Staff Reporter

The World Cup is making the headlines these days, but there's the Galaxy to consider, too.

L.A.'s professional soccer team leads its Major League Soccer opponents in every measure. Its win-loss record is tops in the league, as is its average home-game attendance and sponsorship revenue. Better yet, the league's MLS Cup championship game is scheduled for the Rose Bowl this fall.

There's just one problem: The Galaxy still loses money and remains at least two years away from profitability, team officials concede. And the league itself is losing $20 million a year, according to David Carter, a sports management consultant who has studied Major League Soccer during its first two and a half seasons and who teaches a USC class that will be doing a marketing audit of the Galaxy this fall.

Mark Abbott, chief operating officer of Major League Soccer, refused to confirm or deny the loss figure cited by Carter, but asserted that the future of the league and the Galaxy is bright.

"It's not unusual in the first several years of a start-up operation for companies and divisions to lose money," said Abbott. "That's not unexpected. We look at this as a long-term growth business, and if we have to lose money up front until we establish ourselves, we understand that. That's part of the business."

While team President and General Manager Danny L. Villanueva said the Galaxy's prospects are bright, he conceded that the team, which is owned by a group of investors led by investment banker Marc Rapaport, likely will keep losing money through 2000.

"After year five, we definitely want to be in the black, and we're definitely on a trajectory to do that," he said.

Carter said he doubts the Galaxy can become a profitable venture that quickly.

"I don't see how they'll be profitable in three to five years," said Carter. "The league is losing $20 million a year so far. The ability to turn that around quickly is a problem."

The stakes are very high. "This is a very out-front, very high-profile league," said Carter. "This will be a much more significant loss to soccer than the other ones having failed in years past."

In L.A., the failures have included the Wolves, Aztecs, Lazers and Heat teams that never caught on with local sports fans.

But so far this season, the Galaxy's performance has been encouraging. Its average home-game attendance of 24,447 is far above the 14,860 Major League Soccer game average, and is the highest attendance in the 12-team league. It's also up 18.5 percent from last year's Galaxy average home-game attendance of 20,626.

The Galaxy had a much higher attendance 28,916 per home game during its first year, but team officials said those high numbers were the result of first-year excitement about the league and lingering enthusiasm from the 1994 World Cup. That 1994 tournament was held in the United States, with the final game at the Rose Bowl, where the Galaxy has played since opening day in 1996.

Galaxy officials are also quick to note that this season's games are the best-attended professional sports events in the area, except for Dodgers games. "I think we've surprised a lot of people with how far we've come in just two and a half years," said Villanueva.

A major challenge for the Galaxy, Carter said, is that the team targets two distinct markets: Latino immigrants, who have brought their love of soccer with them from their native countries, and young, largely American-born soccer players, who play on after-school teams.

C. Patrick O'Brien, vice president of corporate sponsorship for the Galaxy, acknowledged the split personality of the fan base, but said the team has been able to sign corporate sponsors targeting both audiences.

Those include Nike Inc., PepsiCo Inc., Kellogg Co., Glendale Federal Bank, McDonald's Corp. and Ralphs/Food 4 Less, a unit of Fred Meyer Inc.

"We do have the McDonald's of the world that want to reach the Hispanic community, as well as the kids and the youth soccer market," O'Brien said. "We've led the league for three years in sponsorship sales."

Ticket sales have been more of a problem. While members of youth soccer teams and their families are likely to buy season tickets through such associations as the American Youth Soccer Organization, the Latino market which makes up between 60 percent and 70 percent of the fan base is more likely to buy tickets on game day.

Carl Sinclair, the team's vice president and controller, said "walk-ups" have accounted for about 61 percent of business on an average game day this season. That's up from the last two seasons, when 52 percent to 55 percent of attendees for an average game were walk-ups.

Having a greater proportion of walk-ups creates complications, Sinclair said, because it results in greater attendance fluctuations from game to game. With a greater portion of season-ticket holders, on the other hand, it's easier to predict attendance and thereby employ the optimum number of ushers and concession workers.

"We would like to convert some of that walk-up business to season tickets, which would help our cash-flow planning extraordinarily," Sinclair said.

The 5 percent to 10 percent drop-off in Galaxy season-ticket sales this year is the result of the poor on-field showing last season, when the team lost two games to the Dallas Burn in the first round of the playoffs, Sinclair said.

"My sense was that people didn't think our prior-year on-field performance was good enough. That's a very big part of this market. As you know, the L.A. market loves a winner; it hates losers," he said.

Michael Arya, vice president of ticket marketing, said prolonged negotiations with Major League Soccer over providing MLS Cup tickets to all Galaxy season-ticket holders this year a battle the Galaxy ended up winning also hurt season-ticket sales. That fight pushed back the start of season-ticket sales from November 1997 to January of this year.

Despite these challenges, the Galaxy is winning fans among longtime soccer followers particularly given the addition last month of Carlos Hermosillo, the all-time leading scorer for Mexico's national team.

"Having Carlos Hermosillo there certainly won't hurt things," said Jeff Goldstein, 29, who has been a season-ticket holder since the Galaxy started playing, and who started playing soccer himself when he was 5 years old. "The quality of the soccer is actually pretty impressive."

Ozzy Gomez, who bought season tickets for the first time this year, said he has seen the Galaxy, as well as other MLS teams, improve their performance to the point where they are now approaching World Cup-quality play.

"It's about 80 percent of what I'm seeing in the World Cup right now," said Gomez, who started following soccer when he was growing up in Argentina. "It's a big difference from the first year to the third season. It's getting better."

Galaxy management is hoping that this year's World Cup, while being held in France rather than the U.S., will also give a boost to the team. Villanueva said the team is trying to tie into the excitement of World Cup by supplying Galaxy players as commentators for local television and radio stations covering the games locally.

"When fans are watching or listening to games in Southern California, it's actually Galaxy people who are explaining it," Villanueva said.

But, he added, he does not know what kind of impact this year's World Cup will have on Galaxy attendance. "This is the first time where we will experience that (World Cup and Galaxy games going on concurrently) in our three years of operations," he said.

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