Glorydays
02-25-2005, 06:58 PM
Is it Golden Showers time for the Golden League?
Has anyone bothered to follow the recent stories about the Golden Baseball League? Yeah great idea, one league, several owners but it seems they havent completely done their homework on the reality of starting a league, let alone a team level.
They have spent their way into launching the league on promises and no clout. Considering under normal circumstances, small market, small staff etc. it takes $850,000 to run a franchise based on 1,400 average attendance (45 games) with group sales, and sponsorship revenues at a modest goal for year one. Even with the $1 million they received from Vons, they are still looking at between $4-$5 million in operating costs in year one (6 teams). Keep in mind, this doesnt include the $75k-100k each member of the corporate staff are making ($450k lets say at 6 employees). At $4-$5 million all of the teams would have to reach their target attendance to get close to breaking-even or limiting losses in year one. Well, what happens if one of the teams fails to meet the minimum attendance mark of 1,400 (and all of the teams will fall short except maybe Chico), then instead of breaking even in year one and thus being able to be self sufficient in year two, all of the sudden, each team is $400k in the hole on average($2.4m for 6 teams), and lets add that $450k in league salaries paid to the CEO, COO, CMO etc we are now looking at nearly $2.8 million in losses in year one. Not so awesome now is it? Considering the fact the league stated they received $2-5 million in funding, well that means $2 mill now and the rest under second phase of funding probably for league expansion. There must be real deep pockets somewhere with backup funding.
Two GM's have quit, and now the team in Tiajuana backed out so they are forced to field a traveling team? With only three months to go until the launch of their inaugural season? Hang with um guys.
One of the reasons that there hasn't been a new league formed on the west coast (for example similar to the old Western Baseball League which is what the GBL was trying to do), is that it takes time, demographical research, and due diligence to find the correct potential markets that can be profitable and find potential owners that are liquid for the required startup fees and operational costs for a five-year plan, and a business plan that is not designed by mathematics at Harvard or Stanford, but based on actual business experience and knowledge of the industry, its past history including successes and failures. They said they had this? The amount they spent on leases tells me no!
The WBL I believe paid no more than $50k for a ballpark lease, and the GBL have doubled and in some cases tripled the cost of their leases. If you are basing everything on a market like Modesto, CA who has lost money or had to severely cut back operating costs because they were losing money, this is mistake one. Long Beach and Chico are two different markets. LB has the Los Angeles media market ($300 for radio spot) and Chico has a small town market ($15 for radio spot). Budgets go a long way in different directions, especially when each team operates (inluding affiliated minor league ball) at an advertising expense around $100,000 annually. So in an effort to get things started, when met with issues they had not expected (high lease costs and lack of bargaining power), they could do the only thing they knew and thats throwing other peoples money at the problems. In a individual owner-owned league where different owners would negotiate different leases with their prospective cities, you can do some competitive bargaining and keep your lease in the $35-$60k range. When you set the precedent that the GBL did by paying out an estimated $200k in one case, how can you honestly look at one of the other cities and say, yeah i paid them $200k, but i can only pay your city $50k. That's instability and a bad business practice, and thus another reason why local ownership needs to be a teams foundation.
The WBL as a whole did not fail, it was because of owners not getting along with other owners, and wanting to do things their own way to enhance personal growth rather than building equity and stability in the league thus increasing the size of assets as an entire league and at the team level. I honor the GBL for wanting to fix that problem by having one owner. In a couple of cases with the WBL, it was owners that said I am not spending any more money (or bankrupcy), which is a sad case to commit to something and two years later not have the money to follow through. Indpendent and Affiliated Professional Baseball teams need to be individually owned and operated. But each owner needs to be fully aware of market conditions, and both sides of the puzzle the extreme profitability and the chance of true losses. The Northern league doesnt seem to have these issues, in fact they are growing into new markets each year.
