CPL new teams speculation

[Ozzie_the_parrot]

26 minutes ago, Mihairokov said:

... "We're making loads of money" is not how you get government support for things like stadiums, infrastructure upgrades, etc. ...

With something like the NFL in an American context or the NHL in a Canadian context the financial success of the league is precisely why politicians can justify the notion of a stadium or arena build to voters by depicting it as an economic driver for their community. Perhaps worth bearing in mind that the Starlight Stadium upgrade didn't do Stu Young's political career any good because it appears to have been one of the key issues that the electorate in Langford were not sold on where his record in office was concerned.

[RS]

On 12/27/2023 at 2:17 PM, Ozzie_the_parrot said:

Brian Noonan

On 12/29/2023 at 7:41 AM, Ozzie_the_parrot said:

Brian Noonan

4 hours ago, Ozzie_the_parrot said:

Brian Noonan

Is there a reason why you keep calling him Brian Noonan? 

I'm curious if you're genuinely confusing him with the retired hockey player or if it's some kind of subtle insult I'm not aware of.

[Aird25]

27 minutes ago, Ozzie_the_parrot said:

Perhaps worth bearing in mind that the Starlight Stadium upgrade didn't do Stu Young's political career any good because it appears to have been one of the key issues that the electorate in Langford were not sold on where his record in office was concerned.

That's a stretch 

[narduch]

4 hours ago, Ozzie_the_parrot said:

 MLS still doesn't have teams in Detroit, Phoenix, Tampa, Baltimore, San Antonio, Las Vegas, Pittsburgh, Sacramento, Cleveland and Indianapolis 

This is an interesting list of cities. 

I personally believe we would be better off in the long run if the 3 Canadian MLS teams joined CPL.

But now I'm wondering if there will eventually be pressure from the US side to kick those teams out, to make room for additional home markets. Surely they will eventually reach a maximum number of teams.

[BigBadBorto]

19 hours ago, An Observer said:

I suspect he is taking operating losses and adding infrastructure spend on facilities on top of it.  Halifax, Vancouver, Calgary, and Victoria had to make large outlays for their stadiums and I suspect that even Hamilton, Winnipeg, and Ottawa probably needed some initial investments in their facilities.  York in the first year had stands on the opposite side to the grandstand.  Perhaps you take $25m in operating losses and add in $100m for facilities whether build or upgrade, whether paid for by the owners or otherwise.  And then I suspect those would be liberal numbers anyway.

I hope you are right on this..  If operating losses were in the $25m range, that would be easier to come out of - it works out to $625k loss per year per team, which means you would need about 1,500 more tickets sold per game to break even (or some other form of additional revenue).  

[BigBadBorto]

4 hours ago, Ozzie_the_parrot said:

I went back and forth on this as well after I initially saw it but it's difficult to see any other possible meaning than a cumulative total loss across the whole "ecosystem" once you see the wider context provided by the Canadian Press story that Northern Tribune rehashed. The mentioning it publicly part definitely looks completely jarring when it forms part of a sales pitch for expansion.

The only explanation I can come up with is that it provides the ability to draw a parallel with where MLS was at when the meeting Brian Noonan would have been part of initially decided to pull the plug on the entire league rather than just the Mutiny and Fusion. From what I remember he claims to have even drafted the press release that was going to announce that. The obvious problem though is that unlike MLS, CanPL have MLS as a direct competitor in markets with over a third of Canada's overall population and don't have a vast reservoir of large untapped metropolitan markets still left to expand into beyond that in a Canadian context. Even with 30 teams on board by 2025, MLS still doesn't have teams in Detroit, Phoenix, Tampa, Baltimore, San Antonio, Las Vegas, Pittsburgh, Sacramento, Cleveland and Indianapolis that all have significantly larger populations than Edmonton, Ottawa and Calgary.

The largest fiscal black hole up to now has likely been York United so the three Mexican brothers look a lot more like their Ken Horowitz coming on board to try to prop up the failing initial economic model rather than the obvious necessary step to achieve fiscal stabilization, which would have been to fold or relocate that team. The biggest success story has been Halifax, but instead of finding another midsized market to try to emulate that with their version of the soccer specific stadium trend that fueled MLS expansion, they doubled down on competing directly with MLS with Vancouver FC. In order to successfully turn the corner they will first have to learn some lessons from what has gone wrong up to now. There aren't many signs of that happening.

