Thursday, February 19, 2009

Weathering the Storm: Crew Financial Situation a Mixed Bag

As the Dow Jones Industrial average hit a 6-year low, and Chrysler and GM asked for billions more in bailout money this week, it became clear that this is the worst economic downturn since the Great Depression. So, one question nags El Luchador at night. No, not what does all this means for our grandkids, something much more important: What affect will all of this have on the Columbus Crew?

Of course the MLS finances are as tightly held as Col. Sanders’ secret spices, but there are a number of factors we can look at that give us some indication of where things stand. Overall there is good news and bad news:

Good News: As the reigning MLS champions, the Crew should see a bump in attendance this year, and concessions and gate receipts are the No. 1 revenue source for MLS franchises. In 2008, the Houston Dynamo experienced a nearly 7 percent increase in attendance after winning their second consecutive MLS Cup in 2007. In fact, the Columbus Dispatch reported that Crew GM Mark "Fuck-Sigi-Schmid" McCullers said that as of Feb. 19, season-ticket renewals are ahead of last year's pace, and new business is about double where it was in 2008. "Overall, it's tracking about 15 to 20 ahead" of last year, he said. "New sales are strong," McCullers said, "and in this economy, we're very happy with that."

Bad News: The Crew’s attendance in 2007 actually dropped nearly 4 percent in 2008 to 14,622 and was 10th out of the 14 teams in the league.

Good News: The Crew in 2008 had the cheapest payroll in American soccer, and with the Hunt family’s famously tight-fisted ways, that will likely continue, giving the Crew an advantage in staving off the recession by keeping overall costs under control. With an average salary of $79,949, the Columbus Crew ranked dead last in the amount it paid its players in 2008. The second cheapest team, Chivas USA ($74,723.37), paid its players nearly 4 percent more on average than Columbus. The team with the most generous average payroll, the Galaxy, paid its players an average of $278,181, nearly four times as much as the Crew. Of course, this figure is somewhat skewed by the ridiculous salary paid to David Beckham.

Bad News: The Crew in 2008 had the cheapest payroll in American soccer. That’s right comrades, this is a double-edged sword. Sigi Schmid had an uncanny ability to find the diamond’s in the rough and get results from players getting poverty wages. (Adam Moffat was paid $17,700 last year). It remains to be seen whether Robert Warzycha has the same ability. In the long term, you cannot expect to stay on top of the league paying your players less than everyone else you hope to compete with on the field.

Good News: The group of robber barons from out of state who were attempting a hostile takeover of the team has been fended off by the Hunts, at least for now. The Columbus Dispatch reported on Feb. 6 that John Wagner, president of Crew investor-operator Hunt Sports Group, announced that they had broken off discussions with the group headed by California businessman Mark Noorzai. This is extremely good news on two fronts: 1) It is a strong indicator that the Crew’s finances must be in reasonable shape. 2) It means the team will be staying in C-Bus. Noorzai and his minions had indicated repeatedly they had no intention of moving the team. Of course, this was a lie. And owner-operator Clark Hunt recently told the Dispatch’s Michael Arace: "I'm confident the Columbus Crew will be playing in Columbus, Ohio, for at least the next 50 years. Beyond that, I'm not making any predictions."

Bad News: A Frobes Magazine study of overall financial strength last fall ranked the Crew 12th out of the 14 MLS franchises, with an estimated total value of $23 million, annual revenue of $6 million and a net operating income deficit of -$4.5 million. That last figure makes Columbus the team with the worst annual loss in the MLS. The magazine wrote: “The league’s second-smallest market with a dearth of sponsors and non-soccer events held at their stadium, nowadays the Crew set the standard in just one category: operating loss.”

Good News: The addition of the stage in the north end has shown initial success in allowing the Hunts to schedule concerts and other non-soccer events to generate revenue.

The bottom line is this, my brothers and sisters of Crew Soccer Nation: The Black and Gold needs our support in these trying economic times more than ever. Buy season tickets. Come to every home game. Buy lots beer at the stadium. Support the Polish Rifle as he takes us into this new era. Columbus till I die.

1 comment:

Stan said...

Worth noting is that estimate is also before Glidden was signed. I imagine the Crew's balance sheet will be much improved this year.