How MLS Uses Expansion To Prop Up Revenue

Associated Press/Parking The Bus Illustration

When the 2019 Major League Soccer season kicks off next month, FC Cincinnati will become the 24th team to join the league. Expansion for MLS has no signs of slowing, either, with Austin FC, Inter Miami and a yet-to-be-named franchise in Nashville coming on board in the next few years.

This will push the league total to 27 teams in 2022, for a league that already has more clubs than any other top flight league in the world. For comparison-sake:

  • Major League Soccer: 27 teams (in 2022)
  • English Premier League: 20 teams
  • La Liga: 20 teams
  • Ligue 1: 20 teams
  • Siere A: 20 teams
  • Bundesliga: 18 teams
  • Liga MX: 18 teams

For a league that is often considered a step behind others in the world in quality, how and why do they continue to add new franchises at such an incredible rate?

The answer is actually quite simple and helps mask the reality of revenue and attendance problems at clubs that have been in the league for years. The price tag of an expansion team to MLS is now up to $150 million to join. Compare this to just 13 years ago when Toronto FC paid $10 million to join the league.

So what happens with this lucrative $150 million that the expansion franchise pays? Well, it is shared across all the current owners in the league, making for a nice guaranteed revenue that is more reliable than fickle ticket sales. In years where an expansion team is added, it increases the owner revenue by 50%.

In a league where the TV contact is small and numerous teams still lose money on a year-to-year basis, this is how MLS stays profitable – they add new franchises.

Even more incredible is the clause in MLS commissioner, Don Garber’s contract that he is personally paid a sum for every expansion team added. So you have a league commissioner who is monetarily motivated to expand the league – whether it is best for the league or not.

The additional benefit of the expansion is it gives the league a shiny new toy to showcase. The new teams see packed stadiums from the expansion city’s initial excitement which makes for great television and talking points for the league as a whole. The reality is, once the team is no longer the new kid of the block, maintaining ticket sales and sellouts becomes arduous.

How long can the expansion be sustained? At some point the league will have to cap the number of franchises and then actually address the reality – that many franchises are not making money.

(Let’s not forget that multiple MLS franchises have already gone under – Tampa Bay Mutiny and Miami Fusion)

This isn’t to say that I don’t think it can level out. I truly believe soccer is a growth sport in the United States and that the revenues (ticket sales, merchandise, sponsorship etc.) can continue to enhance and all teams can be profitable. I just think the league needs to be careful with how much they expand and that the casual fan shouldn’t look at a sold out Atlanta United game as league-wide success.

For the time being, adding new teams and the expensive meal ticket to join the table is a necessity.

It is the expansion that makes the whole thing go.

Author: Brice

All in on the haze craze. Figure it's about time I put that journalism degree to some sort of use.

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