major league soccer in memphis, tn
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F i n a n c i a l M a n a g e m e n t – S L S 3 6 0 5
MLS IN MEMPHIS
Bringing Major League Soccer to
Memphis
Adel Alammari
Fall 14
08 Fall
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Introduction
This Feasibility study was made to perceptively look at the possibilities of building a soccer
stadium with all its facilities and also launch a Major League Soccer franchise that’ll represent
Memphis and it’s Metropolitan. During the making of this study a lot of factors were taken into
consideration; factors like the intended investors, the demographics of the region, possible
location, costs of comparable stadiums and the predictable outcomes of this huge project.
Investing in Memphis Soccer
The Memphis Metropolitan, also known as the Greater Memphis area, is considered one
of the most populated areas in the region. Investing in such a huge populated area without a
soccer franchise that represent the city and its surrounding pride will be a great investment for
foreign investors that are looking for possible markets to put their money in. USMNT
performance in 2010 and 2014 World Cup spread the popularity of the sport throughout the
country and also helped the MLS to grow faster and bigger. In the last few years international
investors have invaded the American soccer market looking for new investment opportunities by
buying an existing club, co-owning or building a new one from scratch. DC United was bought
by an Indonesian named Eric Tohir.The league set to add at least five clubs in the next six
years, and Memphis can and should be one of the new grounds for an MLS franchise.
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More investors like David Beckham, Dolphins owner Stephen Ross , And Alessandro
Butini, an Italian investor living in London, has gone public with his desire to bring his
money to invest in an MLS team. New York, Nevada, Miami, Minneapolis, Atlanta are
the possible candidates to hold new MLS teams within the next few years. Memphis
geographical location give it an advantage because it’s located on the banks of the
Mississippi river and connects 3 states; Tennessee, Arkansas and Mississippi. Memphis
contains up to 10 local soccer clubs and organizations that has been in the city for at least
a decade, soccer in this city has been growing at a moderate rate in the last 5 years.
One of the main drivers of the league’s growth has been the development of soccer-
specific stadiums (instead of teams playing in NFL stadiums that aremuch larger
thannecessary for professional soccer). As the number of soccer-specific stadiums
has increased, sohas attendance of the soccer games. MLS’ current average attendance of
more than 18,000 is greater than theaverage attendance of both the NBA and
NHL.Compared to other MLS metro areas, the Memphis metro area is relatively
small, with a smallercorporate base and lower income levels. Having an MLS team that
represent this city and can absorb the talent that these local clubs produce and put them
into the elite level of soccer can be a huge game-changer in the region.
Technical Feasibility
Location
The location of the proposed MLS stadium will be in the Downtown area. It’s one
of the best possible areas in the city to possibly build a stadium at. One of the main perks
of building it in the downtown is that it’ll be next to almost all of Memphis icons like;
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The Pyramid, Beale street, the famous “M” bridge, FedEx forum and Mud Island. This is
considered one of Memphis liveliest area, adding an MLS team will present Memphis to
the nation in a very nice way.
Facilities
The Stadium will be will contain but not limited to the following: a soccer field that is
110–120 yards (100–110 m) long by 70–80 yards (64–73 m) wide, a range of seats of
20,000 to 35,000. The stadium should have the following; a digital scoreboard, video
screen, concession stands outside the stadium, parking spaces, dressing rooms, media
center, and VIP section. The seats should be wide and comfortable for the pa ying fans;
out of the 18,000-25,000 seats there will be a range of 500-1,500 seats specialized for
disabled people. Also there will be a canopy that should cover all seating sections, an
estimate of 25-35 suites, and that’s including one or two party suites and an owners’
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suite, 2000-4000fan club seats, eight locker rooms. Restaurants and small shops will also
be added.
