The Pro/Rel Lawsuit

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The Pro/Rel Lawsuit

Post by Pounder » Sun Aug 06, 2017 6:20 am

http://www.miamiherald.com/sports/mls/a ... 60022.html

Let this be known... the statute immediately after the one cited in the lawsuit gives wide latitude to national associations and regional associations to do as they see fit. The lawsuit is a joke.

This news after news broke of an attempted buyout of, essentially, SUM. http://www.espnfc.com/major-league-socc ... relegation

MLS couldn't sell... at least the story is that the television rights brokered with Fox and ESPN hinge on a stable set of markets, hence no pro/rel. When 2023 comes around, um, who knows.

I'm trying to avoid the owners signing on who are running NPSL teams... basically operating pay-to-play or otherwise amateur operations, trying to buy in really low in hopes of scoring big. The problem: these are owners not ready to deal with fans asking why they aren't paying a living wage IF they do carry a team professional.

Riccardo Silva clearly initiated this because he thought he was going to corner Miami, thinking David Beckham would be squeezed out by MLS, and almost inexplicably that hasn't happened. Oh, also, he still thought he could pull something off via the Open Cup... and they did pretty well, but it wasn't an MLS team that took them out, it was USL's FC Cincinnati. Such is the risk of depending on the Open Cup. So be it.

BUT...

That's a lot of money to throw at SUM. Silva might be crazy. Another foreign tycoon (or several) might send in a lot of money, promise and deliver the next Messi to New York, and might think this is worthy territory to do it. This makes it seem possible. Likely? Eh, not now. In a few years? 20?
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Post by nksports » Sun Aug 06, 2017 11:45 pm

I read about the suit. I don't think it has much of a chance of going anywhere.
If it did succeed, look for the MLS to fold within a season or two because NONE of the current investor-operators will be willing to risk losing their investment because the franchise lost all its value after dropping to the USL. (The NASL has been on the verge of folding for the past couple of seasons).
There are very few, if any, NASL or USL owners who could afford to survive in the MLS, even with some sort of payment for promotion. (The first thing they would have to do is buy a lot of players).
There are only a couple of NASL or USL teams that would even have access to a stadium that would meet MLS specifications.
We have a pretty good NPSL team in our area (FC Wichita). They won their division and went a couple of rounds into the playoffs. They consistently play to sellout crowds (of about 1,000). Most of their players have pro experience, but they don't pay the players so the college kids on the team can keep their eligibility.
They are talking about maybe applying to the USL, but would need a bigger stadium, unless they wanted to play in a college or high school stadium. (The city just tied up a bunch of money for a new baseball stadium to replace the one that has been used since the 1930s and wouldn't have much to pony up for a soccer stadium).
I still think if US/Canadian soccer ever gets a pro/rel system it will be when the MLS grows to enough teams to have a MLS Championship and MLS Premier, so the teams would still keep MLS valuations.
If the NASL and USL decide to play nice, we could have a Division III and IV that would be able to have pro/rel with. The few pro teams of the NPSL could get in and out of the fourth division, while the NPSL non-pro teams could get together with the PDL for a fifth and sixth division — if they decide to play nice.
What so many people looking on the outside don't realize is American soccer (baseball, hockey and even to some extent basketball) already have promotion and relegation. Just ask the Class AAA baseball player who got called up or the NHL player who got sent down to the AHL.

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Post by Sam Hill » Tue Aug 08, 2017 3:16 am

[quote=""nksports""]If it did succeed, look for the MLS to fold within a season or two because NONE of the current investor-operators will be willing to risk losing their investment because the franchise lost all its value after dropping to the USL.[/quote]

So, wait, wait, wait.

A system that would, at most, impact two of the 24 or 26 or 28 MLS investor/operators in a given year (and potentially fewer going forward as lower level teams likely yo-yo), would result in the other 22 or 24 or 26 just giving up and going home and letting their multi-hundreds-of-millions-of-dollar investments go away, poof.

They wouldn't risk losing their investment, so they'd just let the whole enterprise fold and...all lose their investments?

That's your testimony?
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Post by nksports » Tue Aug 08, 2017 7:12 pm

They'd sell for what they could get, but they would write it off. For some (like AEG or the Hunt family), the write off would mean holding off on that new Mazarati or having to settle for a Porsche, or only using $50 bills to light their cigars instead of $100s.
When the replacement ownership groups show up unable to pay big bucks for talent, the fan base will evaporate, which means TV money evaporates, which means sponsorship money goes away, which means the league goes away.
Less people will watch the MLS on TV and will turn to the Premier League for their fix
Last edited by nksports on Tue Aug 08, 2017 7:17 pm, edited 1 time in total.

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Post by Sam Hill » Thu Aug 10, 2017 2:32 am

So none of the current owners would risk losing their investment, even though the chances of most of them losing their investment would be small because they're not all going to get relegated, but they would totally sell to someone who WOULD be okay with losing their investment by being part of such a league?

"It's a write-off for them."
"How is it a write-off?"
"They just write it off."
"Write it off what?"
"Jerry, all these big companies, they write off everything."
"You don't even know what a write-off is."
"Do you?"
"No, I don't."
"But they do. And they're the ones writing it off."

Jesus, you have zero clue.
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Post by nksports » Fri Aug 11, 2017 12:10 am

So they can lose their investment and not play or they can lose their investment and still play (and keep sending more money down the hole).
What do you think they would do in that case?
BTW: I know what a write-off is.

