Despite the losses and plateaued crowds, MLS is big business

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.

 

@GameofthePeople

 

Photos: PA

Tea – best drink of the day, not a diplomatic issue

LOOSEN-up Lioness fans, Alex Morgan was merely poking fun, not hurling an insult to a nation. Football is a game that provokes such gestures of mockery, cricket thrives on “sledging” and players lift t-shirts to reveal messages after they score. It’s a product for the masses, a simple game that has no halfway measures in competitions like World Cups – win or lose. Emotions get out of control.

Celebrating goals and victories has been part of the game since it began – from gentlemanly handshakes to elaborate choreographed tableaux when a goal is scored. Some of the reactions to Morgan’s sipping tea gesture have been ridiculous, suggesting England should respond next time by re-enacting a school shooting. This is probably coming from the same people who parade a flag over their facebook image when a major incident takes place around the world. Conspicuous grieving like “pray for France” and all that.

USA’s Alex Morgan celebrates scoring her side’s second goal of the game during the FIFA Women’s World Cup Semi Final match at the Stade de Lyon. Photo: PA

Laughing at oneself is something that has characterised Englishness over the years, although it seems to be a trait that is disappearing as taking offence becomes a lifestyle choice. Indeed, there is currently a TV ad where the ubiquitous Olivia Coleman sums up Britain with the comment, “rather a lot of tea”. She may be right, after all, when anything went wrong, the immediate response used to be “let’s have a cup of tea”. It has taken the nation through many crises and major events.

Tea was always drunk at half-time in football matches – remember the photo of Spurs players arguing with Bill Nicholson in the early 1960s with tea cups in hand? – for decades, although it may have been replaced with more trendy and performance-inspiring fluids today.

Somehow, Britain has adopted tea as its own, even though it was a product that originates in China and latterly India. It was a symbol of empire and even today you can buy “Empire Blend” at places like Fortnam’s.

At football matches, we still queue for the “half-time cuppa” even though invariably, it is a flimsy plastic cup of brown-coloured water with no taste, that is so scorching that it removes a layer of skin from the roof of your mouth. We have never tried to find a better alternative. If tea is our drink, why do we sell such abysmally poor versions of it? Even in stores like John Lewis, tea is disappointing, watery and unsatisfying.

Some football clubs used to pride themselves in providing a decent cup of tea. For years, at non-league Hitchin Town, they served tea in catering cups. At one game in the 1960s, one of those cups landed in the back of the net, and the incident made the national news. Sadly, the cups have long disappeared, but they have not been forgotten. Somewhere, in Hitchin’s crumbling Top Field ground, there may be a box of white cups, stained with the tea of decades past!

Not everyone is upset by Alex Morgan’s display. Tea companies are actually quite pleased by the image of the US player – it is sure to be used at some point in advertising. At the end of the day, it is a very benign incident that obviously pricked the sensitivities of some fans. Yet sort of ribbing is part of the game and has always has been. Likewise, comments about teams and games have existed since the 1890s, although any criticism of the Women’s World Cup has been met with negative responses and claims of being unfair. We are, after all, in the age of the Disneynification of football!

We have to be careful not to become too sensitive to healthy rivalry and gentle teasing. Football is a tribal sport, the spectators are critics as well as viewers, the players interact with the fans, not only to let-off their own steam, but also to prod the crowd into action. We are not talking fighting or mobbing, but just an attempt to create an atmosphere that goes beyond “Mexican Waves” and counting down to kick-off. Sipping tea is hardly simulating an Orange Day parade (a la Gazza) or slipping in a fascist arm salute, it is either acknowledging that the English have long used “a cup of tea” to define their quaint habits, or as it has been suggested as Morgan tried to explain herself, a symbol of US independence. Get over it, you might say.

 

Stable gates, but study underlines systemic clubs

FOOTBALL’s principal emerging nations, the US and China, have almost arrived, with the top divisions of their leagues in the top 10 in terms of spectator interest.

