Analysis / MLS / Union

Philadelphia Union and life as a small market team

Photo: Paul Rudderow

Philadelphia Union is effectively a small market team. Accept it. Get used to it.

That may be hard to accept for some, particularly during a summer transfer window that opens today and may drive this notion home by producing no big name signings for the Union. Philadelphians don’t view their city or region as small, probably because neither is. Philadelphia is the nation’s sixth largest metropolitan area and fourth biggest media market. It is home to teams in the other four major professional team sports and firmly ensconced within the American psyche as one of the nation’s most important historic cities.

None of that matters much in Major League Soccer.

In MLS, nearly every club is functionally a small market club. Each team has a base $2.95 million salary budget, a figure typically exceeded by a single player’s salary on top European clubs. While MLS offers various means of finding additional funds for salaries, such as allocation money and the designated player rule, it doesn’t change the fact that MLS clubs operate on tight budgets. The most successfully managed clubs (Salt Lake, Kansas City) play Moneyball, and they do it well.

Any question of that should be put to rest by looking at MLS team payrolls (see below for chart) and how these franchises actually operate. There are several clear tiers into which you can group the clubs, and once you do, it becomes very clear just what level of club the Union really are.

The big market teams: Los Angeles and New York

In MLS, only the Los Angeles Galaxy and New York Red Bulls function as large market teams. They’re the only two MLS clubs to approach the $10 million payroll figure and attract megastars like David Beckham and Thierry Henry to play for them. Their major cities are worldwide glamor cities, which helps draw prime talent. Major corporations bankroll them, and they have two of the best soccer stadiums in North America.

New York City FC will likely join them as big market clubs upon entering the league, but until 2015, it’s just these two.

Second tier: Seattle, Toronto, Montreal and Vancouver

Four clubs have team payrolls between $4.5 million and $6 million: Toronto, Seattle, Montreal and Vancouver. Accordingly, they comprise the second tier, both in terms of financial capability and ambition.

The three Canadian clubs are uniquely situated as international cities, less tied to the other big traditional American sports than U.S. markets are. Only Toronto has clubs in the NBA or Major League Baseball, leaving the winter/spring sport of professional hockey as the only true competitor in the major league marketplace. (Canadian football has its fans, but not on a level proportionate to American football.) It puts the MLS clubs more front and center. Their ownership teams raise the clubs’ profile, with Toronto owned by the same company that owns the NHL’s Maple Leafs and NBA’s Raptors and Vancouver’s ownership group including basketball superstar Steve Nash.

All three cities also have unique characteristics that bolster their teams’ standing in the community.

  • Toronto has an extraordinarily diverse population and is the nation’s biggest city, so there are more soccer fans there.
  • Montreal’s French tilt helps predispose it more toward soccer.
  • The Cascadia rivalry makes the Pacific Northwest a hotbed for professional soccer.

Seattle is its own animal. Seattle’s liberal nature, the ill-fated but timely departure of the NBA’s Supersonics, the history of pro soccer in the region, a good ownership group, a good product on the field, and obviously the fans themselves have combined to make the place Soccer City, USA. The Sounders have punched so far above their weight that it has changed the face of American soccer. They didn’t start with the same kind of deep corporate pockets that Los Angeles and New York have, but the Obafemi Martins signing shows they’ve advanced a great deal.

Tier 3: The small market clubs

Then there’s just about everybody else. Philadelphia, Dallas, Colorado, Salt Lake, Kansas City, Chicago, Houston, Columbus and Portland all operate in this space, with San Jose to join them after their stadium opens next season. They are functionally small market teams even if their metropolitan markets are not actually small.

These clubs are defined first by their control of a soccer-specific stadium. This enables them to control revenues and operations for all games and find alternate revenue streams through other events at their stadiums, such as concerts and college sporting events. Basically, it puts them in better financial position to increase marketing to raise the team’s profile and attract more advertising revenue and fans to games.

Within this tier, there is a wide disparity in how effectively teams operate.

The best small market clubs: Salt Lake and Kansas City

Salt Lake and Kansas City are the gold standard, although it remains to be seen whether Salt Lake will operate as well in the long term now that long-time owner Dave Checketts has divested himself of his controlling stake in the club. Kansas City’s ownership group has made the team extraordinarily fan-friendly with clever marketing and development of perhaps the best soccer stadium in North America. Each club has employed excellent player personnel management to get the most out of their salary budget, largely without the need for designated players (though Kansas City has dipped into that well occasionally).

