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Volume 22 No. 49
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Forum: How MLS can silence critics and drive growth

About a decade ago, a top team executive from a rival league left me a voicemail that criticized our extensive coverage of Major League Soccer. He asked facetiously whether Commissioner Don Garber had some incriminating information on me or Sports Business Journal that compromised us and resulted in positive coverage of the league. He railed that we reported on every nuance and overplayed MLS’s importance compared to the more established leagues — including the one for which he worked.

We talked it out, but that wasn’t the last time readers questioned our treatment of the league, which starts its 25th season on Feb. 29. Two years ago at our Sports Business Awards, MLS won League of the Year. Last year, Garber won Executive of the Year. I certainly received “feedback” on those honors. While many admire the consistent growth of MLS, there are vocal critics. I’m told often that the league’s business model doesn’t pencil out. Critics say that expansion fees of more than $300 million can’t be supported financially, especially with the league’s media and sponsorship revenue. I’m asked about the MLS television viewership numbers compared to other sports. All fair points and worthy of a healthy debate.

But let’s not kid ourselves — investors in MLS are playing a long game, as they should. They see a rapidly shifting American demographic; a global sport that appeals to an ethnically diverse population; a game that is easily understood and fits into succinct viewing windows. Investors like the growth attributes and see them in their favor. There is a healthy soccer economy, and agencies and companies are looking to draft off it. There are challenges, and in talking to people close to MLS, here are areas that must be addressed to drive the league forward and thrive over the next 25 years.

FIX THE BIG MARKETS: Each team must continue to drive revenue in a more aggressive way, as with nationally shared revenue still growing, teams must over-index on local media and sponsorship revenue. While many focus on the new markets, I’m curious to see the efforts to enhance the legacy franchises. Boston and Chicago should be among the league’s top five markets, and they aren’t. The Fire relocating to Soldier Field should help, while an urban soccer facility in Boston would drive major revenue for the Revolution. Dallas and Houston are also huge soccer markets that are underperforming. Get those four markets among the top third in revenue and the dynamics change significantly.

PLAYERS AS A REVENUE STREAM: MLS should copy the model of many leagues across the world and make players a revenue stream. Allow teams to buy talent, let them play for a couple years and then sell them for more money. This seems like a practical and strategic revenue driver for MLS.

MEDIA EXPOSURE: So many people are talking about how Garber and top media executive Gary Stevenson will navigate the next round of media negotiations. A selling point to receive these beefy expansion fees was the promise of increased national media revenue. Combined, the current eight-year deals are valued at $90 million annually and expire in 2022. In addition to the national deals, the league has asked each team to sunset their local media deals at the same time, allowing MLS to go to the marketplace with a massive inventory of programming. It’s a promising proposition with robust potential, but a read on the marketplace shows some skepticism over the league’s ability to draw the audience needed for a massive payday.

WHICH LEADS TO … : The league has to avoid taking big money only to disappear behind a paywall. It can’t get buried on limited exposure platforms and trade audience growth for short-term dollars. Follow the NFL and seek the broadest and widest exposure possible.

BUT THE BIGGEST ISSUE IS … : MLS can’t dramatically improve the TV deal without continuing to improve the product. That’s not a new issue but it’s the biggest, and it’s the reason Garber and his team, as well as league ownership, continue to mine for more dollars. More revenue, more spent on talent, better players, better product, more engaged fans, more appealing to sponsors and media partners. It’s not complicated, but it’s not easy. 

In talking with colleagues and sources, the passionate debate and points of view around MLS outweigh any other property we speak about because of the league’s place in the U.S. sports landscape and for all the reasons listed above. I appreciate the league’s growth over the past 25 years, and feel confident in its leadership and the caliber of ownership. Count me in as a believer in the promise and potential of MLS. The league has methodically built a business to be respected and poised for future growth. It’s a growth stock, and I’m buying.

First Look podcast, with sports business stories Abe is keeping an eye on, at the 36:06 mark:

Abraham Madkour can be reached at amadkour@sportsbusinessjournal.com.