One owner sounds good, but professional sports are a community-based "icon", born and bred into the community, supported by the community and its business owners, fans and more. If created correctly the team and its local ownership will thrive just like any other community run and operated small business. It's pride! People will come and support something they know they have a vested interest in. In the WBL's case, it was the structure of the league and ownership issues. If those simple issues (knowledge that each owner did not have the right amount of capital to keep going) were properly handled up front by proper league-stated business operation decisions, then they would not have had the issues they did. Look at Long Beach again, a community with over 500,000 people living in the city. How is baseball not successful there? They have a nationally ranked College program that doesn't get support either. Has anyone tried to find out why? I think its because dating back to 1996 and 1997, indy baseball was successful, two years, two championships, nearly 1,800 attendance per night and boom they were gone because of ownership! It was the ownership groups that left the bad taste in the mouths of others. I would say that the Long Beach market has that "oh great here we go again attitude". The Breakers then came along a few years later, and started the same way, championship in year one, building a strong community support system in year two, and then they were done because of the ownership decision to not place any more money in the franchise. So maybe thats why Long Beach doesnt have the attendance they should. Why? Because no one wants to be a part of something that enheritly will fail within a couple of years. Why waste your heart-felt vested interest in a team that will break your heart in a few years, especially when you can drive 20 minutes and follow the Angels, or 45 minutes and watch the Dodgers, or even better for FREE watch them both on TV. Granted I won't make that argument because Long Beach has plenty of baseball history and plenty of population to make a AA team be successful. STABILITY AND EQUITY! The keys to any successful minor league franchise. Not here's enough cash for year one and float down the river on your own.
I wish the GBL all the best, but i dont know how they will make it through year one, which will be sad for the future of indy ball on the west coast, because you cant keep explaining to communities why teams dont stay longer than two years.
Here is that link talking about Yuma and Tiajuana:
http://sun.yumasun.com/artman/publish/articles/story_15048.php
I am a market analyst and business research specialist who has been following minor league baseball for years. I have a vested interest in our pastime and its success on a local community level!
I would welcome your comments!
Has anyone bothered to follow the recent stories about the Golden Baseball League? Yeah great idea, one league, several owners but it seems they havent completely done their homework on the reality of starting a league, let alone a team level.
They have spent their way into launching the league on promises and no clout. Considering under normal circumstances, small market, small staff etc. it takes $850,000 to run a franchise based on 1,400 average attendance (45 games) with group sales, and sponsorship revenues at a modest goal for year one. Even with the $1 million they received from Vons, they are still looking at between $4-$5 million in operating costs in year one (6 teams). Keep in mind, this doesnt include the $75k-100k each member of the corporate staff are making ($450k lets say at 6 employees). At $4-$5 million all of the teams would have to reach their target attendance to get close to breaking-even or limiting losses in year one. Well, what happens if one of the teams fails to meet the minimum attendance mark of 1,400 (and all of the teams will fall short except maybe Chico), then instead of breaking even in year one and thus being able to be self sufficient in year two, all of the sudden, each team is $400k in the hole on average($2.4m for 6 teams), and lets add that $450k in league salaries paid to the CEO, COO, CMO etc we are now looking at nearly $2.8 million in losses in year one. Not so awesome now is it? Considering the fact the league stated they received $2-5 million in funding, well that means $2 mill now and the rest under second phase of funding probably for league expansion. There must be real deep pockets somewhere with backup funding.
Two GM's have quit, and now the team in Tiajuana backed out so they are forced to field a traveling team? With only three months to go until the launch of their inaugural season? Hang with um guys.
One of the reasons that there hasn't been a new league formed on the west coast (for example similar to the old Western Baseball League which is what the GBL was trying to do), is that it takes time, demographical research, and due diligence to find the correct potential markets that can be profitable and find potential owners that are liquid for the required startup fees and operational costs for a five-year plan, and a business plan that is not designed by mathematics at Harvard or Stanford, but based on actual business experience and knowledge of the industry, its past history including successes and failures. They said they had this? The amount they spent on leases tells me no!