The next small market clubs: Houston and Portland

Houston and Portland are a small step behind these clubs. AEG’s ownership of both Houston and Los Angeles has probably limited the Dynamo’s ambition, but the team’s new stadium can change that and lift the club to a new level. While they have struggled with injuries this season, Houston has been as talented and well-managed as any team in the league for years and could rise to a second or first tier club in terms of clout, ambition and financial capability if a good and more independent ownership team takes control. A sale of the team would likely include an excellent stadium in one of the nation’s largest cities and the bonus of a big, soccer-friendly Latino demographic.

As for Portland, they’re a popular, new club that hadn’t tasted success until this season, but now a winning product will likely further ingrain the team into the city’s consciousness. With a devoted fan base, the Cascadia rivalry, and little competition from other major league sports – only the NBA’s Trail Blazers – the Timbers are positioned for sustainability.

Small market, stadium problem: Columbus

Columbus had the first soccer-specific stadium in MLS, and it shows. Crew Stadium is bare bones. The Hunt family owns the Crew and probably doesn’t devote enough attention to the club, one of just four in MLS belonging to owners running more than one team. The market is one of the smaller ones in MLS, but the team has shown an ability to foster homegrown talent and could function well for a long time if the stadium and ownership situations can improve.

Small market suburban clubs in crowded pro sports marketplaces: Dallas, Colorado, Chicago

Chicago, Dallas and Colorado all have stadiums outside the major cities in their crowded professional sports markets. These teams fight for fan attention with local pro baseball, football, basketball and hockey teams.

Dallas plays in Frisco, a city the size of Allentown located about 30 miles north of Dallas. By most accounts, the distance has hurt the club’s visibility, but they haven’t exactly helped themselves with poor marketing, distracted ownership (the Hunts also own Columbus and the NFL’s Kansas City Chiefs), and scheduling of daytime games during the sweltering summer heat when they could opt for more night games.

Chicago plays in Bridgeview, a downtrodden suburb bordering Chicago’s south side. There’s not much around Toyota Park that you’d want to check out, and there’s no easy subway or train access. Ownership hasn’t punched its weight either, but the team seems on the rise now that hometown guy Mike Magee has seemingly transformed the club overnight.

Then there’s Colorado, whose stadium sits amid a massive youth soccer complex but whose billionaire owner, Stan Kroenke, has shown that his ambition on the field only goes as far as the profits off the field. (He and his family also own Arsenal, the St. Louis Rams, the Denver Nuggets and the Colorado Avalanche in other leagues.)

Tier 4: Teams without stadiums

New England and D.C. United comprise their own tier, anachronisms of MLS v. 1.0 that still play in American football stadiums ill-suited to soccer. They were giants of the early MLS years, but the times have left both behind.

RFK Stadium is one of the worst places to watch an MLS game. That not only hurts D.C. United’s attendance, but it hits the bottom line due to the team’s inability to better control its revenues. If United can ever get a soccer-specific stadium built near public transit, they can be one of the biggest clubs in MLS. Washington is an international city, and organized soccer is hugely popular in suburban Virginia and Maryland.

New England will never amount to much as long as the Kraft family views the team as just a way to fill Foxborough Stadium during the New England Patriots’ off-season. Like United, they spent the last several years failing to modernize after early success on the field made them complacent off the field. Their lip service about finding a stadium in Boston doesn’t inspire confidence that it will happen anytime soon.

The worst: Chivas USA

Chivas USA doesn’t have their own stadium. Ownership barely markets the club and views it largely as a means to help Mexican sister club Chivas del Guadalajara. It has been completely mismanaged, and its exclusionary practices offend many Americans. This team needs to be moved to Orlando next year and rebranded under new ownership.

So where does Philadelphia fit?

The Union fit in pretty neatly with Chicago, Colorado and Dallas, save for the caveat that Philadelphia is a newer team and therefore has less historical context.

Like these other clubs, the Union play in one of the nation’s largest metropolitan areas, competing for fans’ attention with franchises in all four other major team sports. They get short shrift in local media coverage due to local newspapers’ cutbacks and tilts toward the other sports, which slows popularity growth. And they play outside the city limits of the metropolitan center, which limits public transit access to games and likely cuts attendance as a result.

