News, The Angle

Show me the Money: A Deep Dive Into Minneapolis City SC’s Revenue Sources by Dan Hoedeman

by on 11 January 2019

This is the third in a series of articles that take a look inside what it’s like to run one a lower division club by Dan Hoedeman, co-founder of Minneapolis City SC. We’ll take a look at the revenue piece of the business as a super-interesting prelude to next article which talks about the sporting side, which involved less math.

The other day I was speaking with someone who was considering starting a lower division club. He asked me what my biggest day-to-day worry was and if it had changed over time.

Maybe it is because the capable Bisswurm-Pribyl-vanBenschoten Triumvirate manage the athletics side of the club or maybe because I listened to my Dad’s only piece of advice on my college graduation day (“don’t spend more than you make” – Dad), but I am always and everywhere concerned about the dollars and cents.^

The costs are pretty easy to get a handle on.

Even for someone wondering what it costs to get started, it takes only a few calls to understand what you would pay for stadium, training facility, gear, travel, and league fees. If you’re really lazy, you could just read earlier articles of mine in this esteemed publication where I outline our budget and actuals.

The hard part is the revenue.

I mentioned last time that we are planning on a $100,000 budget. We really want to operate on a $125,000 budget.

And the truth is, there is so much we could do with the money that an infinite budget would find a way to get spent: on the players, facilities, in the community, etc. Homer voice: Mmmm, infinite budget.

Back in the real world though the task is to generate at least $100,000 of revenue to support our operations.

So many butts (in the seats)

When things were getting started back in 2015/2016, I called as many people as I could in sports: NPSL clubs, USL clubs, minor league baseball teams, former NASL GM’s, you name it. From all of them, I heard a sort of “Golden Ratio of Sports Budgeting” where they said that I should take my season ticket base and multiply it by three to get a general idea of average attendance for the season.

It was good advice.

While attendance will vary for any given game, with bad weather the primary culprit for major variance, we found that ratio to be true for us. Except at Osseo last season. It was very difficult to get walk-up sales in Osseo.^^

In 2016, we sold just over 100 Memberships and we averaged about 300 fans per game.

In 2017, we sold just over 150 Memberships and we averaged a bit more than 400 fans per game.

This year, we bought 300 Membership cards and by mid-December already had to order more. If the ratio holds true…nah, I don’t want to jinx it…suffice to say that it’s going to be a full stadium and ticket sales are going to be a yuuuuge part of our budget.

In fact, the year-over-year (YOY) comparison in ticket pre-sales (Q4 sales, basically) from a dollars standpoint is eye-opening, heart-warming, and cuddle-inducing.*

2016: N/A**
2017: $3,005.81
2018: $4,208.98
2019: $11,684.45

Support local soccer (with money)

If I were giving myself a performance review, besides adding a zero or two to my salary (which is $0) because I hear that’s what CEO’s do these days, I would ding myself on sponsorships. Though we have some great, multi-year partners and love them, compared to peer clubs I have done a bad job generating sponsorships.

Not unlike how my wife always complained that I never cleaned the bathrooms so I hired a cleaning person to make sure it got done, the club has been positively badgering me to get my ass in gear and do a decent job of sponsorship generation. So I went out and got someone who knows what they are doing to do it. Kristian Killian is our new Partnerships Manager because it’s really critical that we get the sponsorship element of our business done right.

Our growing profile is going to help.

Our commitment to increased marketing spending, event attendance, and community outreach is going to help.

In 2018, we got a pathetic $13,000 (cash) from sponsorships.

While that came with a large amount of trade value (the true value of sponsorships is probably triple that amount), it’s still, ahem, not good for a club of our size and profile. And by that I mean that it’s maybe 10% what a best-in-class (in terms of sponsorships) club in the NPSL with similar attendance would generate.

We have a low bar to clear.

The good news about it being a low bar, though, is that it is easy to make a huge impact on the bottom line with relatively small wins. Sponsorships is our biggest area of potential revenue upside if you ask me. Also, my day job is advertising so you can totally trust my math-based predictions.

