SBJ/20080804/This Week's News
Several leagues later, debate on single-entity model still lively
Published August 4, 2008
In 2001, Major Indoor Soccer League owners debated how to structure their league to maximize revenue and minimize costs: Convert to a single-entity model or operate under a franchise system?
The debate — never fully resolved — is a microcosm of a wider debate that continues across the sports industry about the merits of that model.
In a single-entity structure, owners invest in a financial stake in the league, not their individual team. That league is run centrally and can manage all costs, from team travel and equipment to front office and player compensation. On the revenue side, it can sell sponsorships and share best practices across all of its teams.
Single-entity proponents contend that the structure reduces costs, eliminates debates between large- and small-market teams and improves its value for potential corporate partners. But opponents say that sports are too local to have a league manage its teams and that it’s easy for a single-entity league to overspend.
Bob Caporale, chairman of the sports advisory firm Game Plan, which consulted MISL in 2001, supports the single-entity model. “With single entity you can determine all of your budget — not just player compensation — and that can make for big saving,” Caporale said.
Proponents also argue a single entity strengthens the sponsorship portfolio of a league by giving partners rights in local markets, decreasing sponsor ambush.
The ability to sell sponsorship across all of its teams helped single-entity MLS sign major corporate partners Pepsi and Honda in its infancy. “They were able to look at soccer as a whole and create one-stop shopping for soccer in America in 1996,” said Randy Bernstein, president of Premier Partnerships and MLS’s former chief marketer. “That’s one of the key reasons MLS is as successful as it is.”
But not everyone is convinced that single entity is the solution.
The WNBA and the NBA Development League, which began as single-entity-owned properties, have shifted toward private team investment to offset losses and encourage local team growth.
“While the launch model was successful, it became evident that owners wanted more control,” said WNBA Commissioner Donna Orender. “Right now, we’re in a nice growth pattern as a result.”
Women’s Professional Soccer, to debut in 2009, is taking the same approach. Rather than use the single entity favored by the WUSA that folded in 2003, the league felt franchise ownership would encourage entrepreneurial investment and do away with “an overly large, overly controlling league office that would inhibit teams’ ability to move quickly and set the strategies necessary for their markets,” said WPS Commissioner Tonya Antonucci.