Similarly, team ownership has appeared as invisible as in Dallas and Colorado and shown few signs that it will put in the level of financial investment demonstrated by ambitious clubs such as Kansas City, Portland, Seattle, Los Angeles and New York. Yes, PPL Park is a great stadium, but it was paid for largely with public funding.

The location of a team in the Philadelphia market was never driven by a singularly ambitious ownership group (or, more accurately, investment group, since MLS owns all the clubs and team “owners” are investors in the larger corporation of MLS). Rather, it was more a matter of MLS recognizing that it needed a club in the nation’s fourth largest media market and the Sons of Ben’s unprecedented fan drive to create the team. The Union’s major investors didn’t come looking for MLS. MLS went looking for them.

The Union’s investment group consists primarily of real estate magnate Jay Sugarman of iStar and three principals of the Buccini/Pollin Group, a local firm that made its name redeveloping the waterfront in Wilmington, Del. Sugarman’s firm took a major liquidity hit in the real estate crash of the last decade, which unfortunately for the Union coincided with the launch of the MLS franchise. Union chief executive Nick Sakiewicz, one of several minority investors in the club, has said the market downturn didn’t hurt the Union’s finances. It’s up to you whether you believe him.

The bottom line is that it’s difficult to measure exactly what the Union have spent because the information is not public. You can measure the team’s payroll, but you can’t as easily measure the money put into youth development without access to the team’s books. YSC has joined the club’s investment team, which likely creates some economies of scale that will bolster the foundational approach of establishing youth development as the franchise’s future. In and of itself, it’s a very good way to build a business: Slow, gradual, continuous growth with an eye toward long-term sustainability.

However, the club has shown in other ways that it lacks the liquidity and ambition to compete in the marketplace the same way that clubs like Seattle and Los Angeles do. Philadelphia has only acquired one designated player by choice (Freddy Adu). The team’s current DP, Kleberson, arrived primarily as a way to get rid of Adu and is likely to depart the club once his loan expires at season’s end. Team management has made clear they are unlikely to invest heavily in designated players. Considering how clearly the presence of just one DP limited the Union’s options on player personnel – they could acquire neither a true left back nor a veteran goalkeeper during the off-season partially because of Adu’s salary – it’s hard to argue with the realities of the situation.

Other evidence bolsters the perception that the Union lack financial flexibility. The Union paid money owed to the city of Chester well after it was due. Despite early stated plans to build a training facility, the Union have made no apparent, tangible progress on this, though the availability of the YSC complex makes that a less pressing need. An expansion to PPL Park remains on the table, but it is not imminent. And the Union’s decision to turn goalkeepers coach Rob Vartughian into a part-time technical director instead of hiring a full-time general manager like RSL’s Garth Lagerway looks like the hallmark of a team that can’t afford another executive and opted instead to expand an employee’s responsibilities on an existing contract.

As for Sakiewicz, it remains unclear exactly what his role is with the club. In general, it’s clear he is the team’s face man at the top when it comes to business relationships. Whatever his critics may say, he clearly cares about the team. The question those critics have, however, is whether he’s effective and whether his presence handicaps or improves the club on the field. It was Sakiewicz’s decision and mistake to give Peter Nowak total control of the Union, but it is to a degree an understandable mistake considering Nowak’s prior accomplishments managing D.C. United and the U.S. Olympic team.  Few could have anticipated Nowak’s unprecedented demolition of the Union roster or understood the potentially questionable business relationships he might have off the field. The installation of John Hackworth as permanent manager may have been financially expedient, but it was also merited by Hackworth’s performance.

Regardless, what you have in the end is a club whose fans’ ambitions outpace the team’s financial realities. Philadelphia has long been a place where fans can be overly critical of their clubs, and that tendency has been exacerbated by Nowak’s destructive impact and the Union’s decision to limit spending on designated players. The Union’s on-field progress in the last year is impressive. But when you’ve had your hopes for your teams crushed as badly and often as Philadelphia fans have over the last 35 years and then you add in the Nowak effect, many fans may tend toward the hypercritical as they expect the worst once again. It’s just a matter of maintaining perspective. Ups and downs are inevitable with a young, promising and improving club that doesn’t have the money to get really good really fast.

