If you have read my blog(s) in the past you know that I love MLS, but I am one of the first to say that the current path they are on is growth at snails pace. I question many things the league does, and so when the head of FIFA says to Al Jazeera:
“There is no very strong professional league (in the U.S.), They have just the MLS but they have no professional leagues which are recognized by the American society.”
A lot of people take offense, I understand that as many players, coaches, media members and fans have poured a lot of blood, sweat, and tears into the league in the last 17 years, I count myself as one of them. They are wrong to take offense, they should instead read that quote and demand answers, demand better, and demand accountability.
People quickly jump to say that MLS has grown and this year had over 6 million fans show up at matches this year, they are right but one has to look at where that growth has really come from. First growth has come from expansion, we added another team in 2012, the Montreal Impact and they brought with them home attendance of just under 400,000 in their first year.
Growth has also come as a result of the Seattle Sounders, over 730,000 of the 6 million fans to attend MLS matches last year were at CenturyLink Field, their average of over 43 K per match puts them with the top soccer teams in the world when it comes to attendance.
There is also the 34 match schedule, adding more matches in the last two years than at any time in MLS history. So yes when you have more teams playing and more matches scheduled your attendance will go up. But read what Blatter said once again, he didn’t say MLS wasn’t growing, he said there was no strong professional league.
So I can not claim to know what Sepp Blatter means when he says that, but I can tell you what he might be looking at when he makes that type of statement.
First, understand that at 330 plus million people the United States is one of the largest nations on the planet, and our annual spend on sports is estimated at about 442 billion dollars (source: Top Business Degrees) Now to be fair not all of that is on professional sports but let’s take a look at those numbers:
- The NFL is the daddy of sports in the US with revenues of $9 billion dollars a year, a profit of $1 billion dollars a year. The average NFL franchise is worth a cool $1 billion dollars.
- Major League Baseball, generates $7.2 billion dollars in revenue a year, and posts a profit of $494 million a season. The average MLB franchise is worth $523 million dollars.
- The NBA, generates $4.1 billion dollars a year in revenue but has a low relative profit of just $183 million dollar a year. The average franchise is worth $369 million dollars
- The NHL, given all their issues over the last decade, including their current season being impacted by labor issues, still has an average of generating $3 billion dollars in revenue, and has posted an average profit of $160 million dollars. Franchise value average is $228 million dollars
So when the head of the international soccer federation questions MLS’s impact on the larger sports market these are the things he is talking about. Now we know that MLS is a private entity that keeps their numbers close to their chest, but we can pull some data out of various places.
- Tickets – MLS announced that attendance broke 6 million for the first time in league history, we know traditionally that about 80% of tickets are actually paid for and in 2009 that ticket prices averaged out to about $24 per ticket. So if we say that MLS sold 5 million tickets at $24 a pop – ticket revenue would equal about $120 million for 2012.
- Internal MLS numbers show that in 2008 the league created just under $65 million dollars from sponsorships – naming rights, jerseys, stadiums and I am willing to say the league has done well in this area and bump them up to $100 million for 2012
- Beyond that it is hard to find any type of numbers but we do know based on the data that the Portland Timbers used in 2009 as part of their stadium plan was that they expected revenue of between $14-15 million dollars each of their first 5 years in the league (tickets, suites, concessions, merchandise, advertising, and other streams). They also estimated their expenses to bet between $9-10 million each of those first five years. That is before dealing with the League Capital Call (where MLS makes teams pay into the collective pot) which was estimated at $3.1 million a year and before they get the distribution from SUM (their share of collective revenues) estimated at $1.6 million per year. Those numbers fairly well matched the numbers released by Forbes in 2007.
- We know that MLS has seen some growth since then and I am willing to give MLS a big bump in the numbers from then, in large part due to the Sounders and several teams moving into their new stadiums. I think it is fair to estimate that league average for revenue is now probably about $20 million dollars per team. We still don’t know how many teams are operating at a profit in 2007 it was just 3 and I would estimate we probably are now around 6-7 (Seattle, Toronto, Philly, Portland, RSL, Vancouver,??), last year the L.A. Times reported that fewer than 1/3 of MLS teams were profitable (Source: SDB)
So if we even give each MLS an average income of $25 million dollars a year, we still don’t come close to generating $500 million in annual revenue as a league. A far shot from the NHL and NBA.
This is why Sepp can make a comment like he did, on the landscape of American sports MLS is a blip on the radar and nothing more. We are told that more kids now play youth soccer than any other sport, that soccer is the 2nd most popular sport with teens, and slow and steady growth will get us there. Globally we know that soccer has a 43% share of the sports market, the NFL accounts for just 13% worldwide (source: ATKearny)
So in the market that spends over $400 billion a year on sports, where the top 4 leagues generate a total of over $23 billion in revenue, MLS is a non-factor. On TV, MLS is a non factor with an average viewership of 311K on ESPN, out of their 98 million household, out of the 330 million people that live in the US. In the $7 billion dollars the networks dish out for TV rights each year, our $20 million is a non-factor. Our $100 million in sponsorship revenue is a non factor in the total $6.4 billion dollars total.
I could go on all day with those numbers, but everyone who says Blatter is wrong look at just one number, average attendance. Great, we have a good gate at most of our stadiums, but it is all local. We know there are a few markets out there that like MLS and don’t have teams, we see that in the TV numbers, but the majority of TV viewership comes from cities with teams. The harsh reality is that MLS doesn’t make a ripple on the sports market in the US, in revenue, in TV ratings, it can’t even compare to the NCAA football teams in the same markets, let alone the other pro sports teams. We don’t have to like it, but trying to deny that what Sepp Blatter said is correct, is like spitting into the wind, you may feel successful for a second or two but then you end up with a face full of spit.
So I say don’t get mad at Sepp Blatter, get mad at MLS. I get that some believe that the slow growth policy is the way to go, but I don’t. It had it’s time, but we have seen that MLS can be a huge hit locally, now we must establish it as a success nationally if we want to see our league become one of the top soccer leagues in the world. It won’t happen with a $3 million dollar a year salary cap that grows at less than 5% a year, it won’t happen with .20 TV ratings, it won’t happen as long as top US athletes who know the league minimum salary in MLS is 40K, and 375K in the NFL 473K in the NBA, and 525K in the NHL, they will go where the money is.
It won’t happen as long as MLS is looked at as inferior to other leagues around the world, the US sports fan wants the best, the best football is the NFL, the best basketball is the NBA, the best baseball is the MLB, the best hockey (when they play) is the NHL, until the best soccer is the MLS, casual sports fans in the US will not pay much attention to it.
It won’t happen as long as we shoot the messenger. We are buying into a bill of goods that reminds me of the “The Emperor’s New Clothes”, we have a league with dedicated people, dedicated fans, but if you really think that in 10 years time at the current pace that MLS will be a top league in the world or matter to the casual sports fan in the US, well good luck with that.
That’s How I See It.