Expansion Pause

Discussion in 'MLS: Expansion' started by arkstfan, Oct 29, 2013.

  1. arkstfan

    arkstfan New Member

    Jun 6, 2010
    Club:
    Liverpool FC
    There is likely to be a pause in the current expansion pace. Either at 22 or 24 but it is certain to happen.

    While the league certainly wants new markets to bolster fan interest and improve the future TV deals, the league is going to have to stop for a time.

    The reason is that the next thing missing from the league is improved sale prices from relocation premiums.

    Expand too far, too soon and you can't sell your operating agreement at a premium to someone looking to relocate or to someone wanting to prevent relocation.

    The league is going to have to enter a period of a decade or so where pent-up demand is created by cities wanting in to drive up team values.

    That's why we will have an expansion pause at either 22 or 24.
     
  2. Yoshou

    Yoshou Fan of the CCL Champ

    May 12, 2009
    Seattle
    Club:
    Seattle Sounders
    Nat'l Team:
    United States
    Not that I know anything more than you, but has the league said there would be a pause after 24? Heck.. Even if the league has said it, why should we believe them this time? They said for years that they would be pausing after the NYC expansion was completed, but yet this last All-Star Game Garber said they'd be adding 4 additional teams by the end of the decade and, by all indications, they are on the verge of announcing expansions into Orlando, Miami, and Atlanta in the relatively near future (30/60/90 days/months).

    I'm also not sure that MLS is really at a point where it can try the "build us a stadium or we'll relocate" gambit. I wouldn't be too surprised if some of the cities said "Don't let the door hit you on the ass". Additionally, aside from Crew Stadium, most MLS stadiums really aren't that old.
     
  3. mls2010

    mls2010 Member

    Aug 6, 2005
    I may have got lost in some of what you said arkstfan but aren't the increased expansion fees effectively doing the same thing as a relocation premium??? Meaning driving up the value of the franchises.

    If you are a wealthy person and you see MLS go from 20 to 24, meaning less future slots....you know only a certain amount of slots are left. That will drive up the the expansion price and value of the franchises already.

    But until MLS gets to 30 or 32 teams, I don't see the relocation premium really coming into play. Owners can buy into NASL in one of the possible relocation markets and argue for expansion not relocation.
     
  4. arkstfan

    arkstfan New Member

    Jun 6, 2010
    Club:
    Liverpool FC
    Well AP says we have #22 with Beckham taking Miami.

    Right now there really isn't a premium at play because as far as we know, there hasn't been anyone walk up the window ready to plop down $70 million with a reasonable business plan who has been turned away.

    A pause in expansion means time for demand to ferment and raise prices. I am assuming no one is cutting these sized checks without the MLS revenue reasonably supporting the price. Right now there is no scarcity in franchises. It seems that everyone willing to pay the entry has made it so far. Rochester didn't make Hunt an offer he couldn't refuse. Cosmos wanted to play by their own rules.

    And it doesn't have to be a facilities game either.

    Let's say Chivas is put up for sale. Based on their attendance, they are almost certainly worth more if moved. But what if say 7 or 8 years from now a potential owner frustrated with attempts to have a team in Charlotte going no where (ie. they have a stadium plan, they have supporters plan, they have a marketing plan, they have $100 million ready to be payable to MLS) is unable to get MLS to award an expansion team and is ready to pay a premium to buy DCU or even Columbus?

    It's when there are more soccer ready potential owners and venues than there are franchises that a premium is created. (ie. supply is below demand).
     
  5. Yoshou

    Yoshou Fan of the CCL Champ

    May 12, 2009
    Seattle
    Club:
    Seattle Sounders
    Nat'l Team:
    United States
    You mean anyone other than Atlanta? And San Antonio, Minnesota, Detroit, etc, etc. :)
     
  6. T.M. Anthony

    T.M. Anthony Member+

    Jun 13, 2010
    Hudson Valley
    Club:
    New York Red Bulls
    Nat'l Team:
    United States
    I believe a good reason to give pause to expansion is to keep distribution of shared revenue from growing too much whilst they focus on gaining more from the brands already in the league. in other words try to make more while splitting it a little less, the league should only be making more revenue from the gate and from tv, build on that and use the cash gained wisely and efficiently.

    another thing to think about is how this may support D2. once the door to D1 is closed those looking to capitalize of the game in untapped markets will look to next best thing, the NASL (hopefully). MLS will only have 22 markets covered, likely with several strong ones left without a D1 side, there should be more than enough there to consider investing on a smaller scale for. (especially if D1 has grown its bottom line and the possibility of joining is teased over time)

    anything after that seems to far to even predict. maybe I'm just talking out of my ass, or maybe the incentives of adding more deep pockets outweighs the benefits of stopping, but I think those thoughts stand to reason.
     
  7. Macsen

    Macsen Moderator
    Staff Member

    Nov 5, 2007
    Orlando
    Club:
    Orlando City SC
    Nat'l Team:
    United States
    Why should you have any reason to believe anything any particular league source says about pace of expansion? If you ask the question, you got a different answer from virtually every source.
     

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