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2011 One Page Investment Summary on Starting a UFL League Franchise
The UFL Goal in 2011
TARGET: To purchase a United Football League Franchise for 2011 by decision deadline of May 15, 2011, providing an NFL-caliber product for non-NFL caliber costs, leading to significant returns on investment. Next step: review league’s full history, financials for league and for each club, projections, ownership structure . If needed for the close, UFL Founder Bill Hambrecht and UFL Commissioner Michael Huyghue will fly to town to meet
*Data in brackets are Portland figures and projections, not the UFL’s
The Term Sheet*
(Expires May 15, 2011)
- Commitment required: $15M over two years, in 10 units of $1.5M each, open to individuals or organizations.
- $5M at acceptance of Term Sheet, $3.5M when all docs are executed, and balance of $6.5M due year two.
- The $8.5M stays in franchise city for local expenses [can be placed in escrow until team officially awarded]
- Break even projected to be in 3rd year; profit of $5.3M in the 4th yr, $9.3M in the 5th year
- In 5 years: cash flow over aggregate amount invested ($15M plus) goes to UFL as fee; if under, no entry fee
- Expansion fee for 2012: $12M/team; in 2013: $14M/team; in 2014: $16M/team. [6 teams = $84M pot to split]
- $94M expected for TV rights to broadcast UFL games, 2012-2014 [anticipate minimum of $10M/team/year)]
- Each projected annual contributions for operations to be based on upcoming proposed budget
- Two documents: a Subscription Agreement and an Operations Agreement
- Teams owned 50%-50% by league and team; each team ownership group owns 4% of the league
The Opportunity Upside*
- Opportunity to fully engage entrepreneurial revenue and job generation, backed by a profitable exit strategy if one becomes needed (see above); can take turnkey and manage it or turn it over to hired managers
- [Outside estimates of making up to 16 times one’s UFL investment if UFL becomes Sunday football for part of 2011]
- UFL is on Versus; Versus is part of NBCU and Comcast; [Comcast seeks a sports network to rival ESPN with 9 geographical satellite sports network; the UFL becomes their perfect professional football content source.]
- The NHL generates $77.5M on Versus each year [with six or more teams, UFL 2011could generate over $100M/yr]
- Local revenues: to local team. Shared revenues: from expansion, television, and national sponsorship.
- Term sheet for 2011 = ¾ of 2010 entry and half of projected 2012 entry.
- Finite # of teams = 5 to 6; 6 to 8; 6 to 10; top out at 12. Favors UFL vis a vis law of supply and demand
- Open 1-2 teams for 2011; any city meeting the Term Sheet gets a team
- Continued NFL lock out = nice UFL TV contract, and maybe nice anyway as networks want to protect themselves with product lined up, especially professional football
- A 6th team would make everyone more revenue, as it would enhance the media contracts.
- With prolonged NFL walkout/lockout, media deal in 2011 could cover costs for second year
- Franchises may handle local operations
- Away games, charters, national media, handled by the league but could also be handled by local team.
- UFL is following Clayton Christensen’s concept of “disruption.” Founder Bill Hambrecht has raised billions following this proven concept of disruption and it is being applied in the UFL.
- No revenue sharing with the UFL until it is from operating profits
- Control revenue and profit destiny: great ops teams will do better than teams lacking in aggressive ops
- Each team will be a laboratory regarding generating different revenue strategies. Going beyond tickets, sponsorships, and licensing/merchandize; read more about the revenue models in Fan Plans to Build Attendance, Sustain Sellouts, Increase Revenue and 40 Revenue Streams in 26 (Mostly Local Revenue) Categories. The NFL is a parity league, but three teams – Cowboys, Redskins, Patriots – earn $100M - $200+M per year as they work more revenue streams than the other teams.
- [West Coast markets marketing to the Pacific Rim can generate an additional $10M/yr/West Coast team.
- [There are those offering to get sponsors at no cost in exchange for fee sharing, further reducing operating costs.]
- Top coaches & players available; operations personnel familiar with UFL operations are available for quick starts.
The Downside*
- A 2011 franchise could lose $6-7M and $3-4M in 2012, until reaching break even in 3rd year. Understandable.
- [League could cease operations before the end of 2011 or not even start 2011. We believe it will play and prosper.]
The Exit Strategies If Needed*
- Internal, to prevent external exit
- [Follow the “Fan Plan” and as many as possible of the 40 ways in 26 categories to generate more revenue;]
- IPO of League and IPO for each teams (in original Business Plan)
- IPO of individual teams (Hartford Colonials doing it with $20M evaluation; = league evaluation of $100M. Six teams = $120M league evaluation, minimal price if bought by NFL or 3rd party)
- External
- NFL purchases league; discussions have been held; so far, UFL has turned the NFL down, a sign of confidence
- Individual franchise investors sell to another set of investors
- [Merge certain teams into the NFL, split purchase of several between investors of all]
- NFL needs the UFL far more than the UFL needs the NFL
- NFL has no player pool available for injury replacement down the playoff stretch; UFL can provides such a pool
- If NFL move to 18 games, 2 only pre-season = less time to evaluate players; UFL will enable evaluation.
*Data in brackets are Portland figures and projections, not the UFL’s
Page content written / posted: 10-15-13
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