Garber: MLS has a Harvard Business School plan for MLS to be 1 of the top soccer leagues by 2022

We just did this in the Rapids financial loss thread: teams pay a capital call each year that is used primarily to pay salaries.

But you're right on the whole, though. Teams aren't really ever going to make enough attendance revenue to fund a significant increase in salaries -- that would have to come through a bigger TV contract.

Maybe Garber can negotiate a TV contract that pumps a lot of money into the league with a clause like the one that went along with LA's local broadcast rights. Something like, "hey NBC, pay us $100 million/year (or $60) and we'll guarantee a high profile player on every team."

 

Hasn't MLS marketing been focused on supporters for a while now? Like since about 2009? I'm just going on images that I can recall from promotional material, but it seems like they've been pretty inclusive of including shots of vibrant, active supporters.

 

Here are the three metrics I would use

1) Revenues from tickets and merchandise (for us, attendance is a proxy)

2) Television ratings

3) Success in CCL (next 5 years, we win it once; after that, we win 50% of the time)

We're not going to be a top 5 league in terms of 1 and 2, but I'm happy with significant progress.

 

Man those profanity comments make garber seem dorky.
Even for the point he was trying to make as a business exec, he sounds like a complete dork.

 

Agree with this.

And if the (unstated but honest/true) goal is regional parity (or dominance, be that for MLS by 2017 or 2022 or the USMNT with Project 2010), the stretch goal could easily be publicly stated to be "among the best leagues in the world" or "capable of honestly competing for the WC" over a decade timeline.

There's a benefit to the vagueness of some of these global targets and metrics. But if MLS (or US Soccer) is competing evenly with (or winning/leading against) Mexico as it works on broader global success targets, that's really an ok destination for the "among the best by 2022" plan that MLS is talking about and on which it is working.

 

In business it is productive to set strong goals that are outside of your comfort zone, but achievable if you perform at a very high level. You work backwards from those goals and figure out what you need to do to get there. Even if you don't end up at the place where you wanted to exactly, it can push you to results that are still extremely impressive. I'm sure that is what they are doing here.

 

I think MLS would be wise to alter your second metric to read as "television revenue" -- and not ratings. (from a straight ratings analysis, MLS is already doing just as fine/poorly as most/all other televised leagues in this market.)

Media revenues (as MLS has shown in the last decade) can increase even as ratings remain relatively consistent.

Of course higher ratings would greatly aid the push for higher revenues from TV partners, but doing things like launching a second team in US Market #1 will help drive TV revenues in the long term, while not necessarily leading to some or any immediate ratings spike for the league.

 

MLS teams won't need 39-man rosters... at least not 39 guys counting against the salary cap. Hopefully MLS will be able to increase the cap more than 10% per year. Also, don't forget the designated players
Still, obviously we won't be a top league in just 10 years though HBS type business plans or not. Give us 30-40 years and we have a shot at it.

 

This is a good point. If you are going to compare salaries across other leagues, you need to include the total cost of MLS teams (not just the salary budget) to get a fair comparison. That includes DP costs above the budget, GA and HG players that are off budget, then the sprinkle of off budget minimum salary guys. I think the only way to really compare int he future is to calculate the total expenditure by the growth rate (10% in the example above).

 

It could be that all he is saying is that he wants a league where the median MLS team is as good as the median team in Argentina or Holland or Russia. That goal is reasonable IF AND ONLY IF the league either becomes nearly an "open" league like Germany is or like our pro sports are (no nationality barriers) or the teams' youth academies make a hell of alot of progress.

 

This makes sense. I wondered about it myself. But that's where I think the "strategic vagueness" I mentioned comes into play. It's possible I missed it (I only glanced at the actual article), but I don't get the sense that Garber is saying exactly what "one of the top leagues in the world" is. You're right that aiming for Number 6 might be demoralizing b/c of the high probability of failure. I take that point. But if he's aiming for Number 10 or 12, that's a different matter. As far as I can tell, he's stating the areas where the league will apply metrics but isn't stating for public consumption the specific numbers it hopes to hit. Those numbers might well be far more achievable.

 

The sad thing is, that even if they do make that enormous leap in quality, it is almost impossible to quantify and I am not sure would be recognized or appreciated by people who are marginal in their respect of MLS.

Getting to the highest level, where say they did the impossible in 10 years and had the average MLS team as good as the average La Liga or Serie A team, then that is a lot easier to recognize by the marginal fans.

 

Here's a fun topic to wank verbal on...in how many leagues in the world is the median team better than the median MFL team? England, Spain, Italy, Germany, sure. Anyone else? The MFL is a damn good league and possibly the most parity-driven league outside of MLS.

 

I'm glad someone brought this up. First of all, remember the idea was that the US would have been hosting 2010, which is a big advantage. But aside from that, imagine that

a) Giuseppe Rossi decides to play for the US
b) Neven Subotic decides to play for the US, allowing Bocanegra to move to RB
c) Jermaine Jones is healthy and
d) either Davies or Gooch is healthy

finally, assume that all the other results, in games not involving the US, are the same.

In that case, the US would be significantly favored over Ghana and Uruguay. At that point, they face Holland and then Spain in one-offs. At that point, they probably have, what, a 10% chance to win the World Cup? At home, that would have been 20-30%.

Point being, it might not be as unrealistic as you think. The goal of P2010 was to develop a team with the realistic potential to win the World Cup when hosting, and we weren't that far off.

