Minneapolis City SC chairman Dan Hoedeman opens club’s books

Photo credit: Tyler Birschbach

The following is a guest story by Minneapolis City SC chairman Dan Hoedeman:

MINNEAPOLIS — For the last two years we have opened our books and talked about what it takes to start and run a lower-division soccer club.

Why?

When we started the club, we had a bunch of vague ideas tied to clear principles that motivated things: create opportunities for local players, build the club we want as a community of empowered supporters, do good in the community, be radically transparent.

But why?

There, I’m not really sure. It seemed like what we should do if we were going to start a club.

That feeling of trying to do something beyond just playing games has motivated us from the very beginning. We open up our books, we talk about our year and what we learned, and we use real numbers because none of this information was available when we started and we thought it would help people. We also thought it was the right thing to do.

As we watch so many clubs start up aiming to not just follow in our footsteps but overtake us and as we see our rivals apply the lessons we have learned to their business we’re apprehensive — and happy. The level is rising. It’s rising quickly. It’s awesome to see that we are, in our own little way, helping to inspire that rising level.

It’s hard work to keep up, let alone keep moving forward. But starting a club and running it successfully at this level was always supposed to be impossible.

YEAR IN REVIEW

This (fiscal) year has been defined by generosity.

We were famously drawn away for all three U.S. Open Cup qualifiers, to Kansas City, Chicago and Rochester, N.Y. While the Kansas City club forfeited, we still traveled over 3,000 miles to play two games.

We could not have done it without the incredible support from our fans and the soccer community who gave over $16,000 to help our club have a shot at glory.

That gooses the revenue numbers a bit because a GoFundMe campaign is hardly something we would do every season to help the club operate, but it shows just how wonderful the people are who support us.

Not to mention that people who give to us, as a 501c3, support our mission of helping local players play soccer in a high-performance environment. Their generous donations have helped us increase the number of players whom we can support during the summer, according to their needs, with no questions asked.

Just looking at the donation number on our financial spreadsheet is an emotional thing. To think that so many people believe in what we’re doing…it’s humbling.

SHOW ME THE MONEY

When we started in 2016, we heard over and over how clubs at our level in this part of the country couldn’t make this work. That we wouldn’t last two years. That we were doomed.

We didn’t listen (obviously), but we kind of listened. Our launch-year budgets and efforts happened within strict budget controls.

That got us through the first year. That was all we needed to know that we had something special here, and that it was time to hit the accelerator. We still keep a very close eye on the budget — we want sustainable, fiscally sensible growth — but we have been able to take some risks by spending on marketing that helped us grow.

Our growth as a club is reflected in our revenue growth.

The money matters insofar as it allows us to do more of the things that we want to do as a club.

In 2016, we were loaned training field time from a local club. Except, sometimes they needed the field at the last minute and we were stuck training in the grassy area between the back of the goal and the stadium fence. By 2018, we had an entire indoor facility rented for training sessions that housed our practices, had room for our trainer to work with players and had space for our management and volunteer teams.

What I’m saying is that while our revenue has grown phenomenally, our costs have grown as well.

Part of that is down to the improvement necessary to keep up in the fiercely competitive National Premier Soccer League.

We have seen clubs in our conference scour the country for top Division 1 and NAIA talent, bring them to their clubs, arrange housing and jobs, and otherwise assemble a team with their pick of the players. We have seen clubs in our region operating on six- and even seven-figure budgets. We have seen coaching staffs hired, coach buses purchased and serious money, time and effort put into these clubs on and off the field.

In many ways, our growth was necessary just to keep up.

Of course, winning the conference title unbeaten as the top-scoring team in the entire country isn’t just keeping up, but it also serves to hide just how close and competitive this season was.

All credit to our players who were simply unstoppable.

All credit to our opponents who made us give everything we could on and off the field. It was a very close-run thing this season.

And it was supported by the budget. That consistent, indoor training facility was important. The high level, regular competition from our U23 side, which is pretty much all expense on the P&L, pushed our players to be at their best every single day.  Every little thing we and our supporters do to make Minneapolis City a club that Twin Cities players choose — and they have so many choices — keeps us competitive in the face of the national recruiting our rivals do.

