MLS Cup conference finals: A look at four teams’ business off the pitch
The MLS Cup conference finals kick off this weekend. Before the games begin, we checked in with each of the four clubs set to play to see how their on-field success this year has affected their business operations.
What happened, instead, was a season in which the Red Bulls posted the league’s best record. And with the club now in the market for a stadium naming-rights deal, the timing couldn’t have been better.
“This has been a year where everyone expected us to be challenged both on and off the field, and I think together we’ve really done a tremendous job of rising above any sort of expectations,” said Red Bulls General Manager Marc de Grandpre. “That’s not to say we still don’t have some work to do, but we’re pretty happy with the progress we’ve made.”
De Grandpre said the club through the course of this year has added more than 2,500 new season-ticket holders for next season. He also said the team’s current renewal rate of 86 percent is a club record.
“The [playoff] run here has clearly helped,” he said, “with the leverage of being a [season-ticket] member helping to get people their seats for the playoffs.”
The Red Bulls averaged 19,657 fans for their 17 regular-season home games this year, up slightly from 2014. The club sold out the 25,189-seat Red Bull Arena for its first-round playoff match versus D.C. United last month, and the Nov. 29 semifinal match it will host versus Columbus is already sold out as well.
Ratings this season on local broadcaster MSG nearly doubled, de Grandpre said. On the corporate side, the club this year relaxed its in-stadium marketing restrictions for partners, opening the door for more deals. Among those that signed on were Yanmar, Bayer Healthcare and Audi. De Grandpre said representatives from 94 current or potential corporate partners attended the club’s first playoff match, with a similar number expected for the coming Columbus match.
“A lot of folks continue to realize the potential of this sport and our club,” he said.
That pursuit of a naming-rights partner continues, as well. Team and stadium owner Red Bull GmbH has held those rights since the venue opened in 2010.
“We’re still exploring the idea of perhaps bringing on a naming-rights partner, but we’re having great conversations on the topic that are ongoing now,” he said. “I’ve heard many say naming-rights deals typically take 24 to 36 months, and I’m a little optimistic we can get it done sooner if we choose to go that route.”
Majority owner and team CEO Merritt Paulson said the club’s standing leaguewide in terms of sponsorship revenue is strong, and the club continues to see good numbers for both its TV ratings and its digital metrics.
“For us in the playoffs, it’s all about the team performance,” Paulson said. “You obviously have those incremental ticket sales and some other added benefits, and it’s obviously not something that we take for granted, but it’s not significantly material from a business perspective.”
The opportunity that does exist, Paulson said, stems from a newly developing fan segment: an older demographic.
“When you look at our market as a whole, typically like most MLS teams, we skew towards a younger audience,” he said. “In general, if you’re under 40 or a millennial, you’re more prone to be an avid Timbers fan. … [But] more and more of that older demographic [is] paying attention and starting to adopt our team, as well as maybe some folks who haven’t been as interested in soccer.”
Paulson points to those fans as a means of growth.
“This team’s relevancy in this market is perhaps unique across MLS, and we’re not worried about sellouts necessarily. However, the intangibles gained from increasing our relevance and our brand to those non-Timbers fans is immense,” he said. “I know that’s a tougher thing to measure, but I can’t overstate just how much I’m feeling that and seeing that.”
After the club made it to the championship in 2010 but lost, the team wasn’t able to capitalize on that on-field success and build a broad franchise base that’s taken hold long-term. Now, five years later — and following one of the more exciting finales to an MLS playoff match (a stunning penalty shot win against Seattle) — the team feels it is better positioned to make those inroads.
“It’s very hard for a team to flip a switch and say, ‘We’re in the playoffs, and here we are,” said Jimmy Smith, the team’s chief financial officer. “In these last few years, we’ve put a number of things in motion to be more in tune with the market and so that we have a foundation so when there is that additional excitement, we can capture it.”
Those steps have included development of both English and Spanish-language radio broadcasts. On TV, this club this year moved from a past split between Time Warner Cable SportsChannel and local outlet TXA 21 to having all non-nationally televised games on TXA 21 this year. That channel is available to all Dallas/Fort Worth cable subscribers in a basic cable package, while TWC is part of a premium sports package.
The team also is marketing the upcoming National Soccer Hall of Fame that will be part of a newly constructed second level of the team’s Toyota Stadium, located above the south end zone and set to open in 2018. The team is already taking deposits for the new premium seats that will come from that stadium project.
Smith said the club’s first playoff game this year was at capacity at 20,500-seat Toyota Stadium, with expectations to either meet or exceed that for the next game.
FC Dallas averaged 16,244 fans a game during the regular season, down 5 percent from 2014 despite the team having one of the league’s best records. But Smith said this year’s ticket base included a new high-point for season-ticket sales, and the pace of sales for 2016 surpasses that — speaking to the deeper inroads the club is trying to make with North Texas sports fans.
“We know this is a very competitive market, so we’re excited that in certain aspects we’ve become the focal point in the sports discussion,” Smith said. “Compared to 2010, this is at least three, four or five times bigger in terms of excitement, and is putting us in a position in 2016 where we’ll be way ahead of where we need to be, something that can sustain us for years to come.”
Fast forward to this year, and the team has sold out its coming home game and is preparing for a record crowd of more than 21,000 fans.
“When we closed 2014, we made it an overarching club goal to grow our playoff attendance,” said Crew President Andy Loughnane.
The team started having playoff meetings internally as early as April to discuss what the best strategies would be. It developed new timetables to begin its ticket sales and discussed what pricing it should use. It even decided to allow fans to purchase playoff tickets as early as August, which Loughnane said made it the earliest among MLS clubs. In 2014, tickets did not go on sale until October.
Columbus also rolled out a significant grassroots campaign across the city over the last few months, highlighting that it is not only the only professional team in Columbus to win a major professional sports championship, but also that it is the last major pro sports franchise in Ohio to win a championship, back in 2008. It also brought out that MLS Cup and presented it at more events throughout this year, something Loughnane said the club felt it wasn’t leveraging enough.
At the same time, the club this year saw its sponsorship revenue increase 45 percent compared to 2014. The team’s naming-rights deal with Mapfre Insurance and its deal with EAS Sports Nutrition for naming rights of its training facility were substantial drivers.
Merchandise sales were up double digits, fueled by the Crew’s rebrand late last year. Food and beverage per caps also were up, by 24 percent. Columbus switched from Sodexo to Levy Restaurants for stadium service prior to start of the season and introduced a number of more locally focused concession options at the venue throughout 2015.
The overall strategy that the team has laid out has helped the Crew gain more than 1,000 new season-ticket holders from last year, and expectations are that the team will surpass that number of new signings for 2016.
But, Loughnane said, the Crew isn’t done yet.
“We’re certainly proud of our accomplishments, but collectively we know we have a long way to go before we’re satisfied with our performance,” he said.