Cdn Dollar plunge to effect Mls bids by Vancouver
By Moosehead,
October 23, 2008 in Men's National Teams
and Montreal? Mls fees will be considerably higher, another 8 million. What about the transportation costs. What happens if Vancouver gets Mls but Montreal doesn't. Does it make sense for Montreal and Vancouver to collaborate on a Canadian league? To promote this concept perhaps Vancouver and Montreal owners should set up new USL clubs in other Canadian cities.
What they should set up is a Canadian League, forget giving money to the yanks, spend the Canadian $$$$$$$ in Canada!!!
tmcmurph
It all depends when they have to pay it. The US dollar could drop and ours go up just as quickly. They could also negotiate a payment schedule. There are options. Right now it doesn't help to but Saputo and Kerfoot could have investments in US funds that they could use as well.
If these two groups havn't purchased a US dollar forward contract for their expansion fees, they're not the type of business people MLS would want to partner with anyway.
CoachRich
There is a better chance of a Canadian League if they can be farm teams & feeders of the Canadian MLS teams. Soccer teams need money & a elite pool of players to built out the sport in a controlled plan. Key to the build out is media coverage as w/out TV & etc the sport will not get support to expand. Also, too many teams w/ small $ in a new league is asking for failure of which soccer in Canada has a history of.
US dollars shouldn't be an issue for any of the 3 Canadian teams as the investors know what they are doing & have deep pockets. Looking a the Caps, all 4 individuals of the Caps are heavy when it comes to US $ due to their industries. 3 are high tech who made their $ in Silicon Valley & 1 is in the NBA.
The whole idea that Canadian millionaires can only pay in Canadian dollars because they don't have bank accounts in the US is quite laughable really.
Vancouversoccerman
Jeffrey's right on this one. First of all, the numbers involved in the net worth of the owners in at least 6 of the 7 MLS bids (St. Louis being unknown, but possibly still valid) are staggering. The operational costs of a MLS team are a fraction of a current NHL team...hell, the cost of an expansion team is less than one year of the NHL salary cap. MLS relies on gate revenues and they're building their TV revenues. Financially, they're where the NHL were in the 70s.
What makes MLS different is that they have owners who believe are getting in on the ground floor on the world's sport. Their costs are far less than the extravagance of the NASL days. Is there anyone these days who doesn't believe MLS won't not only survive but thrive?
Well said JS & VSM
CanadianTraveller
quote:Originally posted by Vancouversoccerman
At the end of the day, most of these owners want to make money - or at least have a reasonable chance of breaking even. A 20% variance in their costs with no relief from added revenue clearly has a major impact on the short-term profitability of the team(s). And that WILL play a factor in where the MLS decides to put a team - they don't need another Vancouver Grizzlies debacle. And they definitely don't want a team in Montreal that has 0% chance of breaking even (due to the size of the stadium combined with cost concerns). MLS will offer teams to bidders who can demonstrate a viable business plan - the change in the dollar makes that more difficult, but not impossible.
Of course, long-term investors like those owning a professional sports team don't worry about the value of the currency in any given week. I would hope that both bids are based upon an 85 cent Canadian dollar, which would demonstrate significant prudence by the owner as well as a realistic budget plan.
I don't doubt that the bidding owners won't be scared by a 78 cent dollar this week. Worried, but not scared. The same can not be said about the expansion committee at the MLS.
Falling stock market, Canadian dollar doesn't scare Jeff Mallett from MLS bid - SLAM!
With the stock market staggering and the Canadian dollar falling this wouldn't appear to be the best time to invest money into bringing a Major League Soccer franchise to Vancouver.
"Yes, it's bumpy as it goes right now but we believe in the long term in sports," Mallett said in a telephone interview from San Francisco. "Short-term bounces are not going to throw us off that."
Canuck Oranje
The operative words in the current financial market are "scared" and "panic". I don't know of any professional economic forecaster who actually believes that the Canadian dollar will be trading at under 80 cents US by the end of 2009. In fact, many believe it will be back above 90 cents by then.
In the end, the current exchange rate is marginally relevant to any Canadian bid. On top of that, many of the investors involved in MLS bids have business activities that go beyond North America. That also includes the Saputo family and I'm sure Kerfoot and Melnyk.
The bigger issue is economic slowdown in the USA and access to credit. That is likely to affect the US bids as much as if not more than the Canadian bids. The Saputo family business seems hardly affected by this crisis because they, just this week, bought Neilson dairies from Westons for about half a billion dollars (food continues to be sold in a recession). Marcelo Claure (Miami bid) is another who is likely less affected by the economic crisis in the USA.
quote:Originally posted by Canuck Oranje
As for Gillett, from Wikipedia:
http://en.wikipedia.org/wiki/George_N._Gillett_Jr.
From 1997 he extended his meat interests by building Corporate Brand Foods America (which included ITC, Iowa Ham, Jordan Meats and Wright Bacon), latterly bought by Iowa Beef Processors for US$550 million. Gillett and Hicks, Muse, Tate & Furst then bought ConAgra's beef operations - Swift and Company - for US$1.4 billion in 2001.[5] In the meat business, Gillett now also controls:
Petaluma Poultry - natural and organic chicken products
Snowball Foods - food processor of turkey and chicken products
Kings Delight - food processor of turkey and chicken products
B3R Country Meats - processes fresh and frozen natural beef
Coleman Natural Products - processes fresh and frozen natural beef and lamb
Gerhard's Napa Valley Sausage - a producer of gourmet sausage products made primarily from poultry
Gillett's other current business interests include:
Northland Services Inc. - a marine transportation company
Great Northern Bark and Sierra Organics - landscaping and gardening products company
Vista Auto Group, an auto dealership chain selling Subaru, Dodge, Jeep & Chrysler in Silverthorne, Colorado and Subaru, Honda, Nissan & Chevrolet in Glenwood Springs, Colorado
+ Gillett Evernham Motorsports
So except maybe for the Vista Auto Group, everything looks good for him too [8D]
Much of the reason for the sudden drop in most currencies against the U.S. dollar is due to institutional investors bringing their money back into the U.S. from overseas to cover losses and margin calls. Virtually every analyst believes this is a short term surge in the U.S. dollar and that the oncoming recession in the U.S. will bring the dollar down to earth. I know a good analyst who believes the Loonie will be at around 89 cents by the new year.
