Rochester Minnesota will Field USL PDL Team in 2010
Going to the website of Rochester MN Thunder PDL team, you would believe good things were in store for the 2010 season. A Rochester Thunder logo cloaked in darkness greets you on the splash page. The familiar Thunder icon is peering out of the darkness with a spotlight trained from atop. A pitch black backdrop has copy in white distressed lettering that states boldly, “January 2010″ – leading one to believe an announcement will take place or perhaps a new website will be launched at the beginning of the coming year. But if you were to have asked Todd Penz several weeks about the team’s chances of survival after their successful inaugural season in 2009, he would have told you that things were not looking good.
That was then, this is now. Penz is the son of Dan Penz, the soon to be new owner of a Rochester Minnesota United Soccer League (USL) Premier Development League (PDL) team. Dan Penz is a successful Rochester businessman who formerly owned 40% of the Rochester Thunder PDL team. Dean Johnson of WingField, who also owned the USL-1 Thunder team, owned the other 60%. Todd, the son of Dan, is the team’s Director of Operations. The younger Penz spoke to IMS earlier in the month and told of their frustration with attempting to contact Dean Johnson to purchase the team from him when the Thunder’s parent team ran into financial difficulties this past year and owed the league $32,000.00 in back payments. The Penz family was desperate to keep a PDL team in Rochester but their attempts to contact Johnson were not reciprocated, and the Penz family, after being voted one of the best new franchises in the USL for 2009, were becoming pessimistic.
IMS has since learned that USL also wanted to keep a PDL team in Rochester, Minnesota and despite the monies owed by WingField, they will allow the Penz family to start a new franchise in the town of 86,000. Todd Penz told IMS this week that they are moving forward with the USL to secure a team and Frank Spaeth of the Rochester group attended the USL AGMs last week. Todd Penz reported to IMS stating they are excited to be back in business and are looking forward to fielding another team in the 2010 season.
Tim Holt, president of the United Soccer League confirmed on Wednesday that the USL are working with the local operating group in Rochester, MN to ensure the PDL team there will continue to operate in 2010.
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Sorry to be so cynical but “USL wanted to keep a PDL team in Rochester, MN……”. If I understand the USL business model their revenue comes from franchise fees, so of course they would want to keep a team in Rochester (no team-no $$$), and would probably also love to have a team in Duluth, Fargo, Eau Claire, etc….
The cynicism aside, this is good news. Now lets see if we can also end up with a Div2 team.
Tom, where are you coming from tht USL’s sole focus in on franchise fees? The PDL franchise fee is about $6,000 a year. With 70 PDL teams, that amounts to $420,000, hardly enough to make “killer” profits on franchise fees.
Bart, is the $32K referenced in BQ’s report for the USL1 Thunder or for the PDL?
Tom, that figure of 32 grand is correct. However, it’s a complicated situation of the Thunder PDL paying money to Johnson and him paying some of the money to the USL but not all the money. A PDL team costs $75,000.00 for initial start up franchise fee’s and that is nothing to sneeze at for just a PDL team. Pretty expensive start up costs.
In response to your first comment, I think the USL is being pretty good to the Rochester organization. I don’t know the exact figures myself, but I believe the are waving a lot of the costs because Rochester had actually paid Johnson for their portion and it wasn’t really their fault for what happened. Then again, the USL could be within their rights to shut down the whole thing and make Rochester go through the whole process again coming up with the start-up franchise fee, and I am pretty sure ULS is not doing that.
I’m not saying USL is always correct with their franchise fees and what they take in. But I think you have to give them the benefit of the doubt on this one that they are really trying to help Rochester make this happen.
BQ – thanks. I was responding to Bart’s $6K? remark (not the first time his facts have been questionable). We all appreciate your efforts. From a business perspective, USL is making a good (and in my opinion) and easy decision. Either take in nothing from any past, present or potential future PDL franchise by holding a hard line on the past debt or deposit new funds from the new group. As a franchise operation, they have very little outlay towards the Dean Johnson old debt – that is it’s not like they have a lot of liabilities against it. Granted, it’s lost potential and from an accounting perspective “booked” profit, but how much expenditure did they actually incur?
All of the posters seem to focus in on the “initial” franchise fee, which admittedly is higher than the annual fee. As will all franchise operations, that initial fee covers a lot of costs, including training, setup and other costs associated with placing a new franchise on line.
The annual fee is the fee that is attributed to season play. Analyze a business, any business, and you need to look at the recurring income, not the sporadic income, to determine value.
I think Brian, you miss the picture.
Tom: I will assume your last sentence was a hypothetical question and not a specific because I would have no idea.