Usage
The new stadium will be one of a kind in the region as it will be the 1st soccer-specific
stadium built. The usage for this soccer-specific stadium will mainly be soccer related activities
such as Major League Soccer games, NWSL matches, USMNT international competitive and
friendly matches, college soccer, and regional nun-MLS soccer matches. Alongside those
activities there will be other none soccer related activities held there, for example; music
concerts, festivals, ceremonies and so on. The following is brief summarization of all the
possible and estimated usage of the stadium followed by a chart that shows the projected
activities that will be held at the stadium:
MLS Matches
MLS by the year 2017 will have about 20 teams spread out across the country. The regular MLS
season start in the beginning of March and it usually ends by the last week of October of the
same year. Assuming that the projected Memphis MLS team will play only the regular season it
means Memphis stadium will surely host minimum of 18 home MLS games in the 1st and it’s
expected to be this way for the following 4 years.
NASL Matches
National American Soccer League also knows as the NASL it’s the second division of
professional soccer in the United States. There will be approximately 11 NASL matches held in
the new stadium and this can be a reasonable source of income.
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Major Soccer Matches
In the summer European teams come to the U.S. to prepare for upcoming season by practicing
and also playing some friendly games with either MLS teams or other European teams. Clubs
like Real Madrid, FC Bayern, and Manchester United come to play in the U.S. in several cities
and states. The new Memphis soccer stadium will host an estimate of 7 major soccer matches;
most of them will be in the summer.
Other Major Sporting Events (Pro/College)
The other expected events that are expected to be held in the new stadium are Pro/College
activities that can either be soccer or other sports activities that are suitable to be played in a
soccer specific stadium.
Other Sporting Events (Other Amateur)
The new Memphis stadium is also expected to host other amateur activities in the city. These
activities can be either amateur soccer matches or any kind of activities that can be held in the
future stadium.
Concert/Festivals
Music concerts and festivals are a good usage and also a good source of revenue for the new
stadium. There’s an estimation of 4 music concerts that can be held in the new stadium. This can
create a new tourist and attraction spot in the city even to people who don’t watch soccer.
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Other Events
The new soccer specific stadium in Memphis will not only be a home to the city future MLS
team but it’ll be a good place to host a lot of different other events. All the events will be ticketed
which means a great source of revenue; there will be entertainment, community, and
social/private events taking place there.
2017 2018 2019 2020 2021
MLS Matches 18 18 18 18 18
NWSL Matches 11 11 11 11 11
Major Soccer Matches 7 7 7 7 7
Other Major Sporting
Events (Pro/College)
3 3 3 5 5
Other Sporting Events
(Other Amateur)
6 6 7 7 8
Concert/Festivals 4 4 4 6 6
Other Ticketed
Entertainment Events
2 2 2 2 3
Community Events 11 11 11 12 12
Social/Private Events 10 11 11 12 12
Other Events 5 5 5 5 5
Total 77 78 78 82 84
Source: AECOM 1 Projected Event Demand
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Expenses and Revenues
Generally, the expenses and revenues of the new stadium are estimated based on actual figures of
other existing MLS stadiums, alongside any expenses and revenues that might be an exception in
the city of Memphis. The following is a summary of all of the possible expenses and revenues
for the projected stadium, remember that all these number are either assumptions based on other
stadiums, or estimations and are not actual figures.
Salaries and Benefits
The Salaries & benefits are mainly estimated to be around $1.0 million in an average MLS
stadium’s 1st year, and it’ll increase to $1.1 million after five years. This number does includes
costs for all full-time stadium staff.
Contractual Services
Services that are not staffed directly by the stadium workers are considered a contractual service.
Expenses for contractual services can include but not limited to security systems and janitors and
other similar services, and are estimated to be roughly $310,000 in the stadium’s 1styear.
Utilities
Roughly, Utility expenses are assumed to be around $620,000 in the stadium’s 1st year. No
method has been determined, but it’s more than likely that the new stadium will have and require
a cooling system because of the heat waves that Memphis have in the summer and it’s around the
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time of the MLS regular season.These projected systems would have to cool mainly the spectator
areas and might also cool the playing field as well.
General and Administrative
The General and administrative costs are estimated to be roughly $880,000 per year. These costs
covers: office supplies, staff uniforms, travel, and training, dues and subscriptions, and other
items that might be needed.
Repairs and Maintenance
Repairs and maintenance expense is estimated to be roughly $310,000 in the stadium’s 1st year,
and it’s expected to increase to roughly $325,000 after five years.
