TORONTO and Seattle Sounders go head-to-head in the 2019 Major League Soccer (MLS) final, the third time in four seasons the two clubs have played each other in the season’s finale.
MLS is growing in popularity and media prominence. Although attendances at games seem to have plateaued and are still relatively modest in some cities, there is no lack of investment in the game. Furthermore, clubs are queuing to get into MLS as the league continues its expansion programme. The latest club to be granted a place is Sacramento Republic, who will enter in 2022, but in 2020 the US will see the second coming of David Beckham as Inter Miami, the club he part-owns, begins life in Major League Soccer.
MLS has moved on significantly since Beckham treaded the boards with LA Galaxy, but the league has some financial hurdles to overcome as the clubs continue to make losses. Financial deficits and football are no strangers, but is the MLS overspending?
Only six clubs were profitable in 2018 and losses totalled around US$ 100 million. Wages have grown at a very fast rate, the average base salary has increased by 150% over the past five year and 2019 was the eighth successive season in which wage bills went up. The league has a maximum budget charge of US$ 504,375 but designated players (for want of a better expression, expensive hired guns) are not included in that figure. This is where the wage bills get really inflated – LA Galaxy are paying their leading scorer Zlatan Ibrahimovic US$ 7 million-plus, while MLS finalists Toronto have big earners in Michael Bradley (US$ 6.43 million), Jozy Altidore (US$ 6.33 million) and Alejandro Pozuelo (US$ 3.8 million). The league’s top scorer, Carlos Vela of LA FC had a guaranteed salary of US$ 6.3 million while former England star Wayne Rooney was on US$ 3.5 million at DC United.
Toronto are the league’s biggest payers, with a wage bill of US$ 24.3 million, LA Galaxy are next with US$ 19.6 million, Chicago Fire (US$ 17.1 million), LA FC (US$ 13.8 million) and Seattle Sounders (US$ 13.7 million). The total guaranteed compensation across the league for 2019 was US$ 294 million, a slight increase on 2018’s US$ 288 million.
At the same time, match attendances – in the first season of a new competition format – have not moved on compared to 2018. The average in the regular season was 21,265 which represented a drop of 2.79%.
Of the 24 MLS teams in 2019, 19 posted lower averages than 2018. Only four – Portland Timbers, DC United, Philadelphia Union and Columbus Crew – had better gates than the previous season. Despite these figures, there have been some impressive attendances – Atlanta United averaged 52,000 and attracted six gates of over 65,000. While the regular season’s crowds were down on 2018, the play-offs averaged 31,000, partly attributable to the fact that well-supported teams like Seattle, Toronto and Atlanta were all involved until the latter stages of the competition.
According to Forbes, Atlanta United are the most valuable MLS club, with a value of US$ 500 million, a 51.5% increase on 2018. Forbes estimated that Atlanta’s revenues totalled US$ 78 million, up by 40% on 2018 with the club making a profit of US$ 7 million. LA Galaxy generated revenues of US$ 64 million, with a profit of US$ 5 million. LA FC (US$ 50 million) is the only other club to hit US$ 50 million in revenues. Only four clubs, Atlanta, New York City, DC United and New England Revolution, enjoyed an increase in 2019. As with most leagues across Europe, there is a huge disparity between the top and bottom, with Montreal Impact, Columbus Crew and Colorado Rapids generating just US$ 18 million.
Yet despite the losses, MLS clubs currently have an average value of US$ 313 million, a 30%-plus improvement on 2018, a bigger growth rate than teams in the BBA, NFL, MLB and NHL. Impressive growth rates include LA FC (55.74%), New York (38.49%), Real Salt Lake (38.24%), Philadelphia Union (37.14%) and Chicago Fire (36.73%). Forbes’ valuations do not include income from the league’s marketing arm, Soccer United Marketing.
Investors see plenty of upside in Major League Soccer, with a new TV deal on the horizon in 2023 and the 2026 World Cup being hosted in the US, Canada and Mexico, commercial opportunities abound in North American soccer. At present, ESPN, Fox and Univision hold MLS rights in an eight-year agreement that started in 2015. MLS receives US$ 90 million per year. There are some clubs that do not receive a rights fee. LA Galaxy have the largest standalone arrangements with a 10-year US$ 55 million deal with Time Warner. The league is looking to secure the sort of deal that will fund growth during the next phase of MLS’s evolution.
The 2019 MLS Cup final features two clubs who know each other well after playing each other twice in the final, 2016 and 2017. As the two previous finals were played in Toronto, Seattle Sounders are hosting the game. Almost 70,000 people will watch the final at the CenturyLink Field. Toronto finished fourth in the Eastern Conference before beating DC United (5-1), New York City (2-1) and Atlanta (2-1) in the play-offs, while Seattle Sounders were second in the Western Conference and disposed of Dallas (4-3), Real Salt Lake (2-0) and Los Angeles (3-1).
Whoever wins, the profile of Major League Soccer has probably never been higher and that’s not just among fans, but also investors and business partners. As a result, expansion fees are rising with the next round expected to sell for in excess of US$ 300 million – when MLS finalist Seattle joined in 2009, they paid just US$ 30 million. Cities have been fighting among themselves to gain entry to what some see as a sport with enormous money-making potential.
The impact of a firmly established league is also good news for clubs elsewhere. The top footballing institutions in Europe have been working hard on building global franchises and the US is one of the genuine growth markets. The benefits are not one-way. Plenty of people in Europe’s top football countries will be watching what happens in Seattle on November 10.