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November 29, 2012 at 10:23 PM

GM Hanauer on balancing expectations from records crowds with wanting to run a rational and sustainable business

Seattle Sounders FC Logo.jpgBy now, you know the numbers. Well, maybe not the exact numbers, but the general idea.

Sounders FC’s average attendance: 43,144.

Next highest average attendance (LA Galaxy): 23,136

MLS average attendance: 18,807

MLS average attendance (minus Seattle): 17,456

So does the league’s highest attendance produce the league’s highest ticket revenue?

Sounders FC general manager Adrian Hanauer said as far as he knows, the answer is yes — though Toronto FC has been close due to higher average ticket prices.

And does that attendance help result in the league’s highest total revenue?

Hanauer wouldn’t go that far, noting things like sponsorships, local television contracts, merchandise, youth programs and other factors weigh into total revenue.

“We are certainly near the…,” he said before catching himself, “…in the top third of franchises in terms of total revenue. I’m not going to go into details.”

The question was posed to Hanauer: How do you balance the desire to run a rational and sustainable business with satisfying the expectations of the fans who see the record crowds in Seattle and want to see the team pay it back with appropriately sized roster moves?

Here was the answer:

“Well, it’s a great question,” Hanauer started.

“We obviously don’t open our books up to our fans, so only we know what we expect rational to be. Fans also don’t understand the complexity of how this whole thing pencils out. Forty thousand fans is one tiny component of a big business that has a lot of moving parts, that has revenue sharing, that has enormous levels of expenses to get those fans in the stadium and provide a great fan experience, that (has) expenses on the technical side in some of the areas that I’ve mentioned, whether it’s sports science or scouting or facilities or youth systems or transfer fees on designated players.

“So that said, what I can’t do is react to the message boards or the irrational math of whoever decides they know exactly what goes into running and the P&L statement of a major league sports franchise. But what I can do is get together with my partners, with (majority owner) Joe Roth and (president) Peter McLoughlin, who’s here, and (co-owner) Drew Carey, and every year we build a budget that we think is appropriate for the business. There’s some amount that we put on the expense line for the soccer side of the business, and then I try to manage to a budget.

“I know sports is super passionate, and it’s why we love it and what makes fans so connected, but I don’t think you very often hear people going into a Starbucks that has a line every day and writing letters to Howard Schultz about how he should lower the prices on coffee because they have lots of customers. He has to run a rational business. We have shareholders, he has shareholders, and it’s along the same lines.

“That said, again, we have always thought that we were stewards of this franchise for the community. It’s certainly not to get rich of the cash flow of the business. We have had a solid business, but it’s not like Joe or I are changing our lifestyles based on the cash that this business generates. So we will continue to reinvest, whether that takes the form of designated players or youth system or infrastructure or scouting or any of the other pieces to the puzzle that we think will keep us as a rational business and sustainable for the long haul.

“I’ll just make one last point: That the United States is littered with professional soccer leagues that have come and gone, men’s and women’s, and that was the result of out-of-control spending. Our league is structured in a way to try and keep us from — excuse the phrase — blowing our brains out with out-of-control spending. The consequence of that is that we’ve got a very stable league today, with amazing parity within the league, with 19 successful-to-some-larger-or-smaller-degree franchises and a lot of possible expansion opportunities in the future.”


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