In the Major Leagues of Soccer

The soccer landscape in the US looks very different now to what it was around a decade ago. Despite reaching the quarter-finals of the 2002 World Cup in Japan/Korea with a squad featuring 11 MLS players (including a 20 year old Landon Donovan), the 2003 MLS season played out with just 10 teams competing with 8 of them going on to the play-offs. Hardly very competitive.

Fast forward to the present day, and it’s barely recognisable. Firstly in this post, I’ll be looking at the ways MLS has transformed its fortunes over the years. The latter section will look specifically at league expansion and attitudes towards it franchises.

I’m sure everyone is, but for those that aren’t familiar with the way MLS is set up, the teams are centrally owned by the league. The league shares revenues, negotiates and holds player contracts, plus player salaries are limited by a cap. The exception to the salary cap rule is the Designated Player rule, or the ‘Beckham Rule’ as he was the first player to be signed under it. It allows teams to sign up to three players whose salaries do not count towards the cap.

The cost controlling method has coupled with an increase in media coverage, teams building their own soccer-specific stadiums and team ownership becoming more varied. These factors have contributed to MLS becoming increasingly profitable. Late last year, Forbes published a valuation of MLS teams, and it was revealed that 10 of the 19 teams earned an operating profit. Comparing this to the majority of European football teams, and the fact that most operate at losses, that’s a really encouraging stat.

The gradual increase in popularity has aided MLS when it comes to negotiating TV deals. Negotiated by the marketing arm of MLS, Soccer United Marketing, the US Men’s National Team (USMNT) is coupled with MLS in the same deal, which increases the pull of the deal. The fee for the new TV deal is reported to be almost doubling, being saved by the fact that the USMNT’s World Cup qualifying games ratings were around ten times that of the average ratings for televised MLS games.

The growing popularity of the league is underlined by the graph below, taken from Forbes.com

Sport popularity in US

This popularity is only going to rise if we consider what the landscape of MLS is going to be like after the next few years.

Since ‘Brand Beckham’ arrived back in 2007, there has been a steady stream of Designated Players coming to the league, notable examples being, Juan Pablo Angel, Freddie Ljungberg, Thierry Henry, Robbie Keane and Tim Cahill. At their time of signing however, it could be argued that each of these players were on the decline, in their mid to late thirties. Recent transfers further support the fact that the league is on the up, these buck-of-the-trend transfers being Clint Dempsey and Michael Bradley. Both players are arguably at the peak of their abilities, and arguably two of the best, if not the best, American players plying their trade at the current time. Two huge transfer coups for the league.

As well as these players arriving and improving the overall standard of play, MLS sought to increase competitiveness. A drive to do so has seen the number of teams competing increase to 19, including 3 from Canada. The top 10 teams in the overall standings (combining the Eastern and Western conferences) were separated by just 8 points in the 2013 season. By 2015, the 19 teams will be joined by 2 more, Orlando City and, more notably, New York City FC (NYCFC).

The NYCFC franchise was announced as the 20th expansion club and they are owned in partnership by Manchester City (majority owners) and the New York Yankees (minority owners). Since the announcement, it’s become evident that the club is just one part of City’s strategy to increase their commercial activities globally. With NYCFC, and the latter purchase of Melbourne Heart in the A-League, City are rolling out a McDonalds-like franchising of football clubs. It allows the club to easily move into new markets, gain commercially and in the long term, hopefully secure new fans for the City brand. Below is the first promo video for the club featuring current City players.

The word ‘franchise’ is almost dirty in the UK. Our clubs are steeped in cultural history and our love for them is deep rooted. Near riotous behaviour breaks out when there are threats to club heritage. MK Dons, and the recent Hull Tigers debate are just two examples that spring to mind. Compare this to the US, and historically, sport is used to make a profit. In most US sports, franchises are awarded to entrepreneurs in specific cities, and these entrepreneurs have to prove that their chosen city can make a profit. The rules are very simple; no profit, no franchise. If a franchise isn’t making any money, it moves to a different city where it potentially might.

