Perhaps the proposed merger is a way for Sinclair to boost distribution of ASN while also acquiring more sports rights to potentially feed its way.

So what changes for fans if the merger is approved?  Probably not much, at least initially, but it bears watching.  Sinclair would own stations that are affiliates of two of the four major broadcast networks, both of which show sports relevant to local fans.  And, Sinclair would be the rights holders for the Sounders, Storm and preseason Seahawks games.  Even mergers in far off places can work their way back to the local level.


First & Goal Hospitality Launched

March 11, 2017

First & Goal Inc. announced the creation of First & Goal Hospitality (FGH), which took over the management and operations of all concessions at CenturyLink Field and related venues as of March 1st.  FGH takes over from Delaware North, a big, long time player in the hospitality business.

It makes sense for Paul Allen’s F&G to do this as a way to increase incremental revenue at a facility the group already operates.  FGH is also believed to be the first locally team owned organization to break into the hospitality sector.  It’s a competitive sector nationally, from Delware North to Yankees and Cowboys’ owned Legends Hospitality to Centerplate (Safeco Field, Tacoma Dome), to Levy Restaurants (KeyArena, Moda Center), to the big heavyweight, Aramark (UW facilities), with over $14B a year in revenue and a market cap of $9B, dwarfing any sports franchise multiple times over.  And these groups have long branched out from concessions, ranging from marketing and sponsorships to ticketing and consulting.

The local venues noted above serviced by the national players make obvious targets should FGH look to expand.  None more so than Allen owned Moda Center in Portland.  And just as the more established hospitality businesses broadened their product offerings, it wouldn’t be surprising to see FGH eventually go that route as well.  So Seahawks and Sounders fans can look forward to new concession offerings this year, knowing that the genesis for those options are indeed, created close to home.

 


Times Red Cards the Sounders Beat

January 22, 2017

A couple of weeks ago, The Seattle Times Sounders beat reporter Matt Pentz announced that his position had been eliminated as part of wider cuts at the Times.  This followed on the heels of a similar situation last summer for Don Ruiz at the Tacoma News Tribune.  So just like the that, the two major daily papers in the region eliminated the position of Sounders beat reporter within a handful of months.

It’s not a great look for the papers, who are struggling to survive.  Nor for the Sounders or MLS, who appear to be not important enough to have beat reporters covering their defending champion.  As Seth Vertelney of GOAL.com notes, it’s part of a wider trend in the league:

There is an air of legitimacy that daily newspaper coverage still provides to an MLS team. When MLS news is pushed off the pages of major metropolitan periodicals and onto websites with more niche followings, it sends a message to those casual fans: MLS isn’t big-time quite yet.

That’s the message the Seattle Times is sending, whether it’s intended or not. In Seattle, the Sounders are big-time though, so a larger swath of the readership suffers there when Pentz and Ruiz leave the beat.

Just as he relates, the loss of newspaper reporters is in some cases being picked up by coverage from blogs, local websites and team sites.  And this is happening in other sports as well.  It’s a trend that doesn’t look like it’s going to reverse itself anytime soon.

It’ll create some new opportunities, though undoubtedly the casual fan who depends on the local daily will lose out.  Certainly this will be the case in Seattle, where local sports talk radio, another avenue of casual fans, mostly neglects the club.  And a less informed fan, or potential fan, is a loss for the team and league as well.


Sounders Valuation Again Tops Forbes List

September 29, 2016

The Sounders once again topped Forbes’ MLS valuation list.  According to the magazine, the club’s value increased from $245M to $285M over the last year.  As with last year, Forbes bases the valuations on a multiple of assumed revenue.  It’s not the clearest way to value a team, as a multiple of operating profit would be preferable.  But in Forbes defense, MLS financial figures are not easily found.

Still, it’s a bit hard to believe the Sounders are worth more than any of the New York or Los Angeles franchises.  With MLS even more of a socialist model than the NFL, one would expect valuations to roughly equate to market size, as with the NFL minus some unique exceptions (Cowboys, Packers, Steelers, etc).  But MLS clubs still have wide differences in stadium revenue generating opportunities as compared to the NFL.  So as a result, it’s quite possible that an upper middle market team could be more valuable than at least a few large market franchises.

 


Forbes Says Sounders’ Value Tops MLS

September 7, 2015

Forbes updated their biannual valuations of MLS clubs recently.  The Sounders topped the list at $245M and were followed by the Galaxy and Dynamo, both also at $200M or higher.  The Sounders’ valuation looks like a pretty good return given the reported $30M expansion fee the owners paid in 2007.  That, of course, does not account for how much the owners have contributed over the years.

There’s no discussion as to what’s included in the calculation of valuations.  While the Sounders lead the league in attendance, the value of items such as sponsorships,  media rights deals and SUM equity arrangements are not really known.  It’s completely reasonable to believe the Sounders are amongst the most valuable franchises in the league, but takes a bit of a leap to see them rank ahead of the likes of teams from New York, Los Angeles or Toronto.