Mpls City T-shirts SC (Kinda)

Since the beginning, merchandise sales have been 25% – 30% of our total revenue.

There are obviously marginal costs associated with merchandise in a way that they aren’t really with tickets, but those are manageable and come with the benefit that merchandise sales gives us year-round cash flow. That’s really important for the club because we operate all year but, obviously, only have matchday revenue during the season. It’s important enough to us to joke that we spend most of our time as Mpls City T-Shirts SC but sometimes, especially when it comes to having to fold and re-fold all of our stock, that joke isn’t very funny.

Jersey sales have been huge for us.

There are probably three main reasons for that: 1. they’ve been well designed; 2. we price them reasonably; 3. we don’t launch a new set every year. That latter reason, though, means that the big burst of sales we get from a new kit more rarely than we would like. Though it’s great to get that big burst of sales for sure.

Our most recent jersey launches were in December 2017 (the new home and away and the Stealth shirt) and March 2018 (“Murder Sleeves” goalkeeper shirt) and you can see the sales spikes from those:

Screen Shot 2019-01-04 at 9.18.54 AM.png
Mission driven makes a difference

One of the most wonderful and unexpected things that has happened over the past year is people supporting our club’s mission with donations and, critically, matching donations from their employers (since we are a volunteer-run 501c3 non-profit).

We work hard to find and support kids who would otherwise be priced out of the system, and with our addition of a U23 team and other planned expansion, we are able to do more than ever before. It’s expensive though.

Very roughly, it costs about $1,000 per player per season to kit out, train, travel, and host games for our NPSL and U23 guys. That is purely the cost of playing. It doesn’t include any of the elements that go into the fan experience, merchandise, community, events, and it assumes that our coaches continue to volunteer. So that is just what it costs to get a guy his gear, facilities, stadium, and to away games. And in some cases, we have been able to do more. Respecting privacy keeps me from giving any detail, but the generous donations we have gotten have helped us help guys in important ways.

Also, we are working hard to extend our community work beyond volunteering. We have some things in the works that we hope will make a difference. We can even start to plan bigger because of the increasing donations we have gotten.

It’s been simply incredible.

We wanted Minneapolis City to be about more than soccer. We are working hard to make it happen. There is so much more to do. But it’s inspiring and incredible that we have people who believe in our ability to use soccer to do good that they have donated…I and everyone in the club are working hard to make sure it’s money well spent.

What it all means (I think)

I went on a similar ramble to the guy who asked me for advice on starting a lower division soccer club.

For him, I hope it was helpful. It’s hard to conceptualize where revenue might come from, how much it might be, and just how hard you have to work to get it before you’ve gotten started. I think it was eye opening…but I also think that he, like many—and not entirely unfairly—looked at us and thought “if those idiots can do it, I definitely can.”***

There are great resources for people who are trying to start something. I’m always happy to talk. So are other owners around the country. Take advantage of them. Get their advice and whatever financial information they will share. Model every possible scenario. All will be wrong, but Eisenhower had a point when he said “I have always found that plans are useless, but planning is indispensable.”

For us, I think it means that we have a lot of momentum…but it’s clear that we still have a lot to do.

Early returns are great. Important. Critical, even, because with an all-volunteer crew it’s best not to get behind because it’s so hard to find the time to make anything up. So I’m excited about where we are right now. But it’s still a looooong road to ahead and until we get to $100,000 (or, with your help, $125,000!) the dollars and cents will continue to keep me up at night.

It’s just the way it works here in lower division soccer.

^ Though I will make my next article focused on the playing side of the club

^^ Just another reason to be excited to back in Minneapolis!

*Not least because, at this point, we do not have a schedule, firm number of games, or fully identified list of opponents that we can release to the public, so we are asking people to make a leap of faith. Also, this year we raised our prices…and almost tripled our sales. boom.gif

** We started selling tickets in Q1 2016, so there is no equivalent pre-sale period.

*** I don’t entirely blame him. We are idiots. We’re just idiots who somehow make lower division soccer look easy when it’s definitely not.

Tags: ,