Rich list shows the long road ahead for MLS to reach its stated goals
MLS remains a league firmly focused on development and growth. The league and its clubs prefer slow and steady progress to improve the standard on the field and strengthen the balance sheet off of it. The measured plan led MLS back from the brink of disaster 12 years ago and ushered it through a period of expansion designed to reinforce it for the future.
These steps ensured the viability of the league over the long term and whetted the appetite for further strides in the years to come. MLS commissioner Don Garber said he wanted the league to feature among the top competitions in the world by 2022. The decisions to increase the presence in the Southeast and introduce a second club in New York City underscore the ambition to improve the influence of the league across North American.
By charting an aggressive course through the next decade, MLS hopes to close the gap with top domestic sports in the United States, the pervasive popularity of Mexican soccer in this country and the wildly successful powers in European football. Ample work remains to close those gaps on all fronts.
The latest edition of Forbes’ rich list for top European sides highlights the lengths still to cross to meet those objectives. The idea of assigning values to clubs is inexact at best – teams are worth exactly what interested parties are willing to pay for them, of course – yet it provides a glimpse at the perceived value of illustrious brands in the global marketplace.
|1||Real Madrid||$3.4 billion|
|3||Manchester United||$2.8 billion|
|4||Bayern Munich||$1.9 billion|
|7||Manchester City||$863 million|
|8||AC Milan||$856 million|
Contrast the lofty figures floated by Forbes to the recent franchise transactions in MLS. Manchester City and the New York Yankees reportedly $100 million to invest in the league and operate New York City F.C. starting next season. Atlanta ($70 million, per the Atlanta Journal-Constitution) and Columbus ($68 million including Crew Stadium, per Forbes) changed hands for smaller sums. All three transactions constitute a significant markup from the reported $40 million paid by Montréal to enter the league in 2012.
The latter three sums are impressive in context, but they also fall below the $80 million or so UEFA seeks to fine City for contravening Financial Fair Play regulations. MLS has its own small part to play in that mess (City included substantial licensing fees for NYCFC in its accounts, according to the Guardian), but the prospect of levying a fine of that magnitude against one of its clubs is simply beyond the scope. It serves to underscore the chasm between the operating principles in the domestic game and the pinnacle of European soccer.
Most of the gulf stems from revenue generation. Other major American sports and top European clubs acquire significantly more capital from commercial, matchday and television considerations to fund their operations. The difference is substantial.
Take, for instance, the recent Serie A accounts published by noted financial blogger Swiss Ramble as an example. Serie A lags behind the Bundesliga and the Premier League in most commercial departments, but it still manages procure the sort of revenues required to fund squads capable of competing in the Champions League and the Europa League:
Forbes published revenue estimates for MLS last year, but those numbers – much like the franchise value estimates – constitute no more than a rough guess. MLS derives its operating resources from its clubs (as part of its LLC structure) and Soccer United Marketing, a promotional arm with extensive and lucrative ties to U.S. Soccer and the FMF. Individual clubs retain a portion of their own revenue streams, too. Those numbers vary from market to market with some larger clubs – LA Galaxy, New York, Seattle and Toronto FC – dwarfing others.
The absence of hard numbers leaves everyone to posit based on conjectures and expenditures. MLS benefits financially from the cost control exerted over its wage bills. Toronto FC boasts the highest playing budget in the league at $16 million, according to a report issued by ESPN and Sporting Intelligence earlier this year. That figure ranks 214th on a list including all of the major American sports leagues, four of the five major leagues in Europe (the Premier League, the Bundesliga, La Liga and Serie A) and other assorted competitions from around the world.
MLS and the MLS Players Union will debate how much to increase salaries and liberalize other procedures during their upcoming collective bargaining negotiations, but the comparatively modest compensation levels represent a hurdle to the league’s growth on the field. Those limitations coincide with the current inability to match the revenues generated in the upper echelons of the game and the prudent desire to balance the books.
By pursuing the modest path now, MLS hopes to climb through the ranks and reach the upper rungs at some point in the future. It is a long and arduous road with no guarantees of success. And the release of those rich lists reveals just how far MLS must travel in order to reach its preferred destination.