According to CIES Football Observatory’s latest report, China and the US are sixth and eighth respectively over the past five years by average crowds.

The German Bundesliga has an average of 43,302 with the English Premier second-placed on 36,675 and Spain third with 27,381. In fourth place, and the top country outside Europe, is Mexico with a crowd of 25,582.

China, with an average of 22,594 is only marginally behind Italy’s Serie A and is ahead of Ligue 1 of France. The US has a gate of 21,358 over the same period – not the highest average posted by Major League Soccer, but a sign that the game in the world’s biggest economy is growing.

Interestingly, the 10thhighest league is Germany’s Bundesliga 2 (18,814) and England’s Championship is 11th(18,526).

Over a 15-year period, the league with the highest percentage increase is Poland with a 47% rise. The US is up by 34% and Germany’s second tier has grown by 32%. The Premier and Championship have expanded by 6% and 8% respectively.

Over the last five years, only 14 clubs have recorded an average gate of more than 50,000 and another 23 have exceeded 40,000. Notable in the top 10 is the MLS’s Atlanta United, a club that was founded in 2014 but one that lifted the MLS Cup in 2018. Atlanta’s 51,547 is remarkable given the population of Atlanta City is less than half a million.

Predictably, the top 10 includes Borussia Dortmund at the summit with an average of 80,230 with Manchester United (75,218), Barcelona (74,876) and Bayern Munich (73,781) the other clubs with more than 70,000.

On a similar note to Atlanta, another rising power is China’s Guangzhou Evergrande, who are placed 26thwith an average crowd of 44,905. While it should be remembered that this is a city with around 12 million people, Guangzhou has a higher gate than big guns Chelsea (41,463) and Juventus (38,778).

CIES Football Observatory’s paper does underline the systemic importance of the top clubs in a number of countries,  which should hit at the heart of any debate over restructuring European football.

For example, Celtic’s attendances account for more than a third of overall Scottish gates (36.5%) and the top three clubs in Scotland contribute a massive 65%. Little wonder that past discussions around Celtic and Rangers joining the English League probably sent shivers down the spine of Scottish FA officials. In 2018-19, Celtic’s 58,000 regular crowd at Parkhead is more than three times the average of the Edinburgh duo, Hearts and Hibernian. The differential between Celtic and Hamilton, the lowest supported club in the Scottish top flight, is a massive 54,000.

Portugal is another good example of the systemic importance of the marque names. Benfica, Sporting and Porto account for 63.9% of total Portuguese gates, with Benfica alone responsible for more than 25%. Benfica’s 2018-19 gates are more than 54,000 per game, while the bottom club by attendances is Aves, who attract less than 2,000. The impact of losing this triumvirate of well supported clubs would be a disaster for Portugal’s domestic football landscape.

By contrast, the more prominent football nations – the so-called big five – are less reliant on their top clubs, hence the Premier’s top three by drawing power contribute 26% and the others – Germany (27.6%), Italy (28.1%), Spain (35.1%) and France (30.2%) are relatively low compared to the likes of Scotland, Portugal, Croatia and others.

Overall, across the 26 leagues surveyed by CIES, the average crowds over 15 years have barely changed, suggesting the appetite for the game remains constant. One area where football seems to be in decline is in the Nordic region, with Sweden (-11%), Finland (-13%), Denmark (-23%) and Norway (-29%) among the worst performing at the turnstiles over the past 15 years. Greece, a country that has confronted economic turmoil over the past decade, is bottom of the list with a 32% decline since 2003.

What does the future look like? For Germany and England, their stadium utilisation rates are currently so high it is difficult to see crowds rising much more, although new builds – such as Tottenham’s impressive ground – would create the potential for bigger capacities. Clubs need to be less reliant on TV money, so growth of matchday and commercial revenues will undoubtedly be a priority for major clubs, which may result in more construction projects to allow supply to better meet demand.

Photo: PA