MLS Team Salaries

Club
Players' Total Base Salaries
Players' Total Guaranteed Compensation
New York$10,008,068.42 $10,860,960.17
Los Angeles$9,026,930$9,685,263.33
Seattle$5,363,796$5,958,812.66
Montreal$3,873,058$5,288,699.58
Vancouver$4,308,121$4,809,277.98
Toronto$3,897,245.96 $4,710,844.29
Chicago$3,700,545$4,333,357.33
Dallas$3,632,343.50 $4,244,860.17
D.C.$3,464,413$3,906,064.57
Philadelphia$3,499,262$3,832,574.50
Kansas City$3,436,085$3,783,881.54
Houston$3,288,333.50 $3,648,640.17
Salt Lake$3,648,640.17$3,646,402.40
Columbus$3,169,668$3,617,001.34
Portland$3,212,976$3,564,501.31
New England$2,991,132.63 $3,476,086
San Jose$3,177,362.50$3,371,907.78
Colorado$2,942,401.20 $3,371,325.48
Chivas USA$2,452,032.50 $2,607,146.13

57 Comments

  1. Southside Johnny says:

    Thanks for a very informative article. It’s hard to be both passionate and realistic as a Philly fan. I guess it boils down to it being fair to expect good decisions within pretty llimitted parameters from management. As a lifetime Phillies fan, it has been the same kind of ride until fairly recently, but I always loved the more blue-collar underdog kind of status. It makes hating and beating the Yankees, Dodgers, Red Bulls and Galaxy sweeter.

  2. Fantastic article. The best thing for us hypercritical fans is certainly to keep perspective. It’s always about the money.

    This doesn’t mean I won’t go on drunken twitter tirades after poor performances…but I’ll try my best to keep calm.

  3. I don’t mind at all that we are a small market team … I mind that we are a dumb team.

    In fact small market means nothing … we have a higher wage budget than KC, HOU and RSL. The difference is we have no clever international signings playing great, we haven’t groomed Americans to go on to clubs in England, we haven’t perfectly complimented talented youngsters with effective and proven veterans.

    What we have are players playing out of position, a coach with no tactical awareness, players who shouldn’t be playing over players who shouldn’t be sitting.

    Etc, etc, etc.

    • Great One says:

      I totally agree. The money issue… is an issue. But a lot more of my problems have come from decisions made with the players we already have on the team.

      • Agree. And we let the wrong players go, or how is it possible that so many flourish elsewhere (look at this week’s POTM or POTW). During the recent SOB Summit meeting with the FO it became very clear that they operate on a shoe string budget. Their main wish was to get more revenue thru advertising and to get us to bring more friends to convert them into regular supporters of the team…. Put a bunch of wins together (more than 2 in a row) and people and advertising will follow!

  4. Scottymac says:

    Good stuff Dan. I raised a few of these points in fan posts on tBG, but you synthesized them better. Probably that journalistic training vs my hypercritical, drunken negadelphia POV is the difference. :)

    Which NFL team does Toronto have?

  5. Which of the “sub-tiers” of Tier 3 would you put San Jose in? Or do we need to wait until their new stadium opens to determine?

    • Dan Walsh says:

      Not sure. Probably most similar to Columbus, but they’re different enough that they’d probably get their own little box. We’ll have a better idea after they open the stadium. Right now, they’re operating with a different reality than they will be later.

  6. Thanks and off to the bar!

  7. Great One says:

    Great article Dan, well done.
    .
    I don’t think the owners understand that we have a pretty solid attendance right now, and what could really push us over the top is a real run at the playoffs. And I don’t mean standing status quo and hoping Hackworth doesn’t muddle it up too much. Make some changes, address some issues, make a run. That will make attendance grow even more. Now is that time to do it. We sit in a good position and the rest of the East in mediocre.
    .
    Also, almost every fan has some combination of official Union shirt/jersey/hat/scarf/etc. I don’t understand how they aren’t making money.

  8. Nicely done. I would be interested in seeing numbers for things like marketing/merchandise sales, dollars spent per fan, etc. for the Union fans that go to the games. I know that attendance is down this year, at least a bit, but it seems to me from looking around the crowd that the merchandise sales have been fairly successful. I see more fans per hundred wearing Union apparel than at other sporting events, unscientifically of course. That should help revenue. (I also know that MLS keeps that stuff close to the vest, so we are unlikely to see the real figures.) Being in the first cycle of the shirt rollouts, I don’t see as many of the pre-Bimbo jerseys as I would have expected to see if the fans were going to simply buy one and hold it forever. It would be interesting to see how the Union fits in on a non-game revenue chart for the MLS, and how that can give us a glimpse of the future. If, for example, Seattle looked similar when they opened, we know what to look expect. Thanks again.