Yeah - I can't figure out which part of the slide deck you put in the $125m losses when Noonan is presenting to prospective owners.. 

The Mexican brothers would have done due diligence, so they obviously see an upside in York.   Hopefully they can figure out the "secret sauce" for making it work in GTA.  If next season, we see avg tickets sales in the 2-3k per game, I would see that as very positive momentum, towards eventually getting to 5k ( I believe I've heard somewhere that teams need 5k per game minimum to break even).  

[Mihairokov]

1 hour ago, BigBadBorto said:

The Mexican brothers would have done due diligence, so they obviously see an upside in York.   Hopefully they can figure out the "secret sauce" for making it work in GTA.  If next season, we see avg tickets sales in the 2-3k per game, I would see that as very positive momentum, towards eventually getting to 5k ( I believe I've heard somewhere that teams need 5k per game minimum to break even).  

I think the "secret sauce" for making a team work in Toronto is not having them play at a university campus separated from literally anything of any interest. I sincerely doubt they would ever reach 5K average at that location. The key to having a strong turnout in this league is either being located in a neighbourhood (Halifax, Ottawa) or having a strong enough local connection (Forge, Cavalry) to have the crowds come out. York has neither. 

Put that team in any of the potential urban stadium venues in the city proper and they pack it out. Regardless of how close or when TFC are playing. Toronto is a massive city and can support 3K average crowds every other week easily. The problem is the location.

1 hour ago, narduch said:

I personally believe we would be better off in the long run if the 3 Canadian MLS teams joined CPL.

Who is the "we" in this scenario? Because it definitely isn't the MLS teams themselves.

20 hours ago, An Observer said:

I suspect he is taking operating losses and adding infrastructure spend on facilities on top of it.  Halifax, Vancouver, Calgary, and Victoria had to make large outlays for their stadiums and I suspect that even Hamilton, Winnipeg, and Ottawa probably needed some initial investments in their facilities.  York in the first year had stands on the opposite side to the grandstand.  Perhaps you take $25m in operating losses and add in $100m for facilities whether build or upgrade, whether paid for by the owners or otherwise.  And then I suspect those would be liberal numbers anyway.

I think you're correct. It's entirely possible that this $125M number is total spend by the league and its teams (IE total expenditures) as opposed to profit/loss after tax (or EBITDA). It's also possible that actual losses are only a fraction of that total spend number, offset by normal revenues for the league. If the total loss is only $25-35M after five years then I assume that is expected and forecasted for. If.

Edited December 30, 2023 by Mihairokov

[Kadenge]

3 hours ago, BigBadBorto said:

I hope you are right on this..  If operating losses were in the $25m range, that would be easier to come out of - it works out to $625k loss per year per team, which means you would need about 1,500 more tickets sold per game to break even (or some other form of additional revenue).  

Player transfer fees could close that gap quickly. Another reason to invest in younger players with potential at an early stage.

 

[An Observer]

6 hours ago, Watchmen said:

I would not anticipate the losses to include any stadiums/upgrades paid for by the cities.  Those aren't losses on the CPL's books.

I would agree but I am just saying how he may have got to that number.  I am not saying whether its accurate or not.

[Colonel Green]

5 hours ago, narduch said:

I personally believe we would be better off in the long run if the 3 Canadian MLS teams joined CPL.

All of the Canadian MLS teams would be effectively destroyed by joining the CPL (and in a scenario where they were somehow bought out of MLS, it's not even really clear that any of the owners would want to continue the teams in a much smaller league).

[Kent]

10 hours ago, Ozzie_the_parrot said:

The biggest success story has been Halifax, but instead of finding another midsized market to try to emulate that with their version of the soccer specific stadium trend that fueled MLS expansion, they doubled down on competing directly with MLS with Vancouver FC. In order to successfully turn the corner they will first have to learn some lessons from what has gone wrong up to now. There aren't many signs of that happening.