That being said, nothing is certain in this climate. But I wouldn't worry about the operational capacity of any of the bids (except St.Louis). Even with operational losses, MLS' single entity format somewhat shields teams from tough times. Also, MLS has access to a revenue stream no other league has...transfer fees for players. On top of that, the ultimate money-maker for most professional teams is in the appreciation of their franchise value. In that sense, it's a bit like real estate.
Danny Boy
http://www.amerocurrency.com/
Actually, Gillet does not own Swifts anymore as it was sold, while under bankruptcy protection, to JBS (a Brazilian meat company) in 2007. At best, Gillet may have got his money out but probably took a hit. See www.jbsswift.com
Wiki needs to be updated.
quote:Originally posted by the biologist
canucklefan
I think both Vancouver and Montral have great chances to play in MLS given their achievements this year (Vancouver is USL champion and Montreal is doing pretty good in Concacaf Champions League), but it would be nice if MLS could pick Ottawa so we would have a fourth professional team in Canada.
Saputo, Kerfoot and Melynk should all work together for a Canadian League. Imagine owning a whole league rather than 1 team in Mls. What if Vancouver doesn't get in to Mls and has to wait several years to get into MLS then they are stuck in the USL and they could be in a Canadian League. If Montreal goes into MLS it further reduces the chances of a Canadian League and the same if Vancouver gets in and Montreal doesn't. There are new sports channels opening up in Canada and perfect time to get this new league on the television on a regular basis.
I think they should all work together in expanding. Melynk should start a team in USL in Ottawa, Kerfoot in Victoria and or Alberta. Saputo in Halifax then once the teams are operating then merge the teams into a Canadian league.
Mls may survive but will the new entrants be able to recoup the money. Is soccer ever going to catch on in America? It maybe more successful in Canada then USA. Maybe the only thing that will make money is the pyramid scheme whereby as long as new teams enter and pay more money then every one is happy but are clubs making money on their own? Are tv viewership increasing?
I wouldn't rule out a Canadian League we just need the confidence to get it done.
Johnnie Monster
I guarantee you the boys with the big coins in their pockets scooped up wads of US currency when the loonie was $1.10 USD. Rich guys tend to have these guys called "financial advisors" who see to these things.
I'd also be surprised if they weren't buying back Canadian loonies at 74 cents USD in anticipation of the loonie's climb back over the next few months.
Guest Ed
I heard last night that Gillett is a gazillion dollars in debt. Surely that would affect the Montreal bid, no?
Bertuzzi44
quote:Originally posted by Moosehead
As much as I would love to see another Canadian league, I think it will never happen mainly because Toronto already has a franchise in the MLS.
How could a Canadian league survive without the country's largest market part of it? I doubt TFC would leave MLS for a proposed Canadian league.
Kinda like the Toronto-joins-NFL-and-the-CFL-dies argument, but backwards.
quote:Originally posted by Ed
The debt is probably related to the purchase of Liverpool FC which would explain why he and his partner have been looking to unload the club for the past year.
My understanding of Gillett and Liverpool FC is that he and Hicks have a large loan coming due sometime in the near future that needs to be refinanced. With credit markets what they are presently and especially with the recessionary conditions in the UK, refinancing is virtually impossible. However, I doubt he holds that debt personally and is suitably laundered through corporate entity or two and secured by Liverpool FC assets. In other words, I doubt it will have, by itself, much effect on the MLS bid.
I've always been fascinated by how sports fans seem to keep looking to Gillett as the money man for a number of sports franchises. In the case of the Montreal MLS franchise, the Saputo family really doesn't need any help on money alone. I suspect bringing Gillett in was more one of putting a higher profile on the bid and spreading the risk. I see it suggested in the media often that Gillett is a billionaire but I can't find any credible evidence of that. I don't doubt that he has a few hundreds of millions but from what I can find is that he is a typical risk-taking entrepreneur with the usual checkered financial history. That means not all of his ventures have been money-makers.
ag futbol
quote:Originally posted by youllneverwalkalone
Currency fluctuations will have an effect in the long term, but so does the overall viability of the club and the economic conditions of the community they are based in. Think about the revues half these guys get paid in. Steve Nash gets paid in US Dollars, Mallet gets paid in USD, and no doubt Kerfoot through this business has significant exposure to US currency.
Currency should not be a deal breaker now, because anyone who has done some prudent financial analysis would have said there's always a chance the CDN dollar returns to levels we saw prior to the commodities boom.
I am quite sure that the club itself forms a large part of the loan collateral but at the end of the day Gillett and Hicks hold the can. Relative to Liverpool FC and even the Montreal Canadians, an MLS bid and team are small potatoes. I agree though that Saputo likely brought him on board for his name and associations with big league sports rather than his money.
hectorj
We are the most hockey mad country on the planet and we don't have our own league. The Stanley Cup (most sacred item in Canadian sport) has been taken over by American businessman.
We can have a top notch soccer league here? No. MLS is the way to go. We have chosen our path and most are content to being an appendage of the American sporting family. Our sporting media has been co-opted. Bloody NASCAR is reported on like it is a real sport. If we can't do it at a top level in hockey, we can't do it in anything else.