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NOTE: THIS VERSION IS ALL 9 ELEMENTS OF THE L.A. GALAXY MODEL, COMPLETE

EBM Assignment Three

L.A. Galaxy

(Student Name)

(Date)

Carol Wonsavage, Entertainment Business Models

Background Information

The L.A. Galaxy is an America professional soccer team owned by AEG based in Los Angeles, California. Competing in the MLS league, the highest level in both the United States and Canada, L.A. Galaxy are one of the league’s most-decorated clubs as well as reigning MLS Cup Champions ("Lagalaxy.com review," 2013). The team was founded in 1995 and became part of the ten members of MLS. The Galaxy also reached a 10-year $55million contract with Time Warner Cable in 2011 (Baxter).

Bruce Arena, a former US national team coach, is the head coach for the L.A. Galaxy. Originally, The Galaxy played their home games at the Rose Bowl in Pasadena, California but in 2003 moved to the StubHub Center in Carson. The Galaxy is the most popular MLS team around the world including some of the best players such as Robbie Keane, Landon Donovan and David Beckham. Landon Donovan signed a four-year, $10M (Baxter, 2013). David Beckham’s $250M for 5 year deal move to The Galaxy is what sparked their popularity (Davis, 2007).

The Galaxy has won numerous Cups and Awards. They have won the MLS Cup four times, the MLS supporters’ Shield four times, the Lamar Hunt U.S. Open Cup twice, and the CONCACAF Champions’ Cup which they are just one of two MLS teams to win the award.

Customer Segments

· Primary Target: The main target customer for the L.A. Galaxy games are men ages 18-34 who enjoy watching sporting events. Based on a chart found on Sports Business Daily fans ages 18-34 make up 37.8% of the attendees. On average 60.5% of the fans attending MLS games are males (Scarborough Sports Marketing). Many of the fans are also soccer players themselves and enjoy watching a high intensity game with friends or family.

· Secondary Target: The secondary target includes sponsors and potential sponsors for live games, the arena and game telecasts.

Value Proposition

· Famous Athletes: L.A. Galaxy has numerous famous athletes on their team including David Beckham, Robbie Keane, and Landon Donovan. All three of these athletes are on the top paid athletes: Robbie Keane earning $4,333,333, Landon Donovan earning $2,600000 and David Beckham on top with $6,500,000 (Kenney, 2013).

· MLS Soccer Franchise: With some of the top athletes in MLS every L.A. Galaxy game is a highly competitive game that will keep fans at the edge of their seats. Being one of the most popular MLS teams worldwide many people who visit California and enjoy soccer always make it out to a game. Other fans are simply locals who are huge fans and enjoy rooting for their favorite team.

· Championship Team: Fans attending the L.A. Galaxy get to attend a match with a championship winning team. The Galaxy have been the 2013 MLS National Cup champions.

· StubHub Center: this iconic arena, located in the heart of Los Angels, is part of the fan appeal. The team shares it with other LA athletic teams.

Channels of Distribution

· The Live Game: Their biggest channel of distribution is live games played both at home and on the road. An average of 22,283 attend every home game. By bringing the fans to the live event that opens several opportunities for L.A. Galaxy to sell their merchandise, promote new merchandise and events, and advertise many things.

· Time Warner Cable: L.A. Galaxy holds “Galaxy Viewing Parties” at the Buffalo Wild Wings near the stadium for the fans, which other Galaxy legends will join. With their partnership with time Warner Cable many of their games are broadcast on TV.

· Live Stream: L.A. Galaxy brings in fans from all over the world. On their website they give fans a link to international broadcasts. Coming in 2nd after NHL with fans spending 20 or more hours on the Internet with a percentage of 13.8% (Scarborsough Sports Marketing).

· Other cable and network outlets.

Customer Relationships

· Social Media/website: The Galaxy does a fantastic job at keeping up to date with their fans online, they have an account on Facebook, Twitter, YouTube, Instragram, Google+, Pinterest, and FourSquare . The Galaxy has a total of 152,846 followers on twitter and a total of 700k likes on Facebook.

· Training Camps: This is a great way that L.A. Galaxy keeps in touch with their younger fans who want to be like them one day. They have camps for all ages for simply one day or weeks at a time ("Camps & clinics,”).

· MLS Pubs: L.A. Galaxy has numerous pubs for fans to go watch the game. The pubs are located close to the field such as Buffalo Wild Wings, or far from the field like Gallaghers Pub and Grill in Long Beach or Ye Olde Kings Head in Santa Monica.

· Merchandise: in the online store and at live games.

Key Activities:

· Recruiting: First the L.A. Galaxy must have a team, which means recruiting and contracting. There are a few ways to locate players. One way is from their academy teams which start as young as U-12 ("About the galaxy," ). Another is to attend open tryout, which happen once a year usually in July. According to the website over 700 people attend with high hopes of being part of L.A. Galaxy (Morgan, 2010). Of course many players are recruited from other pro teams.

· Play Games: The biggest key activity is playing games in the StubHub Arena and on the road. The schedule is planned between the team and the MLS.

· Administration: Like any business, the L.A. Galaxy has staff to cover accounting, legal contracts, travel arrangements, human resources, website maintenance, merchandise creation, marketing/PR and sponsor sales and relationships.