I think something a lot of us forget is that it's not like the CPL gets to say "Up next, Quebec City. Make it happen universe!" and then the next potential ownership group shows up with interest in starting a team in Quebec City. As you pointed out before, the Pacific ownership group always wanted a team in the area that Vancouver FC is now in. When they were ready to go, the league let them do it, despite there apparently not being any groups ready to go in Quebec City, or KW, or London, or other midsized cities. This doesn't necessarily mean the league is ignoring those cities, just that they aren't ready for a team yet (whether that is a lack of venue or a lack of ownership group). We don't have any evidence that the league is saying no to midsize cities before any momentum gets going, and it would be questionable at best if they said no to ownership groups because the city they want a team in isn't the next one on CPL's dream list. As you also pointed out, they did seem interested in Saskatoon and Windsor even if they weren't ultimately able to make them work (yet at least).

[Ozzie_the_parrot]

15 hours ago, Kent said:

I think something a lot of us forget is that it's not like the CPL gets to say "Up next, Quebec City...

What you may be overlooking is that the "stadium" in Halifax is basically two sets of temporary bleachers and a few converted shipment containers in a public park. Compare and contrast with the reported need for expansion teams to have a permanent stadium solution like the Prairieland project in Saskatoon sorted out before entry with a Usports stadium like the one at Laval University only allowed as a temporary home until that gets built.

They don't have to do things the way they are currently doing them in other words and they've had their biggest success story when they followed a different approach to the one that appears to now be mandatory. My guess would be that Bob Young and Scott Mitchell were anticipating that there was going to be a CFL stadium in Halifax by now and never expected things to unfold the way they did.

Edited December 31, 2023 by Ozzie_the_parrot

[longlugan]

1 hour ago, Ozzie_the_parrot said:

What you may be overlooking is that the "stadium" in Halifax is basically two sets of temporary bleachers and a few converted shipment containers in a public park. Compare and contrast with the reported need for expansion teams to have a permanent stadium solution like the Prairieland project in Saskatoon sorted out before entry with a Usports stadium only allowed as a temporary home until that gets built.

They don't have to do things the way they are currently doing them in other words and they've had their biggest success story when they followed a different approach to the one that appears to now be mandatory. My guess would be that Bob Young and Scott Mitchell were anticipating that there was going to be a CFL stadium in Halifax by now and never expected things to unfold the way they did.

You seem to guess a lot...usually wrong.

[Ozzie_the_parrot]

19 hours ago, Mihairokov said:

...I think you're correct. It's entirely possible that this $125M number is total spend by the league and its teams (IE total expenditures) as opposed to profit/loss after tax (or EBITDA)...

That's not what the Canadian Press story implies. They could always have asked to have a correction issued if they thought Neil Davidson had misinterpreted the direct quote when he drafted the second bolded bit below:

https://www.theglobeandmail.com/sports/soccer/article-commissioner-mark-noonan-says-cpl-headed-in-the-right-direction-with/

...Noonan says the CPL owners are “probably $125-million in the hole” from developing “an ecosystem for soccer in Canada that didn’t exist.”

That includes expanding the lower-tier League1 framework from 40 teams in 2019 to 162 and creating a women’s interprovincial championship.

While Noonan expects his league to continue to have operating losses, the hope is franchise value will go up as it expands “and we get better at what we do in terms of selling sponsorship and selling tickets and media and all those sort of things that make the business go.” ...

Given information that there has probably been a $125 million cumulative loss on the CanPL/CSB project is not something a league exec would generally be expected to want to have reported like this by high profile national media outlets and is something a very experienced journalist like Neil Davidson would likely have been careful to fact check, this whole turn of events is frankly bizarre.

Edited December 31, 2023 by Ozzie_the_parrot

[Aird25]

Is it really that bizarre? CPL owners have been dragged through the dirt and accused of taking money away from the national teams. I see this as a way of demonstrating how invested they are in the sport, not an outcry for aid or anything else 

Edited December 31, 2023 by Aird25

[BearcatSA]

On 12/29/2023 at 10:02 PM, Aird25 said:

Tax write-offs. Like most sports teams

There's a threshold with those.

[Aird25]

39 minutes ago, BearcatSA said:

There's a threshold with those.

Sure, but $125 mill to date is like $3 mill a year per club, which is still a quarter of what Montreal loses annually, no?