Insurance
Insurance expense is estimated to be roughly $260,000 in the stadium’s 1st year.
Management Fees
It’s assumed that the MLS ownership entity is hired to operate the stadium and is paid an exact
amount of $800,000 per year (based on 2014 prices).
Capital Maintenance Account
It’s assume that an amount of $400,000 per year will be and should be deposited into an account
for future capital maintenance, and that the team will also be responsible for keeping a minimum
amount of capital per year and it’d required to have certain capital improvements on a yearly
bases. The capital maintenance account is not expected to be spendingin the early years of the
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franchise but it will still be included as an operating expense.
Other Expenses
Other miscellaneous expenses that are not included in the previous categories are estimated to be
roughly $310,000 per year.
Total Operating Expenditures
Total operating expenses are estimated to be roughly $5.0 million in the stadium’s 1st year, net
of the team’s share of expenses, and increase to roughly $5.2 million after five years of
operating.
Net Operating Income
Based on the projected operating revenues and expenses of the stadium on first year then into
five years ahead, the facility’s net operating income is estimated to be roughly $2.5 million in its
1st year, and this amount is expected to increase to approximately $3.6 million after five years.
All numbers in the table are in thousands.
2017 2018 2019 2020 2021
Operating Revenues
(Net)
Rent $964 $982 $999 $1,25 $1,278
Concessions 856 869 882 1,176 1,193
Catering 58 58 59 77 78
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Merchandise 86 88 89 118 119
Premium Seating 784 796 808 1,054 1,070
Other
Advertising/Sponsorship
675 685 695 706 716
Facility Fees 306 306 306 399 399
Ticketing/Convenience
Fees
607 616 625 835 847
Parking 351 357 362 367 373
Tenant Reimbursement 2,743 2,743 2,743 2,743 2,743
Total $7,431 $7,500 $7,570 $8,731 $8,818
Operating Expenses
Salaries and Benefits $1,034 $1,050 $1,065 $1,081 $1,098
Contractual Services 310 315 320 324 329
Utilities 620 630 639 649 659
General and
Administrative
879 892 90 919 933
Repairs and
Maintenance
310 315 320 324 329
Insurance 259 262 266 270 274
Management Fees 827 840 852 865 878
Capital Maintenance 400 400 400 400 400
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Account
Other Expenses 310 315 320 324 329
Total $4,950 $5,018 $5,087 $5,158 $5,299
Net Operating Income $2,481 $2,481 $2,482 $3,573 $3,589
Source: AECOM 2 Projected Event Demand
This is a table that shows all the MLS teams values, revenues, and operating income in
2013.
Source: FORBES3 Projected Value & Operating Income
Rank Value ($M) Revenue ($M) Operating Income
($M)1
Seattle Sounders 175 48.0 18.2
LA Galaxy 170 44.0 7.8
Portland Timbers 141 39.1 9.4
Houston Dynamo 125 32.6 8.2
Toronto FC 121 30.9 4.5
New York Red Bulls 114 28.1 -6.3
Sporting Kansas City 108 27.7 5.1
Chicago Fire 102 24.5 -3.2
FC Dallas 97 24.2 0.6
Montreal Impact 96 26.2 3.4
Philadelphia Union 90 21.4 1.1
New England
Revolution
89 17.1 2.6
Vancouver Whitecaps 86 23.0 0.0
Real Salt Lake 85 23.0 -0.1
Colorado Rapids 76 18.1 -2.9
San Jose Earthquakes 75 15.0 -4.5
Columbus Crew 73 18.6 -1.6
DC United 71 17.7 -2.8
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Chivas USA 64 15.0 -5.5
Organizational/Managerial Feasibility
In any MLS team there should be an organizational structure to the franchisethat
keeps it going. The potential Memphis MLS team should have the following employees:
President– A personal with this status should have full knowledge of the game, a
good CV in managing teams and corporations. Educationally, they should have a Masters
in any degree that is related to sports, managing, accounting, financing, law etc.
Vice President–It’s usually a co-owner who’s considered the 2nd most important
man in the franchise, to be a VP the qualifications should be no less than the
qualifications of the president, the only difference is that either the President has more
years of experience or that they are the only owners of the club.