That’s a long way of saying that while we could trot out a competitive side in 2016 on less than $30,000, we couldn’t do that in 2018.

It will be even harder in 2019.

LET’S GET TO THE BORING FUN STUFF

Woo! Let’s dig into the financials.

A few things about the numbers. First, we use the cash accounting method. Second, these numbers represent just cash and don’t attempt to quantify in-kind or trade arrangements we have made. Third, our fiscal year is September to August. Fourth, these numbers haven’t been audited or anything but we did wait until the end of August before pulling them so they’re probably legit.

The Open Cup was obviously a surprise from our original budget, and so big of a surprise that the numbers shown above reflect where we thought we would be after our November game in Rochester.

We adjusted expectations at that point and planned for the season ahead.

At that point, we knew that Edor Nelson Field at Augsburg University was not going to be available because of construction. We knew this year was always going to be about how we dealt with not playing at home.

We expected it to have a financial impact. We were right.

First, the new stadium was more expensive than our Minneapolis home. And, while we continued to increase our number of Annual Members, we saw a sharp decrease in day-of-game ticket sales. With that came a decrease in at-game merchandise sales.

Because we knew that we were facing serious headwinds from the stadium, which was much more expensive and much farther away from central Minneapolis than Edor Nelson, we prepped for it.

We were given a gift when our contract with our former kit provider expired and we met Geison Moura, founder of Stimulus Athletic.

How could we help plug the budget issue the stadium construction was causing?

Merch. If we did it right.

Using Stimulus’ ability to create custom kits to the absolute fullest, with the wind at our back from a new logo voted on by our supporters, we launched two beautiful new shirts.

And then followed up with the shirt that got the next most votes.

And then our #MurderSleeves goalkeeper shirts blew up in the most unexpected way.

Here we are, not looking at a ~$6,000 loss but instead facing a much more comfortable ~$1,500 loss with pretty much all of that loss represented by merchandise inventory.

In fact, if we sold all of the inventory in hand we would be right at break even.

Some lessons:

• Design matters
• The right kit provider matters
• We can’t do this every year (and, as welcoming as Osseo was, we need to get back to a more central location)

YOU COME AT THE KING, YOU BEST NOT MISS

The one constant in lower-division soccer is change. Wrenching, unexpected, foundational change.

We are seeing more of that right now as independent leagues like NPSL Pro and NISA look to get started, and as USL D3 launches itself into proven NPSL markets. We see it closer to home even as new leagues like the UPSL arrive and we even see it when other lower-division clubs look to replicate the successes of existing clubs in their market instead of working together to build something with mass.

There is instability in the basics, like the drawing and re-drawing of Open Cup regions. Or in availability of stadiums. There is instability at a more macro level as declining attendance and TV viewership of sports pairs with declining youth participation in sports to paint a gloomy picture of the future, in the face of short-term increases in lower-division soccer attendance.

In other words, what the hell is going on?

I don’t know.

Photo credit: John Hoedeman

We believe in the club enough to have launched our new storefront in South Minneapolis. That is an investment that is part retail shop, part awareness vehicle, part community center for soccer culture. It cost money but we think it will pay out.

We believe in the club enough to keep going, and we’re careening into 2019 with a planned budget that is significantly higher than 2018. Weeee!

We believe that people are going to want to beat us on the field and off even more than they already do thanks to our success this past season. But I’m not saying that we are the king. We are not the king.

The king is the bottom line.

Underlying all of what we are doing is the relentlessness of the bottom line. We can increase our budget — we have to if we are going to grow — but when we do that we’re coming at the king. We can’t miss. At least not that much.*

I read with trepidation articles like the one by Andy Hayes of UPSL side USAi Old Bhoys. They lost TWENTY-THREE THOUSAND DOLLARS last year. That is from a total spend of $31,095.24.

That could have been us. Andy did a ton right with Old Bhoys, it’s just really hard to make money at this level. And if your revenue isn’t in line with your costs…

*Our total over three years of operating a lower-division soccer team in an MLS market shared with two other NPSL teams we have lost $7,000 on ~$172,000 of revenue. Not going to get us on the cover of Forbes but also not going to get us bankrupt.

Follow Dan on Twitter: @hoedeman.

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