[Mihairokov]

We're reading too much into this $125M number. Without clarification we don't know if it's direct expenditure, affiliated expenditure, or total losses. I highly doubt it's the latter. "In the hole" can simply mean money spent or committed or forecasted.

Edited December 31, 2023 by Mihairokov

[BearcatSA]

32 minutes ago, Aird25 said:

Sure, but $125 mill to date is like $3 mill a year per club, which is still a quarter of what Montreal loses annually, no?

Two ownership groups, particularly the York one, have left the scene.  

[Kent]

17 hours ago, Ozzie_the_parrot said:

What you may be overlooking is that the "stadium" in Halifax is basically two sets of temporary bleachers and a few converted shipment containers in a public park. Compare and contrast with the reported need for expansion teams to have a permanent stadium solution like the Prairieland project in Saskatoon sorted out before entry with a Usports stadium like the one at Laval University only allowed as a temporary home until that gets built.

They don't have to do things the way they are currently doing them in other words and they've had their biggest success story when they followed a different approach to the one that appears to now be mandatory. My guess would be that Bob Young and Scott Mitchell were anticipating that there was going to be a CFL stadium in Halifax by now and never expected things to unfold the way they did.

They still needed to go through the city to have access to that land for the temporary stadium before Halifax got their team, if I'm not mistaken. It's not crazy to have teams have a plan for where they will play before they get started.

[Ozzie_the_parrot]

The point I have been making is that insisting on a permanent stadium solution being sorted out up front makes expansion more difficult than it needs to be and appears somewhat odd when their biggest success story so far has been in the market where they did not follow that strategy.

Common sense would dictate that it's likely to be a lot easier to persuade a munipality to donate some land for a temporary popup for x number of years as a trial run for both parties than it is to ask city and provincial governments for $25 million up front for something like the Prairieland stadium.

There's an argument to be made that a new entry in the province of Quebec, to name the most obvious example, would inherently add so much to the league's overall footprint and sponsorphip possibilities that there's no compelling reason why the existing investors should expect a large expansion fee in that context if the league really does have an independent club model.

Somebody being willing to take the financial risk associated with entering a league that is "probably $125 million in the hole" at this point with a temporary pop-up approach should arguably be enough in a Quebec context. It's clearly not about independent soccer clubs at this point though, it's about trying to emulate MLS's at one point near exponential franchise value growth with the 2026 co-hosting providing the reason to still believe it can happen for them as well.

Edited January 1 by Ozzie_the_parrot

[Unnamed Trialist]

On 12/30/2023 at 7:34 PM, Aird25 said:

That's a stretch 

Quite the understatement.

Mayor Stewart Young in Langford lost for three key reasons, none of them related to the stadium or the club. They were: 

1) turnout was extremely low, under 25%, meaning he (or the challengers) did not get out even the few thousand that are in favour of his mayoralty, especially those making money as developers, happy to buy into the community with their families or just flipping homes in Langford.

2) he failed to file legal development plans (the strategic plan) for the city, so he was exposed as running an irregular or improvised administration. I know people--including someone I went to kindergarten with!-- who bought in Langford and now have left for up-Island because zoning was haphazard and planning didn't care about core quality issues.

3) those who were motivated to vote were in opposition to him, including those concerned by point 2. 

The entire council of his "party" were also voted out, the only one independent incumbent survived, the party voted in are younger, unassuming for the most part, some were born and raised in Langford. There is no reason why they won't come around to support the stadium because there are revenue possibilities there, for example the two Concacaf Champions matches this year.

Edited January 1 by Unnamed Trialist

[Ozzie_the_parrot]

19 hours ago, Mihairokov said:

We're reading too much into this $125M number. Without clarification we don't know if it's direct expenditure, affiliated expenditure, or total losses. I highly doubt it's the latter. "In the hole" can simply mean money spent or committed or forecasted.

You don't want it to be total losses but why would you phrase direct or affiliated expenditure as being "probably $125M in the hole" rather than "have probably spent $125M"? In Neil Davidson's Canadian Press article, the league's commissioner is quoted as going on to say:

https://www.townandcountrytoday.com/national-sports/commissioner-says-cpl-headed-in-the-right-direction-with-more-teams-coming-8030137

..."But we're still a startup … in our sixth year with two years of pandemic. You have to invest and you have to feed a startup to get it to the point where it's healthy."...

