20 Talking Points: Answers to Questions Raised During April-May 2011 Negotiations
Prepared for investors interested in a UFL team in Portland, Oregon, and provided as an example to investors interested in a UFL team in other cities.
- The United Football League seeks investors to purchase franchises in non-NFL cities, with half the team owned by the investors, the other half by the League, with shared revenue in media, gear and other areas, with operations run locally and with all local generated revenue staying with the local team.
- Portland still mourns the Delta Park Dome that would have brought the 1968 Olympics and the NFL; the supermajority-voting requirement didn't pass, and Seattle got the Dome, the NFL, and other ensuing benefits. The Oregon Sports Journal, March 2, 2010, ran a cover story on the Delta Dome: Once Upon a Time in the Rose City, Portland chased an Olympic Dream. Where Else? Delta Park. So: how about now? Will Portland step up?
- This is an excellent time to begin climbing that professional sports mountain again. This is a great opportunity to return to retrieve the lost Delta Dome opportunity of the 1960s. Portland has the Blazers and Winter Hawks and now the Timbers. The UFL team would make a perfect squaring of the circle. The new broadcast/satellite/cable sports networks, national and regional, seek content. This is perfect timing for the UFL and Portland.
- Remember, in this tight time frame, to get more UFL information right away, without the back and forths, directly call John Prutch, Prometheus Capital, cell: 847-989-6601, who is, as noted, the UFL point man for working with investors to establish new franchises.
- Term sheet expires May 15, 2011, with slide room of maybe a week if a firm “yes” is on or almost on the table.
- It is OK to tie a UFL team to a Practice Facility but it is not necessary. It is what the UFL did in 2009 in Casa Grande, AZ.
- Given the short time frame to submit the LOI or term sheet, collateralization is seen as the fast alternative to other agreements (its how Red McCombs, as well as his predecessors, purchased the Vikings for very little money).
- Investment units: Ten units of $1.5M are available for a total commitment of $15M for each franchise team.
- Special offer for 2011: $15M over two years, $8.5M for 2011, and $6.5M for 2012.
- Additional operations funds to be determined. The thesis here is that the Revenue Strategies listed in the DETAILS should generate such funds, precluding further investing, as the operation achieves financing and operational sustainability.
- Projected breakeven year is 2011.
- Profits are projected to begin in year 2012.
- Investors in a local franchise can earn money and protect their investment even if the desired media deal comes in stages (more in 2011 than 2010 but not as much as the business model calls for until 2012). Revenue is in two parts: local revenues generated locally (best case scenario) and, if it comes to that, one of the UFL exit strategies (worst case scenario). Bottom line for both, in my view: protected investment.
- Three teams in the NFL, a league of parity, earn $100 – $200 million more than the other 29 teams, because they push the execution of active revenue generation strategies, rather than passive revenue collection, and are examples of what Bill Hambrecht means by making profit and succeeding by introducing disruption to the market place. This means playing in non-NFL cities, charging affordable prices, and engaging in media disruption and other disruptive means for maximizing revenue generation.
- For every game the NFL season is cut short the more the UFL will make from TV in 2011.
- My perspective, as outlined in the revenue details, is that the risk is less than it seems and the potential upside is greater than it seems.
- The Franchise LLC would own half the team (the UFL the other half) and have a seat on the UFL board.
- UFL Year 1: Teams in Casa Grande and Orlando traveled to their home cities. Now all teams are located in their home cities.
- UFL Year 2: Even though each went its own ways in Year 2, the Casa Grande complex will break even this year.
- UFL Year 3: My sense: following the revenue avenues outlined will lead to break even and profit. If, worst-case scenario, the UFL didn't continue, the UFL has exit strategies to protect the investment.
Page content written / posted: 10-13-13