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THE BIZ: Bulletproof MLS?

Dec. 01, 2008
Dec. 01, 2008

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Dec. 1, 2008

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THE BIZ: Bulletproof MLS?

MAJOR LEAGUESOCCER'S tiny TV ratings are stagnant, attendance is down, and, according to aForbes study in September, only three clubs are profitable. Yet MLS keepsminting franchises: A new team is slated to join in each of the next two years,and in early 2009 the league—which operates by paying virtually all of eachteam's payroll, then taxing team revenues—is preparing to announce two moreadditions, which would fatten the roster to 18 teams in 2011. Six suitors arevying to pay $40 million for one of two spots. "MLS has proven it's goingto have a slow, steady rise into American mainstream sports," says JeffCooper, a lawyer and the lead investor of the St. Louis group, which alsoincludes Cardinals slugger Albert Pujols.

This is an article from the Dec. 1, 2008 issue

Is pro soccerreally a growth industry in North America? MLS on ESPN2 averaged a WNBA-esque0.2 rating for the third straight year, but other vital signs have been on theupswing, and the economic crises haven't spooked many of those who want in.(Atlanta, Miami, Ottawa, Portland and Vancouver are competing with St. Louisfor the slots.) The league now takes in $20 million annually in TV money, andwhile attendance did slip by 1.8% in 2008, that number is skewed by the 8.2%jump in '07 (when the L.A. Galaxy acquired David Beckham, left) and by the factthat Kansas City and San Jose played the 2008 season in temporary, 10,000-seatstadiums. Excluding those two, attendance rose 2.1% to 17,110, roughly what theNBA has averaged this season.

Teams are alsomoving from multipurpose stadiums into franchise-owned soccer venues, wherethey reap revenue from parking, merchandise and other sales. While the averageteam value of $37 million (says Forbes) is less than the expansion fee,consider teams like Toronto FC, which joined in '07 and is valued at $44million. Toronto has sold every ticket to every game at 20,148-capacity BMOField. It turned a profit its first year.

$40 million
MLS expansion fee

6 teams
Vying for two new spots in 2011

PHOTOWENDY LARSEN/ISIPHOTOS.COM (BECKHAM)