Price to join MLS expansion could hit $125M
|Orlando City SC, a 2015 MLS expansion club, ranks second in average attendance.
Ownership groups looking to buy in on the next round of MLS expansion should be prepared to pay at least $125 million to take part in that growth, according to sources familiar with the league’s expansion goals.
While league officials say no figure has been finalized, people involved in the expansion discussions point to $125 million as the league’s likely new expansion fee, with MLS seeing demand from a number of markets considered eligible for hosting a franchise.
The league’s board of governors met in San Francisco last week ahead of the MLS All-Star Game in San Jose on Thursday night. Expansion was the most talked-about topic among the league’s stakeholders, but no expansion-related motions were voted upon.
MLS currently sits at 20 franchises, and new teams Atlanta United and Los Angeles FC are slated to join in 2017 and 2018, respectively. Additionally, a franchise in Minnesota is poised to join the league, and a David Beckham-owned franchise has rights for a team in Miami pending stadium considerations. Those clubs would get the league to 24 franchises. The league will likely lay out a road map for that next round of expansion in the coming months, with a source indicating the process should be explained to interested ownership groups by the end of the calendar year.
A potential $125 million fee compares to the existing high of $110 million paid by the ownership group of LAFC when it was granted its MLS franchise rights in 2014. But with the league seeing increased attendance (see chart) and TV ratings, more lucrative sponsorship deals, and steadily increasing merchandise sales, interest in ownership in MLS has never been higher. Among the groups that have overtly expressed their interest in having league teams are parties in Charlotte, Cincinnati, Detroit, San Antonio, San Diego, Sacramento and St. Louis.
There are two other elements factoring into the higher price.
MLS ATTENDANCE AT THE ALL-STAR BREAK
|TEAM||AVG. PER GAME (CHANGE*)|
|Chicago Fire||14,503 (-7.0%)|
|Colorado Rapids||15,929 (+3.0%)|
|Columbus Crew||16,742 (+5.1%)|
|D.C. United||15,692 (+5.7%)|
|FC Dallas||13,933 (-9.7%)|
|Houston Dynamo||19,716 (-5.1%)|
|LA Galaxy||24,564 (+12.2%)|
|Montreal Impact (a)||21,472 (+36.2%)|
|New England Revolution||18,423 (+5.6%)|
|New York City FC||26,978 (-7.2%)|
|New York Red Bulls||19,683 (+4.2%)|
|Orlando City SC||33,892 (-0.2%)|
|Philadelphia Union||17,140 (-2.7%)|
|Portland Timbers||21,144 (0.0%)|
|Real Salt Lake||19,609 (-2.5%)|
|San Jose Earthquakes (b)||21,282 (-12.5%)|
|Seattle Sounders FC||40,738 (+1.2%)|
|Sporting Kansas City||19,560 (-1.9%)|
|Toronto FC (c)||27,793 (+15.9%)|
|Vancouver Whitecaps||22,049 (+6.5%)|
* Compared to All-Star Break last year
(a) Played its first two games this season and first game last season at Olympic Stadium in Montreal.
(b) Includes designated Earthquakes home game played at Levi's Stadium last season and at Stanford Stadium both seasons.
(c) Renovations at BMO Field expanded capacity to 30,226 this season.
Compiled by Brandon McClung
In recent years, there have been very few team transactions across MLS, so buying an expansion club is seen as the most likely way into the league for interested owners. The last team to fully shift hands was the Columbus Crew in 2013. Additionally, the next round of expansion clubs will be quick to reap the expected benefits of MLS’s next media rights contract, which is the league’s most lucrative national deal. The current rights contract expires in 2022 and provides the league $90 million annually, a sum that’s five times more than the value of the previous deal. A further increase the next go-round can be expected.
Any expansion fee paid to MLS is distributed to the league’s existing owners in exchange for diluting their share in leaguewide revenue.
■ GO FOR MLS: In the buildup to last week’s All-Star Game, MLS planned five days’ worth of programming and activities in San Jose’s downtown Plaza de Cesar Chavez Park in hopes of appealing to anyone ranging from existing fans to those unaware of the league. But in case a Flo Rida concert, a live “Men in Blazers” podcast, or soccer-themed games with drop-ins by former national team stars Landon Donovan and Brandi Chastain didn’t catch your interest, MLS ran a play using — you guessed it — Pokémon Go.
Upon arriving in San Jose last week, many of the league’s MLS Digital staffers (themselves Pokémon Go players) began to notice that many of the game’s key locations were centered on the same spots as where the league coincidently had planned to hold its All-Star activities.
“When we saw how many people were actually playing the game in San Jose, as well as how many members of our team were too, we really wanted to find a way we could leverage that and engage a new base of people to participate in the planned activities,” said Amanda Vandervort, MLS vice president of social media and CRM.
Specifically, the staff wanted to capitalize on the capture-game’s “lure” modules, items that draw more valuable Pokémon to specific locations, often attracting hordes of players. The lures are purchased with in-game currency and when activated at specific locations last 30 minutes. The digital team worked out a schedule where different staffers would head down to the locations on shifts to reactivate them when the time expired, with a specific emphasis to keep them activated during the buildup to and when events were ongoing for MLS in the downtown area.
Vandervort noted that because the league wasn’t overtly advertising that it was doing this, it was hard to truly measure the number of people who interacted with the league’s activities specifically because they discovered them thanks to playing the game. Still, the overall strategy fits into what the league wants to do on digital and social platforms.
“We know our fans are a little younger, and they’re engaging across digital platforms in ways that truly give us a unique way to reach them and provide content that feels authentic to that experience they’re having on social,” she said. “If we can find ways to leverage any social or digital platforms to bring both new and old fans closer to our league, our players and our game, that’s really a core component of what we’re trying to do.”