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Post by suge night » Fri Aug 11, 2017 3:30 pm

A writedown is sometimes considered synonymous with a write-off.[2] The distinction is that while a write-off is generally completely removed from the balance sheet, a writedown leaves the asset with a lower value.

A write down is an accounting treatment that recognizes the reduced value of an impaired asset. The value of an asset may change due to fundamental changes in technology or markets.

Now when using it within the context of a sports team, the lines become a little wiggly in that they are over sold as intrinsic value, when in fact it is an impaired asset.

Are the Dallas Cowboys really a Billion dollar asset? as TV revenue start to dry up you can be assured the proposed value will come back into reality.

But in the context of this discussion this cover's it.
when one company purchases another and pays more than the net fair value of its assets and liabilities. The excess purchase price is recorded on the buying company's accounts as goodwill. If it becomes apparent that the purchased asset no longer has the value recorded in the goodwill account (i.e., if the asset cannot be resold at the same price), the value in the goodwill asset account is "written down".
Last edited by suge night on Fri Aug 11, 2017 3:52 pm, edited 2 times in total.

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Post by Pounder » Sat Aug 12, 2017 7:00 am

[quote=""Sam Hill""]So, wait, wait, wait.

A system that would, at most, impact two of the 24 or 26 or 28 MLS investor/operators in a given year (and potentially fewer going forward as lower level teams likely yo-yo), would result in the other 22 or 24 or 26 just giving up and going home and letting their multi-hundreds-of-millions-of-dollar investments go away, poof.

They wouldn't risk losing their investment, so they'd just let the whole enterprise fold and...all lose their investments?

That's your testimony?[/quote]

This I did not expect from you. This is interesting.

Mind you, on one hand, I have been accused of being a believer in the "soccer apocalypse" (American edition). When one feels that the Red Bull ownership would actually walk away from the soccer investment- but cannily find a buyer for Red Bull Arena... when there's a serious "Texas problem" with the league (any attendance numbers you see from Dallas or Houston, assume a small percentage is real)... Chicago, um, oops, Bridgeport... a slew of cities that have major league competition and their teams don't really compete with that... damn right there's a possibility of an exodus.

What I've done is probably write off half the TV market interest in the process, and that theoretically topples the rest.

BUT

Let's explore this a bit.

It's one thing that I still can't explain Seattle. Atlanta? Have you seen that $#!%? Portland, duh. Kansas City might fudge their numbers a bit, but not too much. Los Angeles does anchor this thing, draw more than a percentage of announced, but LAFC and an ownership so big that would fill the new stadium on the Sports Arena site themselves is going to be VERY interesting when opening next year, especially assessing location versus Carson. Philadelphia doesn't complete suck at the box office. Orlando is proven, even if there are a couple cracks in the armor. Salt Lake and Vancouver and Montreal and maybe Columbus are steady, if nothing else. OK, half the league is stable.

Is it drop-a-division and survive stable?

That's the test. The answer easily is no. HOWEVER... you're looking at good replacements in the following places based on drawing north of 10K a fair amount of the time or drawing enough in an even lower league.

Cincinnati
Detroit
Indianapolis (who was doing much better... giving benefit of the doubt)
Louisville
Sacramento
San Antonio
Tampa, theoretically

Do we want to talk Rio Grande Valley or perhaps Phoenix? I can also argue that the trend of "sports underserved" markets have been a boon to MLS OR USL and there are a potential handful of others to mine, too.

Theoretically, if you go pro/rel, you're also loosening up (if not completely eliminating) the salary cap. You practically have to do that; it's part of the point. So you're enticing a Cosmos 3.0 or otherwise a potentially strong New York presence (and very likely Chicago) to stand up. You're also focused on the top tier, so any potential carnage below is held below.

The other little trick: pro/rel doesn't have to be England, 3 teams up, 3 teams down (and all happening in an area as big as Oregon). Mexico moves one team a year based on a 3-year average and looks away from some shenanigans if a larger market team goes down.

Can you cobble something workable from that and INCREASE the desire to watch it on profitable media? Can you? (Shrug. Exhale. Sigh.)

(And now I return to reading The Miracle Of Castel Di Sangro)
Last edited by Pounder on Sat Aug 12, 2017 7:13 am, edited 2 times in total.
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Post by suge night » Sun Aug 13, 2017 9:07 pm

The Miracle of Castel di Sangro by Joe McGinniss. The team played in a 7,220 seat stadium.

Interesting read in that you probably answered your proposition
(Can you cobble something workable from that and INCREASE the desire to watch it on profitable media? Can you? )

Let's say the television cap is simply one million that could be enough in today's TV marketplace and the stadium cap is 6,000 with exceptions.

They can't become the other two major leagues but could find a steady growth marketplace.

This is going to take much longer than the MLS thought to build,their now is on going global gains being made by overseas soccer clubs into the USA market which explains why they are so inclined to bring the friendly games, they are using it as a scheme to test the market (Barcel) is looking at having its first ever female team play in the NWSL this is not by mistake.

And could be a way to start a expansion game, that would simply take U.S markets like LA Seattle and a few others into their history of the sport, as soccer is a global sport and they are tracking attendance numbers when they come in to play those friendly games that have nothing to do with who the host team is (exception Seattle)
Last edited by suge night on Mon Aug 14, 2017 2:11 pm, edited 5 times in total.

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