    • Funny, I bought an inaugural season Union jersey the day that “BIMBO” was announced. I’m sorry, but their logo looks absolutely horrendous on our blue and gold.

      • John Ling says:

        I generally wear golf / polo shirts to work. The Union have some nice looking ones for sale at the stadium, but I won’t wear them becasuee of the BIMBO logo.
        .
        As the father of a young girl, it bugs the bejeesus out of me to have her walking around with a shirt that says “bimbo” across the chest. I’ve had to explain it on more than one ocassion to people.
        .
        Here’s hoping the contract isn’t renewed next year…

      • It’s kind of like Chevy selling the Nova in Mexico. Marketing fail!

      • Well, the Chevy Nova thing is actually an old urban legend (source: http://www.snopes.com/business/misxlate/nova.asp ). That said, the point of the urban legend – “lost in translation” – does indeed fit with Bimbo.
        .
        Oddly, as much as it bothers me my daughter is pretty immune to it. She says there are several kids in her school who wear Union stuff. And her teacher last year was also a Union fan. It’s actually a topic I’ve been considering writing about.

  9. Good perspective. I appreciate that payroll is important in this kind of overview, and that the complete financial reports for the league and the clubs are not available. On the other hand, I think that since the word “market” appears in the title of the piece, there is a critical word missing from the article: Bimbo. This small market team has a rather large shirt sponsor. Why don’t they spend more money on salary?

    • Dan Walsh says:

      That’s true. Good point. I don’t know.

      In response to this and Great One’s comments higher up —

      My guess is it has a lot to do with the startup costs that come with any new business. Also, we don’t know what kind of profit margins have been deemed acceptable or unacceptable. There are so many expenses and revenues that we just haven’t seen. How much have legal expenses (Nowak, etc.) hurt the club? When you don’t have a chief counsel on staff, you’re probably paying by the hour for every legal matter, which includes review of contracts. Are they losing money on parking because many people pass on the $20 team lots to park in the neighborhoods for $10 or free? Have advertising revenues been less than expected? What are the youth development efforts costing? So many variables and questions, so few answers for outsiders.

      • I have an answer to one of your questions! Yes, they are losing money on parking. I park on the street for every match, and I see literally hundreds of others doing the same thing. The two times I tried the official parking lots were not happy experiences. I’d pay extra for a little security if it weren’t such a hassle getting out. Also, dirt. But I don’t think they’re losing too much money on us.

      • Andy Muenz says:

        If you’re looking for a lot that’s easy to get out of, try Lot A on the other side of the bridge. It usually takes about 5 minutes to get out (although it also takes a few minutes to walk to). I can park in Lot C for free (based on working in the same building as the Union offices) but still pay for parking in Lot A because it is so much quicker to get out.

  10. kingkowboys says:

    This is an excellent article and highly informative. I appreciate the perspective on how other MLS clubs are faring, helps to keep things in perspective. I think I agree most with James’ point that we are a “dumb” franchise/team. We are still a young franchise so I’m not going nuts about it but I think Nowak taught us quite a lesson. Now we must focus on player evaluation and development. Look at how the Oakland Athletics made the playoffs in the early 2000s. They found young talent, developed it, then sold it off while placing solid veterans around the talent. It’s exactly what I believe is our ticket to success and is perfectly stated in this article.

  11. Basically what this article says is that we shouldn’t expect the Union to throw money around in an attempt to solve the team’s problems (besides, when has that ever worked in North Jersey?)
    .
    And that’s fine, but that doesn’t mean they can’t still do well in the transfer market on a budget. Maybe it means you wait for a guy to be available on a free like Nikolov, but that doesn’t excuse them from the sort of roster mismanagement that has taken place in the recent past.

  12. Forlan and with prior Toronto signings makes them a clear 3rd place.

    Good article.

  13. Well done Dan.

    A few things re: Chicago Fire.

    First, you say…

    “These clubs [Chicago, Dallas, Colorado] are defined first by their control of a soccer-specific stadium. This enables them to control revenues and operations for all games and find alternate revenue streams through other events at their stadiums, such as concerts and college sporting events. Basically, it puts them in better financial position to increase marketing to raise the team’s profile and attract more advertising revenue and fans to games.”