That reads a lot more like an explanation for accumulated losses than expenditure levels to me.

Coming at this from another angle an average loss of $1 million per club per season wouldn't appear hugely out of whack to me from what we have been seeing from the Winnipeg Football Club accounts. That gets us to about $40 million without even really trying. They were already operating in 2018 prior to launch with no income coming in yet. Would $20 million to get seven teams and a league office up and running be outrageous? If not, we are at $60 million now.

Do we know how much financial support they would have received from the federal government during COVID? Would an extra $20 million of losses at that point one way or another be off base? If not, now we are at $80 million. There has definitely been some level of infrastructure spend with Halifax, York United, FCE, the Cavalry and perhaps most significantly on the indoor facility with Pacific. Let's say another net $20 million financial hit from that?  

If that takes us to $100 million then we still need to examine whether Onesoccer and related broadcasting deals have actually been revenue positive for them or whether there was a renegotiation during COVID to stop Mediapro from walking away that moved some of the liabilities over to whatever Timeless Inc is. If so, being a collective and cumulative $125 million in the hole maybe isn't so mindboggling after all.

Even the CSB deal may not have been particularly lucrative for them yet when all the years are taken together. The two pandemic years have to be factored in and delays with the launch may have meant they were on the hook for a $3.5 million payment in 2018 before they had significant league related revenue streams. The CMNT and CWNT players not being on board with what they are doing also won't have helped them to maximize all the possible sponsorship opportunities.

 

[SoccMan]

4 hours ago, Ozzie_the_parrot said:

The point I have been making is that insisting on a permanent stadium solution being sorted out up front makes expansion more difficult than it needs to be and appears somewhat odd when their biggest success story so far has been in the market where they did not follow that strategy.

Common sense would dictate that it's likely to be a lot easier to persuade a munipality to donate some land for a temporary popup for x number of years as a trial run for both parties than it is to ask city and provincial governments for $25 million up front for something like the Prairieland stadium.

There's an argument to be made that a new entry in the province of Quebec, to name the most obvious example, would inherently add so much to the league's overall footprint and sponsorphip possibilities that there's no compelling reason why the existing investors should expect a large expansion fee in that context if the league really does have an independent club model.

Somebody being willing to take the financial risk associated with entering a league that is "probably $125 million in the hole" at this point with a temporary pop-up approach should arguably be enough in a Quebec context. It's clearly not about independent soccer clubs at this point though, it's still about trying to emulate MLS's at one point near exponential franchise value growth with the 2026 co-hosting providing the reason to still believe it can happen for them as well.

There is a very nice pop up in Phoenix I think who play in the USL Championship, if anyone has time go have a look at that pop up stadium definitely nothing wrong with it. I’ve seen highlights of games there and the atmosphere is second to none. A nice little pop up with stands right around the field where even when not fully full still has that packed stadium feel to it . Put teams in pop ups like that and you will have people breaking down the doors to get in . I’ve been to one game at Tim Hortons and yes I know why they play there but staring at 80 percent or more empty seats just doesn’t do it for me even when there are 5000 or so fans there .

[narduch]

1 hour ago, Unnamed Trialist said:

Quite the understatement.

Mayor Stewart Young in Langford lost for three key reasons, none of them related to the stadium or the club. They were: 

1) turnout was extremely low, under 25%, meaning he (or the challengers) did not get out even the few thousand that are in favour of his mayoralty, especially those making money as developers, happy to buy into the community with their families or just flipping homes in Langford.

2) he failed to file legal development plans (the strategic plan) for the city, so he was exposed as running an irregular or improvised administration. I know people--including someone I went to kindergarten with!-- who bought in Langford and now have left for up-Island because zoning was haphazard and planning didn't care about core quality issues.

3) those who were motivated to vote were in opposition to him, including those concerned by point 2. 

The entire council of his "party" were also voted out, the only one independent incumbent survived, the party voted in are younger, unassuming for the most part, some were born and raised in Langford. There is no reason why they won't come around to support the stadium because there are revenue possibilities there, for example the two Concacaf Champions matches this year.

A bit of a missed opportunity that the stadium wasn't expanded for that Sinclair send off game.