Spokesperson & Media Relations–spokesperson for an MLS franchise is similar to
a public relations specialist. They are responsible for setting up public appearances,
handling conflicts and keeping the public updated on vital team information. They also
have to take care of e-mails, phone calls, letters and press releases, so they should be
effective writers in addition to being eloquent speakers.
General Manager– A soccer GM should have years of experience piled up in his
record. They should’ve coached or took part in assisting coaching a team in a top league
in the world. They should also have on field experience in playing soccer. Being a GM
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automatically means they’re the coach and are held responsible for all athletics duties. A
minimum of USSF “B” coaching license should be required to get this position.
Assisting Coach– It’s usually a job for a personal that’s gaining experience in
becoming a soccer coach. They should have a minimum of USSF “C” coaching license to
qualify for this position. An assisting coach should also have on field experience in
playing soccer. As usual in topflight soccer clubs, the GM should have between 2-3
assisting coaches.
Goal Keepers Coach– This is the person who’s responsible for keeping the goalies
in top form and in charge of picking the best goalie to start each game. It’s usually former
soccer keepers who get this job due to their experience in this position.
Other Positions– other positions to fill up are Head Athletic trainer, Assistant
Athletic trainer, Head Team Physician, Primary Care Physician, Director of Soccer
Operations, & Equipment Manager.
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MLS and Other Leagues’ Overview
Major League Soccer (MLS) is currently in the end of its 19th season. MLS is the
US’s preeminent professional soccer league, and is structured as a single-entity league,
and has grown to the current size of 19 teams across the US and Canada (with also four
expansion teams, in Orlando, New York, Atlanta, and Miami, to join the league in the
next 2-4 years). Its schedule consists of 34 games that are played from April throughout
November. After the regular season is over, teams also compete in playoffs series to
determine the league winner. In addition to the normal league, teams also compete
against teams from around the world, in events such as the US Open Cup, the Canadian
Championship, and the CONCACAF Champions League.MLS was created as a result of
the 1994 World Cup that was held across the US and the granting of “Division One”
President
General Manager
Assisting Coach
Goal Keepers Coach
Assistant Athletic trainer
Head Team Physician
Primary Care Physician
Director of Soccer
Operations
Vice President
Spokesperson & Media Relations
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status to the league by FIFA, the organizing body for international soccer. The league’s
1st season took place in 1996, with ten teams. During its initial years, MLS gradually
expanded, although teams were also contracted for various reasons. The following map
shows the location of the league’s 19 current teams, not including the planned expansions
to New York, Orlando, and Miami.
League Structure
The Major League Soccer is the only major professional sports league that is organized
and built as a single entity league. This means that the player’s contracts are with and paid by the
MLS itself. The stadiums leases, national and international partnership, and any other big picture
league matter are the central league office responsibilities. However, this doesn’t mean that each
franchise won’t have an independent ownership/operator group that is responsible for managing
its team day-to-day operations. Generally, teams are responsible for team-specific expenses
(except player’s payroll) and have the right to fins and contract a local sponsorship to generate
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revenue. The Soccer United Market (SUM) is the entity responsible for all the league wide and
national partnerships. The league created SUM in 2002; it holds various commercial rights
associated with MLS and other soccer leagues in the country. Each MLS team has its own
individual unit in the league and in SUM.
The following list summarizes the sharing of revenues and expenses between teams and
the league (netof any separate sharing arrangements with stadium owners). Over time, the
sharing arrangement haschanged to further incentive teams to generate revenues that they
retain.
Ticket sales – 33.5 percent is currently shared with the league.
Stadium revenues(such as concessions, parking, etc.) – are retained by teams.
Sponsorships –
o The teams retain local sponsorships and media, as well as jersey sponsorships .
o National media and sponsorships are league revenues.
Expenses – aside from player salaries (with the exception of designated players),
all expensesare the responsibility of teams.In addition to running its local team,
investor/operators are also often creating youth developmentacademies in their markets.