Bart: No, I don’t think I’m missing the picture at all. I don’t care what league your in, your going to have renewable fees. How would the league operate without them? You could argue those league fees are too hight or too low, but that’s not what this article in concerning. In context of what this article is about, its the USL knowing they need teams and yes, I’m sure even looking like the good guy here and doing a little PR. That’s the read between the lines portion. But I’ve spoken to both parties and there is a genuine arrangement made here to help Rochester out of a bad situation.
Also, please don’t generalize and group everyone into one category. “All of the posters” there’s nothing that kills a good give and take dialog than generalizing and making accusations that turn the conversation into black and white instead of give and take with grays were we can all learn something from each other.
While I do agree Bart that the annual fee’s are important, consider that your 6 grand fee is correct. It would take 12-1/2 years of annual franchise fees to make up the same amount as the initial fee. I would guess there are a great number of PDL teams that never make it that far along.
Also, I don’t think that the franchise fee is in question as much as the league’s lack of support for that fee and lack of sharing in the losses.
On the other side is the league who are saying to the TOA, you think costs are expensive now, if you want all the things you are talking about from marketing to more support, your fees will be much, much higher.
Franchise fees and who owes whom aside, at least someone will definitely have a team.
That is exactly to the point Nathan!
Brian,
Why should any league share in the losses of any one team? Each team is an independent business, at least that is the European model (not MLS).
A league should provide a platform to create the business of playing soccer. The league should, on macro scale, market its brand. The team is responsible for its individual creation of a home fan base at the local level. The team markets its brand on a local basis.
Each side must look at the cost/benefits analysis on this.
It would appear that the biggest criticism of USL is the lack of brand marketing on any kind of macro level. At least with other franchise operations (from your Subways, Midas Mufflers, etc…) there is some corporate brand building. It seems some folks are more familiar with this than I am, but just what do you get from USL for your initial franchise fee and annual fees? I know they have a website which needs maintaining/updating. There are roughly 120 basic teams plus another 90+ Super 20/Super Y teams so if Bart’s $6K number is remotely correct that’s well over $1M annually for basic operations (something tells me the USL1 annual renewals are a whole lot more than $6K/year).
Taking a step back and looking at the situation from a business perspective, I can easily understand why the TOA/NASL wants to go the direction they are going.
USL-1 is about $13,000 a year. USL is hardly a money making machine, if you are looking at $1,ooo,ooo a year. That is probably less than their total payroll.
I would be shocked if USL has a positive cash flow of over $250,000 per year. This is chump change, folks.
Bart – thanks. What I’m still not sure of is what they actually do? It’s seems like its kind of a “you’ve gotta pay to play” since they own the infrastructure, but just not sure what they do? One other question….if USL-1 is only $13K/yr, then how does the current Thunder ownership owe so much? I’ve heard reports of well in excess of $100k, so how would they owe so much money? Your numbers never seem to add up.
My numbers never add up? Having not reviewed the books on either organization, I have no idea on how much Thunder owes USL.
As to your comment on “not being sure on what USL does”, for one, as you put it, they own the infrastructure, which is a very big deal. The infrastructure is essentially all the elements that allows the league to run and allows the teams to operate. I would not discount that, not just anyone can do that, and even NASL will be tasked when they start that process.
PDL franchise fee used to be 50K and recently went to 75K. With annual membership fees of 6K, used to be 5K. Interesting development with the USL latching on to the Rochester group. I suspect it is posturing at this point, unless the Rochester group are considering a USL 1 team in the Minneapolis/St. Paul area. What USL needs is a USL 1 team in the upper midwest. They will not sell a seperate PDL franchise, if a USL 1 franchise is currenlty in the works, as the USL 1 franchise would have rights to the PDL market/team as well.
I also suspect the Kwik Trip/Zietlowe family could certainly afford to buy the entire USL frnachise package (USL1 and PDL). And that the Rochester group may be willing to make up for some of the money the Thunder owe the USL. Which may be why they Rochester relationship remains strong.
I also heard recently that the TOA + NSC + some former Thunder employees are trying to make a go of a new team. What have you heard about this BQ?
” Kwik Trip/Zietlowe family” Huh? No idea what you’re talking about. This one is coming out of left field. Is this someone who has an interest in soccer? I’m really confused about what your trying to say.
As I have posted previously, the NSC wants to field a team and are looking for business partners. I have also posted that both sides (TOA/USL) are courting the NSC. There are also rumors of other groups possibly interested in having a pro team here in the Twin Cities, with the key word being rumor and possibly. In other words, nothing concrete and not worth wasting my time writing about and your time reading.