· Marketing and Promotion: From finding sponsors to getting the word out to the public, marketing and PR is key both at home and on the road. Sponsorships are sold for the arena banners, for television and for the website. Banners feature the company’s logos; key sponsors will have their logo on the players’ jerseys. Paid advertising includes television ads, print ads, billboards and online ads.

· Website Maintenance: The team has its own website with information for the fans, the schedule, merchandise sales and player information,

· Selling sponsorships: Sponsorship revenue from food vendors and other services can be shared between the team and the arena; a sales staff is usually part of team administration.

· Ticket sales: the team has a partnership with arena StubHub Center to sell tickets.

Key Resources

· Players: Without the players there would be no team. Galaxy players are some of the top in MLS. The team has players from around the world including France, Italy, Brazil, Ireland, Argentina, Ghana, and Panama (The L.A. Galaxy).

· Coaches/coaching staff: In order to keep the team in shape and well maintained, a coaching staff is very important. Coaches serve as managers.

· Arena: The Galaxy currently plays at the StubHub Center, located in Carson outside of L.A. Anschutz Entertainment Group (AEG) whom also owns the L.A. Galaxy built and owns the StubHub Center (Peltz, 2013). The stadium holds up to 27,000 people.

· Fans: Fans are what bring the atmosphere to the event. On average in 2013, 22,152 fans attended their home games. L.A. Galaxy is second in attendance next to the Seattle Sounders (Schultt, 2013).

· Sponsors/Partners: Capital is very important for every business. Sponsors are a key source of revenue. The L.A. Galaxy holds a 10-year deal with Herbalife for over $44 million (Eisenmenger, 2012). Other partners include Adidas, American Express, Buffalo Wild Wings, Corona, and many more ("Partners,”).

· Production and administrative staff: Production and administrative staff do planning and scheduling of games, sell sponsorships, handle marketing/PR , legal contracts, administration and work with telecast partners. On the day of the games even more staff is needed for merchandise sales and concessions, staging half time shows, security and many other tasks; hundreds of staff are needed for each game.

· Media: Broadcast is very important for the fans. For example, L.A. Galaxy has a ten-year, $55 million deal with Time Warner Cable ("La galaxy and," 2011). In 2012 matches were played in Spanish on KWHY. It has radio coverage on KLAC AM 570 for Los Angeles and Orange County as well as KTLK 1150 Am for English and KWKW 1330 Am for Spanish ("La galaxy local," 2012).

Key Partners

· MLS: Major League Soccer is a professional soccer league representing the highest level in the U.S. and Canada. To become a part of MLS a team must meet several criteria’s such as the financials, an approved stadium, the size of the market of the metropolitan area and an established local fan base (Hakala, 2011).

· Time Warner Cable: In signing a $55 million deal with Time Warner Cable, the Galaxy made the most lucrative media contract in MLS history. Games are broadcasted out in English as well as Spanish. The network also televises the clubs’ friends and other non-league matches. Also announced is that all games will be produced in high definition with pre and post game shows ("La galaxy and," 2011).

· Herbalife: After it signed a $4.4 million per year deal, Herbalife became the primary shirt sponsor for The Galaxy. The first deal was made in 2007 for a 5-year deal for $4 million a year. Last year in March, LA Galaxy and Herbalife announced a 10-year extension for $44 million to run through 2022. This deal is the largest and longest sponsorship agreement in MLS history ("La galaxy and," 2012).

Cost Structure:

· Player Fees: The salary for each player varies anywhere from $5 million to $35,125 a year. David Beckham had the record highest salary for any MLS player before retiring last year of $250 million for 5 years, which is about $1 million a week. Now that Beckham is retired Robbie Keane is the most paid with $4 million ("Los Angeles Galaxy,”).

· Staff Fees, salaries: The biggest fee for staff would be Bruce Arena, who has a four year $3.5 million contract as head coach and manager of the team. Salaries for the coaching team, legal, marketing, sales and administration staff are a major cost center.

· Broadcasting: In a ten year $55 million agreement starting in 2012 Time Warner Cable will televise all matches not designated for a national telecast ("La galaxy and," 2011). Each game will be broadcasted in HD and will be available in English as well as Spanish. Other networks may carry games on a contract basis.

Revenue Streams

· Live Games: Tickets start as low as $12.50 per game for the upper level and $20 for the lower level. Season tickets range from $520 a game to $5,660. If calculated from the cheapest price, tickets are bringing in at least $276,900 per game.

· Merchandise: The online store has a variety of merchandise at high prices. A Herbalife jersey runs for about $139.99, a scarf for $34.99, and a foam hand for $6.99. The team receives a percentage of the revenue from merchandise sold with the LA Galaxy logo.

· Camps: Every year the Galaxy holds a winter and spring camp. The winter camps runs for three days and costs $150. The Spring Break Camp costs $395 for four days.

Conclusion

The LA Galaxy is a solid business model. With the expansion of MLS in 2007, soccer is constantly growing in America. More and more cities are building soccer stadiums, especially those with large Hispanic populations, such as Orlando. The appeal soccer has for children who play in youth leagues seems to be translating as they become adults. The Galaxy are improving and finding new ways to improve MLS as well. After bringing David Beckham to The Galaxy, not only has its fan base grown, but also MLS in general.

One thing that they could do to improve would be to play more teams around the U.S. to grow a larger national fan base. By growing their fan base it will bring more fans wanting to travel to watch their games; especially with expansion of MLS they will be traveling to new places for potential new fans.

References