Freelance football writer and MLS enthusiast, Graham Ruthven, points out though that it isn’t always the case that US sports fans are content with clubs moving cities, citing the failed relocation of the Sacramento Kings NBA team as evidence. Fans arranged protests and boycotted matches, which all proved successful in the end. Current MLS side Chivas USA are said to be relocating and rebranding as MLS has recently purchased the franchise back from the entrepreneur/owner. Why? To seek profit, of course. 

This all leads us back to ‘Brand Beckham’. When he signed for the Galaxy back in ’07, a clause in his contract gave him the opportunity to purchase a new franchise for $25m after he retired from the game. Pretty good business considering that franchises are now up to four times more costly. City and the Yankees had to stump up a cool $100m for NYCFC, while $75m was the franchise fee for Orlando City to join MLS.

It won’t all be plain sailing for Beckham and his new Miami franchise, MLS has had a Miami-based franchise before. Miami Fusion ceased to exist back in 2001 with the lowest revenue in the league, almost no commercial revenue and low season ticket sales. Early indications are if anyone can make a Miami MLS franchise a success, that person will be David Beckham. With rumoured partners on board such as NBA icon, LeBron James and Bolivian billionaire, Marcelo Claure, Beckham has definitely surrounded himself with the required personnel to hit the ground running. The question remains though, will he secure the required resources? Former teammates and stars are already getting in touch to play for the new team, having great players doesn’t always mean success though. The single most important factor to success will be the location of the stadium. Fusion ultimately failed because they were based 30 minutes away in Fort Lauderdale. Miami is a huge soccer market, and the success of the club will be purely based on whether the stadium is accessible enough for the downtown, city-based, hardcore fans to attend.

What are your thoughts on MLS? Can you see the overall quality one day rivalling the top European leagues?

4 thoughts on “In the Major Leagues of Soccer

  1. petesharpe90 says:

    I saw an LA Galaxy game a few years back and based on that I’d say the MLS has a long way to go before it competes with the top leagues. I’m from the UK so I guess we get treated to some of the worlds best players. That being said, the England national team suffers as a result of all the foreign players in the league.. Be careful what you wish for I’d say. Nice article by the way, The MLS is something i’ve followed with interest since Beckham and Thierry Henry went there.

    • Thanks for your comment, Pete.

      I agree that it has a long way to go to reach the same level as the EPL, for example, but the signs of growth are really encouraging. I think the introduction of City-backed NYCFC and Beckham owning the Miami side will only help the league grow further. Dempsey and Bradley returning to MLS from Europe also underlines how far the league has come in quite a remarkably short space of time too.

      Glad you enjoyed it.

  2. Excellent piece Chris. I’ve been a keen long distance admirer of the strides the MLS have made in recent years and from a marketing perspective the league has certainly grown exponentially. I’ll watch with interest the situation in Miami as it develops considering the difficulty the Miami Dolphins have faced in recent years. On the field, I feel the league must continue to remain competitive nationally as opposed to be overly focused on matching European standards. An evenly matched competitive league structure will always be far more interesting than a two horse race that you can sometimes get in European Leagues. There’s an element of snobbery from European fans sometimes towards the MLS but I’ve thoroughly enjoyed the games I’ve watched and that’s no mean feat considering I’m a Toronto FC fan!

    • Thank you Karl. Thanks for the comment too.

      The Miami franchise will only be a success if the stadium is right, that’s the opinion of most. Right in the sense of the location, but also right in the opinions of the citizens of Miami. Beckham came out and said no public money will be going towards it, which is what they want to hear after the Marlins stadium fiasco.

      That’s true actually, there’s a real sense in MLS that pretty much any of the teams can go on and win the league.

      A Toronto fan, you’ll be pleased with your recent acquisitions then!

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