    Toyota Park is 100% owned by the Village of Bridgeview. To my knowledge, the scenario above does not apply to Chicago Fire SC. I can’t get into specifics, but let’s just say that former owner AEG really got over on the Village. Current ownership bought into a situation with numerous built-in structural economic challenges they have yet to find a way to mitigate or overcome.

    Moreover, AEG’s dealings so soured Village leadership’s perception of the club (they’ve had to raise taxes five times since the stadium project got underway (in ’05?), and took out a credit facility late last year just to cover the interest payments for the next two years) to the point where current ownership has faced many obstacles in trying to facilitate plans and action for additional development that would make the environs around Toyota Park more attractive and help long-term economic growth in Bridgeview.

    So as far as control of revenue streams goes (at least in the Fire’s case), I do not believe it is to the extent you describe in the quote above. Granted, I’m not privy to the terms of the Lease Agreement (among others) between the Village of Bridgeview and the Club, but I don’t think the latter has much (if any) say in what goes on inside and around Toyota Park aside from soccer operations.

    The public transportation issue for city folks without cars is certainly another structural challenge, and a difficult one to mitigate. On the other hand though, there are millions of folks in the suburbs who can reach the stadium relatively easily and quickly. Unfortunately, the club hasn’t devoted enough resources to market to these folks.

    Regarding ownership “not punching its weight,” on the surface, this seems evident. Thing is though, there are a lot of complex issues that conspire to create this perception. Understandably, many fans don’t have the patience, nor the care to understand them – they just want a winning team and a fun event to attend, regularly, nine months out of the year.

    Lastly, your concluding statement really hits home for me (and probably a lot of Fire folks):

    “…many fans may tend toward the hypercritical as they expect the worst once again. They just need to keep perspective. Ups and downs are inevitable with a young, promising and improving club that doesn’t have the money to get really good really fast.”

    In an MLS context, Chicago Fire’s not young, it certainly has the potential to become promising very soon, and with the addition of Mike Magee, seems to be improving on the field. But in the end, its fans need to understand that, like the Union, it “doesn’t have the money to get really good really fast.”

    • Dan Walsh says:

      Scott, thanks for the good feedback and insights. The way I describe it is certainly how it has been pitched by MLS when it comes to soccer stadiums, but I don’t pretend to be up to date on the specifics of how Chicago’s particular stadium situation has played out in reality. (I reported on it from an outsider’s view several years ago, in the context of comparing it to the Union, but I’ll yield to your expertise on this one.)

      Overall, I think most smaller communities hosting MLS stadiums (Bridgeview and Harrison, N.J., for example) find it’s not the sweetheart deal it’s promised to be, perhaps in part because of real estate crash collapsed the credit market and prospects for economic development around these stadiums. But really, I think the stadiums in the Dallas/Chicago/Philly group may have been built just a bit too soon, before the Toronto example showed what can happen if you build them downtown near public transit. I’ve been to Toyota Park, and there’s just nothing close by. It’s too bad, because it’s a great place to watch a game.

      Edit to add: With regards to revenues, the Union at least control their revenues. That’s the idea behind owning these stadiums. But when you have a government entity holding ownership, that’s a different story.

      • Hi again Dan,

        Thanks for the response. Great point on timing. It reminds me of the new Comiskey Park. After Camden Yards showed up, everyone went retro. That hurt the White Sox to the point where they eventually had to spend $50 million to renovate the place to make it more attractive and fan-friendly.

        I’ve got a dynamite location for a soccer-specific stadium in Chicago. You know any real estate moguls with ties to the Chicago Park District and Mayor’s office? ;)

        Cheers,

        Scott

      • Dan Walsh says:

        Hey, it’s Chicago! Doesn’t every real estate mogul there have ties to the mayor’s office? ;)

        In Philly, lots of people wish the stadium could have been within Philly city limits. On the flip side, the stadium’s location below the Commodore Barry bridge and along the Delaware River is one of the most picturesque in American sports. So it’s a tradeoff. And hopefully the economic development outside the stadium will eventually come. Sure, there’s a similar location on Penns Landing in Philly, but that would have cost a boatload of cash that just wasn’t available at the time because no one thought a soccer club in a downtown would work. (MLS actually first wanted to put the Union at Rowan University in south Jersey and model the stadium situation after the Galaxy’s at Dominguez Hills.) And when it comes to this group of teams, that’s basically the killer reality.

