MLS Expansion Beyond Charlotte Uncertain

JohnWallStreet

Editor Note: ‘Early Entrants’ is a series of sports business ‘rumblings’ before the news breaks.

Commissioner Don Garber publicly acknowledged at the MLS State of the League Address on Nov. 8th, that Charlotte is the front-runner to be awarded the league’s thirtieth franchise (of course, JohnWallStreet suggested that would be the case back in March). Las Vegas and Phoenix have also been reported to be in the running (and San Diego is also said to be perceived as a viable destination).

Garber has been hesitant to commit to expansion beyond thirty clubs, but said back in April that he believes “there are many many cities across the country that can support an MLS team.” Soccer prognosticators have taken that mean that the league will continue to add franchises, but it sounds as if they're jumping the gun.

No prospective owner has such a good plan that an announcement is imminent (or coming anytime soon). Sources said that save two or three clubs at the top and bottom, just about every team is losing money (some as much as $15 million/year) and that MLS remains very much in investment mode (see: increasing spending on players, youth academies). In other words, even if the television dollars were to triple in the next round of rights negotiations - which is optimistic considering the ratings (granted, they will have a streaming partner) - most teams won't be cash-flow positive and there simply aren’t a ton of people interested in writing a $600 million plus check for an asset with $30 million in revenue, that is losing money. There would seem to be little reason for the league’s existing owners to take much less.

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