(by Elliott Turner massivereport.com 11-8-17)
On Oct. 31, the Columbus Crew eviscerated New York City FC, 4-1, at home in the MLS playoffs. However, it was not all cheers in the crowd. Here’s why: Nov. 1, the very next day, the president of the Columbus Crew, Dave Greeley, appeared at an event in Austin, Texas, to gauge the city’s support for a relocated Crew. The club’s owner, Anthony Precourt, had stated a week beforehand that the team needed a new downtown stadium or it would have to move to Austin.
Precourt’s threat is based on the claim that the “business is struggling.” On the surface, he has a point. The Crew rank near the bottom of MLS in average attendance. However, that’s not the whole story. By gathering information obtained from records requests and other publicly available resources, we were able to piece together a picture of the Crew's costs and revenue. Struggling they are not.
Rather, Precourt’s claim looks like posturing in hopes of obtaining a sweeter stadium deal.
The Crew’s costs aren't paying much to play in Columbus
A big part of any sports franchise’s “business” is their stadium and lease agreement. The Crew have a 25-year lease to play at MAPFRE Stadium which began in 1999. It was the first soccer-specific stadium in MLS, and is comparable in size and location to later stadiums erected in Colorado, Dallas, and Chicago. The Crew pay annual rent of $50,000, regularly adjusted for inflation. Since 2014, they have paid $72,000 per year. From 1999 to this year, the Crew has paid $1.14 million dollars in rent.
That seems like a big chunk of change until you do the math on what the Crew might have paid in tax as property owners. Franklin County appraises the stadium site at a value of $28 million. The property tax rate for Franklin County is 1.48 percent. Thus, the annual property tax payment on the stadium would be $414,000 per year if the construction and lease agreement had not structured the Ohio Expo Commission as owner. The current rent is 17 percent of what the team would pay in property taxes.
By comparison, the New York Red Bulls were billed for $1.5 million and $1.3 million in property taxes in 2010 and 2011, which is more in a single year than the Crew have paid in 19 years of rent. Newer club Orlando City pays $264,829 in property taxes. Florida is a tax haven, and yet Orlando pays more than three times what Columbus does.
One could argue that paying rent and paying property taxes are inherently different. After all, in one situation you are owner of the structure, in the other you just occupy it. However, the Red Bulls are also technically tenants, paying taxes plus rent of $150,000 per year. The Colorado Rapids also pay property taxes and then pay an “additional rent” not to exceed $1.2 million per year to help pay off city bonds.
The Crew pay no property taxes and pay annual rent that’s cheap relative to other MLS clubs. New York is a much bigger market than Columbus, granted, but Denver and Orlando are comparably sized metro areas.
The Crew seem to be doing just fine, financially
We can reasonably estimate the Crew’s ticket revenue with public info. In 2017, the Crew had 17 regular season home games and a total of 262,429 people showed up. Though the Crew have relatively cheap ticket prices, they hovered around $41.95 per ticket as of 2014. At that price, the Crew would have earned roughly $11 million in ticket revenue this year, not including the playoffs.
In public information requests, we obtained records of MAPFRE Stadium’s parking revenue. The 25-year lease between the Crew and the OEC states that parking revenue is split between the OEC and Crew. The OEC gets 25 percent of the “gross amount charged per car for all paid parking for Sporting Events and Other Events” held by the “lessee,” a.k.a. the Crew.
The OEC said that its share of parking revenue for events at MAPFRE stadium was $333,000 in 2016 and $335,000 in 2015 — one quarter of the total parking revenue. The Crew’s portion was thus roughly $999,000 in 2016 and $1 million in 2015, or three-quarters of the total parking revenue.
The Crew also make money from naming rights and franchise fees, though the exact amounts are unknown. They signed a stadium naming right agreement with MAPFRE Insurance back in 2015, but only stated it was a “multimillion-dollar agreement.”
The Crew make money simply by being stakeholders in the league, sharing in league-wide costs and revenue. MLS’ six-year, $700 million sponsorship deal with Adidas works out to $116 million dollars per year. Split among 22 clubs, that’s about $5.4 million per year. Then there’s the league TV deals in English and Spanish; MLS earns $90 million per year. Divided by 22, that's $4 million per club per year.