  14. The maddening thing about MLS is that there are only a few competent teams out there. The Union do not have to strive for greatness. All they need is competence. We were really making progress through 2011 before we got Nowaked.
    .
    Now, we’re rebuilding again, and making progress again. I’d say we’re in good shape at 6 positions, in okay shape in 3 positions, and in bad shape in 2 positions (and if Roger Torres ever got to play, that could possibly drop to 1). Right now, we have 2 good subs who are forwards, but the rest of our squad depth is worthless (or might as well be in Torres’ case).
    .
    The point is, if we can buy 2-3 quality players at the end of Kleberson’s loan, we’ll be that much closer to having a complete team that’s worth fielding. And don’t forget that we still own the rights to Carlos Valdes.
    .
    This year is going pretty well considering the circumstances. And there’s always next year…

  15. Let’s not forget about the near $40 million that the owners are trying to recover with interest from the initial investment in the team.

  16. Neck label says:

    I’m not drinking the kool aid. Philly is not small market. I wonder how much money fast Eddie rendell is still making off the stadium deal? Do you know how much it costs to park at Dallas FC stadium? Nothing. Free. There is a science to making profits off passion and the PA political machine ( and the sugarmens of the world) are masters at it.

    • Steve L. says:

      He’s not talking in general, he’s talking about how MLS sees things, I wouldn’t consider Chicago a small market either, but MLS sees them as one.

  17. Steve L. says:

    Great article. I will first say I’m an implant, I wasn’t born here my wife was. I was a military brat and have lived here for 10 years now. One of the things that struck me first about this area was its passions for its teams (good and bad passion) and its willingness to get behind a winner that even remotely comes from this area. It struck me as weird how passionate people around here got behind smarty jones just because they wanted a winner so badly. And then this became even more apparent with the Phillies, when I first moved here we went regularly, after they won the World Series, the stadium was packed to the gills. I’m not saying that the Union should spend a lot of money to win, but that if they did a better job of using there resources like SKC or RSL they would be winning and the fan base would be loving it. Hopefully after the Novak fiasco they are on the road to recovery and in the process of doing that. On a side note, it’s still really sad that DC still don’t have there own stadium.

    • Dan Walsh says:

      I had the same observations after moving to Philly. I got kind of eased in a bit because I lived in Bethlehem for a few years before Philly, but I was amazed at the reaction after the Phillies won. It really showed that all the negativity that many outsiders see in Philly fans was really just how the flip side of local fans’ passion appeared.

  18. The Chopper says:

    Excellent analysis. From my dealings with Union FO types, my understanding is that the team is profitable. Not wildly so, but on the plus side of the ledger somewhere between 500k and 1m. The team is seeking additional investors to bring more cash in to invest in both players and development. It is easier to,find investors when you are,profitable, thus they are not reinvesting the profits yet.

    Sakiewciz is great with the business side.His record shows that. His soccer background makes him the right guy to express the soccer needs to the investors. However he really needs a strong director of player personnel to be the GM and run the football side. They thought they had with that Nowak. Sakiewciz may not be the best sounding board for Hackworth who has no real experience is running an MLS side top to bottom.

    • Yeah. They are pocketing the proffits and making excuses. If they reinvest in the team they will make the team more successful and can than gain addittional outside interestment by rasing the clubs profile. That’s logical. Not the “plan ” above.

      • The Chopper says:

        Also keep in mind that 3/4 millionor so in profit distributed amongst a group of investors is not exactly a huge return. If you reinvest that money in the club, you are essentially depleting your reserve funds. It makes more sense to seek more investors to bring in more spendable cash.

      • Well, I don’t know. What’s the point of any “reserve fund”? Are they putting that money away or into their pockets. Its a business so they expect to make money. As such I assume they are putting it into their pockets. Its not a lot but its something. However, that money (if that’s all they are making)would be best spent on a DP.
        /
        I have a feeling they make much more then that million. Instead of building a brand in the long term they are slashing and burning for the short term.

  19. Jason Kolodziejski says:

    Great article.

    Its a shame really. I think the Union could grow to cult like status in the city very similar to the Flyers. One thing the Flyers have had for years are owners who are as passionate about the team as the fans. The Flyers haven’t been cheap and granted we haven’t won a cup since ’75. But, man they keep me heartbroken and interested year in and year out. They weren’t afraid to spend to acquire players. They also do very well on the income side due to that.