These academies create an organized and well-funded system to developfuture soccer
players under the auspices of each MLS team. As an additional incentive to youngsoccer
players, MLS teams can retain certain players that are developed through thei r academies.
Also,MLS has a partnership with USL PRO, which includes affiliations between MLS
clubs and USL PROclubs.
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Demographics
Memphis Area has approximately 4,577.85 square miles of land area and 121.57 square miles of
water area. As of 2010, the total Memphis Area population is 1,316,100. Memphis Area has a
median household income of $47,477 in 2008-2012 which increased by 4.78% increase since
2005-2009. Memphis Area also has a median house value is $136,800 in 2008-2012 and that’s a
5.39% increase since 2005-2009. Memphis Area has a population density of 280.06 person per
square mile compared with 81.32 per square mile for the whole United States. Following is chart
that shows population in Memphis Metropolitan by race:
Table 1 via 2010 census
POPULATION BY RACE
White: 630,715 (47.92%)
Black: 601,043 (45.67%)
Hispanics: 65,395 (4.97%)
Asians: 24,479 (1.86%)
Native: 3,973 (0.30%)
0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%
Native
Asians
Hispanics
Black
White
U.S.
Memphis Area
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Comparable MLS teams
This section will show a quick summary of the planning, operations, use, and other
characteristics of existing soccer MLS stadiums in other markets across the United States. This
summary of these facilities will help us define what has been successfully implemented in other
major metropolitan areas. The facilities analyzed are the following:
Sporting Park in Kansas City
Sporting Park, Kansas City, Kansas
Sporting Park is an 18,500-seat soccer-specific stadium located in Kansas City, which is
the home of one of the MLS team,Sporting KC and the NWLS team FC Kansas City. The
stadium was built for around $200-million and it opened in May of 2011 and issurrounded by the
Community America Ballpark, the Kansas Speedway, the Nebraska Furniture Mart, and also the
Legends at Village West outlet mall.
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Market
The market of the Sporting Kansas is the City of Kansas City, whichhas roughlya population of
150,000 residents, and the 15-county Kansas City metro area (which includes Kansas City,
Missouri) has roughly a population of 2.3 million residents.
Ownership and Management
The stadium of Sporting Kansas, Kansas Park, is owned and operated by a company named
Kansas Unified Development, LLC, which is controlled by team ownership. Delaware North
Sportservice provides food service.
Funding
The stadium was primarily funded through $50 million from the team and the remaining $150
million of Sales Tax Revenue.
Facilities and Offerings
The stadium size is 342,000-square foot and it includes the following facilities:
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A 75 x 120-yard field, Roughly 18,500 seats, and a maximum capacity (for
concerts) of 25,000, A canopy that covers all seating sections, 37 suites, including one party
suite and an owners’ suite, 3,400 club seats, The 124,000-square foot Sprint Plaza that is used for
pre-game activities and standalone events, and six locker rooms.
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Conclusion
In Conclusion, Memphis is city that should have a hometown pride in soccer; it deserves
to be one of the 1st 24 cities in the U.S. to have an MLS franchise. The question that this semi-
thorough study tried to answer is “Is it possible?” The city is ready to have a second franchise
alongside the Grizzlies to represent it on the national level. Soccer is growing in Memphis, and
soccer community needs a home; a home in which they can be proud of and also refer to every
game day. The main Obstacle that’s in the way is finding a national or even an international
investor that will want to spend their money in the city to start an MLS franchise. Until then, I
believe that having an MLS with a soccer-specific stadium is very unlikely to happen.
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Sources
"AECOM - A Global Provider of Architecture, Design, Engineering, and Construction
Services." AECOM - A Global Provider of Architecture, Design, Engineering, and
Construction Services. N.p., n.d. Web. 18 Nov. 2014.
"MLSsoccer.com." MLSSoccer.com. N.p., n.d. Web. 18 Nov. 2014.
Smith, Chris. "Major League Soccer's Most Valuable Teams." Forbes. Forbes Magazine,
20 Nov. 2013. Web. 17 Nov. 2014.
"Sporting Park Home." Sporting Kansas City. Sporting Park, n.d. Web. 15 Nov. 2014.
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