The WBL I believe paid no more than $50k for a ballpark lease, and the GBL have doubled and in some cases tripled the cost of their leases. If you are basing everything on a market like Modesto, CA who has lost money or had to severely cut back operating costs because they were losing money, this is mistake one. Long Beach and Chico are two different markets. LB has the Los Angeles media market ($300 for radio spot) and Chico has a small town market ($15 for radio spot). Budgets go a long way in different directions, especially when each team operates (inluding affiliated minor league ball) at an advertising expense around $100,000 annually. So in an effort to get things started, when met with issues they had not expected (high lease costs and lack of bargaining power), they could do the only thing they knew and thats throwing other peoples money at the problems. In a individual owner-owned league where different owners would negotiate different leases with their prospective cities, you can do some competitive bargaining and keep your lease in the $35-$60k range. When you set the precedent that the GBL did by paying out an estimated $200k in one case, how can you honestly look at one of the other cities and say, yeah i paid them $200k, but i can only pay your city $50k. That's instability and a bad business practice, and thus another reason why local ownership needs to be a teams foundation.
The WBL as a whole did not fail, it was because of owners not getting along with other owners, and wanting to do things their own way to enhance personal growth rather than building equity and stability in the league thus increasing the size of assets as an entire league and at the team level. I honor the GBL for wanting to fix that problem by having one owner. In a couple of cases with the WBL, it was owners that said I am not spending any more money (or bankrupcy), which is a sad case to commit to something and two years later not have the money to follow through. Indpendent and Affiliated Professional Baseball teams need to be individually owned and operated. But each owner needs to be fully aware of market conditions, and both sides of the puzzle the extreme profitability and the chance of true losses. The Northern league doesnt seem to have these issues, in fact they are growing into new markets each year.
One owner sounds good, but professional sports are a community-based "icon", born and bred into the community, supported by the community and its business owners, fans and more. If created correctly the team and its local ownership will thrive just like any other community run and operated small business. It's pride! People will come and support something they know they have a vested interest in. In the WBL's case, it was the structure of the league and ownership issues. If those simple issues (knowledge that each owner did not have the right amount of capital to keep going) were properly handled up front by proper league-stated business operation decisions, then they would not have had the issues they did. Look at Long Beach again, a community with over 500,000 people living in the city. How is baseball not successful there? They have a nationally ranked College program that doesn't get support either. Has anyone tried to find out why? I think its because dating back to 1996 and 1997, indy baseball was successful, two years, two championships, nearly 1,800 attendance per night and boom they were gone because of ownership! It was the ownership groups that left the bad taste in the mouths of others. I would say that the Long Beach market has that "oh great here we go again attitude". The Breakers then came along a few years later, and started the same way, championship in year one, building a strong community support system in year two, and then they were done because of the ownership decision to not place any more money in the franchise. So maybe thats why Long Beach doesnt have the attendance they should. Why? Because no one wants to be a part of something that enheritly will fail within a couple of years. Why waste your heart-felt vested interest in a team that will break your heart in a few years, especially when you can drive 20 minutes and follow the Angels, or 45 minutes and watch the Dodgers, or even better for FREE watch them both on TV. Granted I won't make that argument because Long Beach has plenty of baseball history and plenty of population to make a AA team be successful. STABILITY AND EQUITY! The keys to any successful minor league franchise. Not here's enough cash for year one and float down the river on your own.
I wish the GBL all the best, but i dont know how they will make it through year one, which will be sad for the future of indy ball on the west coast, because you cant keep explaining to communities why teams dont stay longer than two years.
Here is that link talking about Yuma and Tiajuana:
http://sun.yumasun.com/artman/publish/articles/story_15048.php
I am a market analyst and business research specialist who has been following minor league baseball for years. I have a vested interest in our pastime and its success on a local community level!
I would welcome your comments!