MLS club owners also benefit from the league’s partial ownership of Soccer United Marketing (SUM), which gets a slice of revenue from every soccer match broadcast in the United States, and from the fees paid by new clubs to join the league. SUM is valued privately at $2 billion dollars. Teams joining MLS now pay more than $100 million dollars to join the league.
When you add up the Crew’s parking revenue, likely gate revenue, and probable league-wide TV and sponsorship revenue, they earn more than enough to keep the power running while fielding a competitive team.
So the Crew’s move has little to do with “business struggles”
But if the Crew are in no financial trouble, the question then is why? Why would the Crew want to talk about relocation and push for a shiny new downtown stadium? Just a few months ago, their press officer stated “there’s no rush to get this right” and that they “are not ready to move out of MAPFRE Stadium.”
A major factor is that the 25-year lease ends in just six years. By threatening to move, ownership strengthens its hand in bargaining. Right now, the Crew has to pay for renovations and improvements; this would stay the same if they renovated the current lease for another 25 years. However, if they got a new downtown stadium, then they could try to shift some of that burden to taxpayers like other teams have done.
Crucially, there is no incentive for the Crew to stop flirting with other cities. The lease between the Crew and OEC does not include an “early relocation penalty” clause. Thus, the Crew can relocate before the 25-year ends lease and only be liable in a potential lawsuit for breach of contract in which any monetary damages would be low. The missed parking revenue and rent for the remaining years of the contract would total approximately $1.62 million.
Could the Crew thrive in Austin? Maybe. But the Texas Capitol has already had two incarnations of a lower league club named the Aztex. In 2010, one version of the club left for Orlando in large part due to the lack of a viable stadium. In 2016, the second incarnation also closed shop … due to the lack of a stadium. The city of Austin lacks an NFL, MLB, NBA, and NHL team.
There’s no history of Travis County taxpayers forking over subsidies to billionaire sports owners. The mayor has stated the Crew should not expect any public funds.
There’s no history of Travis County taxpayers forking over subsidies to billionaire sports owners. The mayor has stated the Crew should not expect any public funds.
If Precourt really wanted to spur business, he could push for that new stadium with a better location. In talking online and by phone with Crew fans, they thought a downtown stadium could help; the parking is great at MAPFRE, but there are no surrounding bars or restaurants. Crew fans pointed out that the Triple-A baseball team, the Columbus Clippers, experienced a surge in attendance after opening a new stadium in the arena district.
Some had even answered the Crew’s fan survey this summer and stated that they 1) Wanted a downtown stadium, 2) Were willing to pay more for tickets, but, crucially, 3) Did not want public funds used. Fans are still mad about the perceived “wealthfare” bailout of the local NHL team’s Nationwide Arena. They don’t want the same situation with the Crew.
A new stadium, paid for in part by taxpayers, would increase the Crew’s value. And as Neil deMause explained in his 2002 book Field of Schemes, the real money in North American sports is not in annual profits, but the moment you sell a team. The formula never changes: (1) Buy a team, (2) Negotiate a new stadium deal, and (3) Sell the club for a one-time profit years later. Teams often operate at a thin margin or a loss with the effect of lowering (or eliminating) annual tax liabilities. They can also plead poverty when negotiating a collective bargaining agreement with the Players’ Union.
Thus, if the Crew move to Austin, it won’t be because “the business is struggling.” The Crew have a serviceable stadium, very low rent, and field a really good team. This botched PR ploy smells like a taxpayer cash grab. We've seen this form of exploitation before in American sports. Now it has come home to roost in MLS.
The Columbus Crew and Major League Soccer did not respond to request for comment prior to this article’s deadline.
Correction: This article originally stated that the Crew had the lowest attendance in MLS. The team had the third-lowest average attendance this season, per Soccer Stadium Digest.
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https://www.sbnation.com/2017/11/8/16618962/columbus-crew-relocation-austin-financial-records
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