  20. John O'Donnell says:

    I find it hard to look at this team as small market. As I recall, the team did quite well with the naming rights to the stadium and the front of the kit. They have a nice list of partners, from Turkey Hill to Toyota, what I can’t understand is why they never started the second phase of the construction around the stadium. This would bring in revenue from being landlords and take the stadium to another level.
    The one thing that I’m happy about is that they are gone to have a genuine academy. Hopefully we’ll be able to hold on to some of are young players for a few more years as we try and win a cup. If they could do that with a young team that they developed, I believe you could double the fan base.

  21. Wonderful stuff, Dan. I hadn’t thought much before about how the crowded sports market does seem to hurt teams in those situations. There’s always a bit of chicken or egg question when it comes to putting together quality teams. In world football, as in most sports, it seems that you have to put together a winning product first for the revenue to increase. While it’s frustrating that the Union are trying to take the opposite approach (build the revenue base first), it is probably a smart financial plan. Slow and steady…

  22. By the way, great insights from commenters here. Like, pretty much all of them. Thanks for weighing in, as always. (And obviously thanks for the compliments.)

  23. Thanks for doing this!
    .
    It’s an interesting, unconventional way to look at market size, more MLS-contextually than the usual application. As a fan, it can be maddening not knowing more about how league’s and teams’ finances actually work. It gives us little more to consider than their play on the field, which maybe isn’t the worst thing in the world.
    .
    For years, the Phils operated like a small-market team (even famously declaring themselves one), but the mid-to-late 2000’s success flipped a major switch in them. Wonder if the same will be true for the Union.

  24. Enjoyed this article. Really wish these teams like Philly, Chicago, Dallas had their stadiums in the city proper. Interesting read on Phillys ownership group, which I wasn’t aware of.

    One other note, Google ‘Soccer City USA.’ It’s not Seattle.

    • Dan Walsh says:

      Ha! I saw that too. Was pretty funny. And awfully presumptuous and anti-Seattle of them. And factually wrong. So I refuse to edit! Though I do love the rivalry, as you can probably guess.

  25. If they’re gonna be small market…….Go Chester Union!!!!!!!!

  26. I am disappointed by this article’s desire to settle for mediocrity. Yes, we are a poor team, but I don’t buy the argument that being a small market team in a “crowded sports market” excuses bad decision making. Our average attendance is still 17,591. That includes two games in heavy downpours. We also have sold the most merchandise and have competed for that top sales spot in previous seasons. We also have a 3 million a year jersey deal, one of the largest in the league. The market isn’t a problem.

    You, also, create a straw man to think that critical opinion is based around this desire to see some marquee Designated Player with a big name and not spending on a Los Angeles level. We get it. This team doesn’t have money. We don’t want big signings, we want smart signings. You can beat bad finances by making smart signings. That is how Salt Lake City established themselves.

    Look at San Jose last year or us in 2011. A few good moves won San Jose a Supporter Shield. This year, we are competing. Can you imagine how we would be playing if we had signed a LB and a left-sided mid in the offseason, positions that were obvious and glaring holes? There’s a world of football players out there. Was there nobody available out there that would fit the Union’s budget and improve this team? A team like Salt Lake puts in the due diligence and scouts abroad to find these players. We don’t. Fabinho could be the answer to LM, but that still leaves us needing a LB and defensive depth.

    To add to that, we’ve struck out far more than we have hit on recent signings. Look at our turnover recently: Adu, Soumare, Pajoy, Okai, Lopez, Martinez, Damani Richards, Gomez, and Hoffman all represent bad business. So, no, I don’t expect a Designated Player. I expect a good player who will stay with this team for more than a season. I don’t think we should settle for bad decision making.

    • Dan Walsh says:

      I’m not settling for mediocrity. I simply explained the situation as it is. This was not written from a fan’s point of view. It was written as this particular individual sees it.

  27. How much of our problems with attracting new players at the begging season was due to not just Adu’s contract but Soumare and other contracts that we may still have been paying on? And not so much in the cost to management but the Salary cap? If after getting Casey and Le Toux (Parke was a wash with Valdes loan) we were close to the cap that would explain why we couldn’t add anyone really. Kleberson was a direct swap salary cap wise for Adu as they were both DP contracts.

    Before offloading Soumare I don’t think the Union had enough cap space to target a DP. They could have added a cheaper player and pushed even closer to the cap but is that a good idea to put yourself at the cap ceiling? If a key player gets injured can you add a suitable replacement without getting fleeced?

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