SBD/Issue 135/MLS Season Preview

MLS’ Don Garber Talks State Of The League With The Daily

By Jon Show, Senior Staff Writer

MLS’ Garber Discusses
Growth Of League
MLS Commissioner Don Garber, during a recent meeting with writers and editors of SportsBusiness Daily and SportsBusiness Journal, said improving the quality of play in the league occupies 50% of the focus on ensuring its future success. “You have to do two things, which we’re doing,” he said. “You need to have youth development academies where you have a stake in keeping the players in the league, and you need to spend more money.” Garber said he was also focusing on globalization, demographic changes in the U.S., resistance to public stadium funding, social responsibility, stadium security and monetizing the digital space. He added of the sports industry’s effort toward globalization, “Certainly soccer is not going to lose and we have to be sure we’re part of whatever that win is going to be.” Garber stressed the league can capitalize on the changing demographics of the U.S. and that leagues and teams must tackle the perceived player/fan disconnect though civic and corporate responsibility.

EXPANSION: The $33M sale of United has allowed the league to set an expansion price of $35M. Candidates for expansion to 14, and possibly 16, teams by 2010 include Philadelphia, San Diego, Seattle or Cleveland, plus A’s Owner Lew Wolff has an option for a team in San Jose. Talks are also ongoing with groups in Atlanta, Milwaukee, St. Louis and the Pacific Northwest. Garber said that a return to Miami is also a possibility. Garber: “The explosion of the (South Florida) market — Cubans, Mexicans, Brazilians, Caribbeans –- is overwhelming. ... But we won’t go back there until they give us a facility downtown that’s connected to the community that would likely have a Latin American owner. I think post-2010, it will be a great market for us.”

FRANCHISES: Garber said a “handful of teams” are making money. “I think the goal is that if teams can make a little, lose a little locally, and they’re making money in their facility and their asset goes up, that’s a good model,” he said. “And that’s happening in most markets.” AEG, which owns three MLS teams, currently has the Fire and Dynamo on the block as league owners attempt to divest themselves of multiple teams. Garber said he would be disappointed if league investors own more than one entity by the end of the decade. “There’s a real focus on my part to push that ahead — and going out and meeting with investors and trying to help them move that process along,” he said.

FC Dallas’ Pizza Hut Park Sold Out For The Year

FACILITIES: Garber expressed optimism over stadiums either recently completed or currently under construction in Chicago, DC, New Jersey and Denver, and added, “Houston is one where they’re still struggling to figure out. I think eventually they’ll get something done, but I think it will require a local owner to come in and get something done.” FC Dallas’ new complex in Frisco is sold out for the year and hosted 750,000 youth soccer players in ’06; Dick’s Sporting Goods Park near Denver is nearly sold out for the year. He added that growing resistance to public funding in markets like Seattle are a concern to any growing league, but security is the issue that concerns him the most. “I probably worry more about that than anything else because I think our entire industry is vulnerable. Not just in how we deal with it, but (in the event of an attack) how will the consumer feel about going to a public event where they don’t feel safe?”

MARKETING: Some previous league marketing campaigns have featured players and others have focused on league branding, but MLS will highlight neither this season, focusing instead on supporting its broadcast partners’ campaigns. Garber: “It’s OK to sort of not believe that you need to establish a long term brand until you have the core fundamentals down, and we’re still building our core fundamentals. We made the decision: why should we just spend money and throw logos out there in an ad that is about this year’s positioning? This year it’s going to be about how our broadcaster partners want to position the league.”

MEDIA: Garber said soccer fans are more used to gathering information online, presumably due to the dearth of mainstream coverage, than fans of other sports. That presents a growth opportunity in online efforts, which are currently being managed by MLBAM under a one-year extension that expires this year. SUM President Doug Quinn said ESPN is packaging advertising inventory for MLS’ new Thursday night games similar to its “MNF” offerings, selling across multiple platforms to entice media buyers. Meanwhile, with Real Salt Lake Owner Dave Checketts close to finalizing a deal to buy 80% of GolTV, Garber said more competition between soccer networks can only mean good things for the sport. “I’m not saying all three are successful, but — Fox Soccer, Setanta and Gol — that says something in terms of what the market thinks about the long-term opportunity,” he said.

Beckham’s Arrival To Give MLS
Major Boost In National Media Exposure
LABOR: The current CBA runs through the ’09 season, and the massive investment in players like David Beckham is likely to have a ripple effect in a league with a minimum salary of $30,000 this season. “We were in a tremendously leveraged and powerful position during our last agreement,” Garber said. “We still believe we’ll be in that position during our next negotiations, but clearly our players are seeing a lot of money invested in the sport — certainly in a handful of players. So I’m sure their expectation is to see more than the 2 or 3% salary budget increase that we’ve been spending over the last couple of years.” The Designated Player Rule that allows teams to exceed the salary cap to sign expensive talent expires the same year.

LOOKING AHEAD: MLS, which is entering its 12th season, has had around $1B invested in it in the last two years alone in TV, sponsorship, new facilities and other investments. The league has taken its lumps (relocation, contraction) but one cannot overlook the solid footing that MLS is on as it looks to the future. But don’t look for any growth, or decline, to be “NASL-esque.” Garber: “We envision the growth plane of MLS being very slow and steady over the next 10-20 years. We don’t think there’s going to be anything that will either take that down or skyrocket it.” Meanwhile, he added of the Designated Player Rule, “I think you’ll start seeing guys like Figo [from Portugal] and other players [coming]. If Beckham is successful and crowds come out, there will be a real market for these international players coming to the league. We’ve just got to be sure we do it in a way that’s smart.”

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