 

I agree that it's a lofty goal to set for 2022, but I'll go out on a limb and try to figure out their projected path toward that goal.

First of all, having a "top league" in the world is pretty subjective. We're certainly not there now, but you have to imagine that people in France/Brazil/Argentina/Mexico believe that they are a "top league". Those leagues are within a reasonable reach (at least compared to Eng/Ger/Spa/Ita)

If the league improves from '12-'22 at the same rate it improved from '02-'12, then I think we'll be knocking on the door of (at least) the lower end of those "top leagues". Also keep in mind that the player pool over the last 10 years has basically doubled, with 9 teams added and squad sizes expanded. While I expect the league to be at more than 20 teams by 2022, I certainly wouldn't expect to have 9 more teams to fill with players.

Ten years ago, we had no real professional youth development system, outside of the opening of the Bradenton academy, and maybe a handful of elite pay-to-play youth clubs. With development academies now firmly in place, and a clear vision from USSF for producing top professionals, we can hope for real results in the next decade. It takes time for these investments to pay off, but by 2022, an entire generation of players will have passed through this new system, and should provide a stream of quality young players that are better players than their predecessors.

We should also see continued improvement of foreign signings. The 2012 off/season saw MLS clubs sign an unprecedented number of foreign players. Not just DP's, but all-star caliber contributors like Victor Bernardez, Felipe, and Boniek have all had a big impact on their teams. Wage budgets are only going to increase, and barring an economic miracle/catastrophe, MLS will still provide a more secure financial incentive than most other clubs in the Americas.

Overall in the next 10 years, we can expect to see a continued infusion of quality foreign players (primarily from the Americas), an improvement in the quality of academy graduates and young players, and a relative stabilization of the size of the player pool. Combine these with a steadily-improving commercial picture, and maybe we won't be so far off of Garber's goals.

 

He also singled out San Jose supporters, who have never done YSA chants.

 

I was there. That was a great game (and something that makes this season even more disappointing). The end of that game was the loudest I remember Lane since the 2003 night game against Miami. I watched the game as soon as I got home and got chills towards the end of that broadcast.

(full final 6 minutes)

 

So it seems like the goals are "top league in the Western Hemisphere" and "top 4-5 leagues in the world." Those are big goals, and I wonder how they expect to acheive those things in such a short timeframe.

 

But, in regards to San Jose, I think he was referring to the Ultra's singing how the Galaxy/Saunders, were of "little consequence to them". The YSA comment was the sentence before. The irony of this is that he chooses to mention profanity from a game where the police had to show up in numbers, in riot gear, to deal with LA supporters who were resisting arrest, and throwing smoke bombs at the cops.

 

and if you include every single player on every MLS roster (plus pool GKs) at their highest "total compensation" MLS spent $92M on salaries this past season.

so doing a bit of quick math says that for the league to have spent at least 50% of revenue on wages (which given the chart for the Championship above and the similar on for the EPL is extremely conservative) that would mean the league only had a total revenue (19 clubs plus the league centrally) of $180M.

according to a link in the Colorado loses 1.3M thread there was a SportsMoney program in 2011 that showed the average MLS team's revenue was a bit above $15.5M. since then MLS has added an above average revenue team in Montreal and attendance was up 5% which would drive revenues up.

so lets say in 2012 the average team revenue was conservatively $17M per team (a 5% increase) ... that alone would be $323M plus whatever national TV and sponsorship comes into the league ... let's call it $350M conservative estimate at total league wide revenue.

that would put the Salary to Revenue ratio at under 30%.

you cannot be a top 5 league in the world when your wages/turnover ration is under 30%.

that is the first and foremost thing to address. that and allowing teams to spend not just more money (thru DPs) but more money on all senior roster spots to increase overall quality and depth from 1-20.

EDIT: the SportsMoney program was from early 2011 so actually the average team revenue of 15.5M would have been based on the 2010 season which means that since then THREE high revenue teams Portland, Vancouver and Montreal have been added to the league and the attendance is up 13% since 2010. so in actuality i'd guess the average team revenue is nearer to $18M or more which means the total league revenue is probably above $360M which would make the ration 25%.

 

So if MLS is making $360 million per year, and only spending $92 million on player expenses, where is all the money going? Do youth academies, FO's, and travel costs really amount to $250+ million dollars?

 

the operating expenses of each team averaged about $14M in the report from SportsMoney plus league HQ expenses. the expenses per team probably have gone up since 2010 too. so maybe as much as $300M for all the teams combined operating expenses plus whatever it costs to run the league HQ. still seems like there'd be money left over to spend 1-2M more per team on salaries.

 

How likely is it that the average team revenue is $15.5M? Ole's estimate of ticket revenue is about half that much. Assuming that itself isn't an overestimate, do sponsorships, merchandising, and tv money bring in as much as ticket sales on a league-wide basis?

 

i got the numbers from a blog that reported watching a SportsMoney program from early 2011 that showed a graphic listing the average team revenue as 15.5M. the link to the particular blog entry is in the other thread about Colorado losing 1.3M

here it is:

http://kirsoccer.wordpress.com/2011/03/26/mls-highlighted-on-sportsmoney/

 

Interesting. Does that seem reasonable to you that the average team makes $2.8M in "exhibitions and events," $1.6M in premium seating, and $3.4M in ads/sponsorships? (Asking honestly, I have no idea. )