Besides which, the league is really the owners who's franchise values have quadrupled in recent years and will likely continue to do so. That's the only income that really matters in pro sports ownership... Hell, UEFA's FFP was invented precisely due to the fact that most of the biggest clubs willfully do not operate in the black or anywhere close to it... ...OP do you even billionaire bro???
The fact that there are a multitude of people clamoring to pay $150 million to get a piece of the league should tell all you need to know. Period.
The two posts above are perfect. The league need not make money. As an enterprise, the sport operates at a loss globally. Most sports probably do. The margins are pretty thin anyway when you consider the salaries. MLS needs to be sustainable and we've got more than enough evidence thus is the case.
There are some on the internet who claim MLS is just a big ponzi scheme. I, personally, do not believe this but I'd like to hear how others might refute such an argument.
There are also some on the internet who claim that the world is flat. Seriously, go do your own homework and look up what a Ponzi scheme is.
Refute it by understanding what s ponzi scheme is. A lot of this nonsense comes out of Soccernomics, which I found largely to a load of sophistires and cherry pick facts without context. Here's a good article on the MLS is going to collapse nonsense: http://www.sbnation.com/soccer/2015/4/23/8482407/soccernomics-mls-collapse-stefan-szymanski
I know full well what a Ponzi scheme is, American Greed is oneof my favorite TV shows. Asking for an intelligent opinion on BS often is an exercise in futility.
Well, to be technical, the league needs to make "money" and lots of money. The league does not need to make a "profit", however. This. You nailed it.
As is going into an MLS forum, sympathising with someone calling MLS a big scheme and then expecting to be given a bouquet of roses.
The combined value of the 20 teams in 2016 was $3 billion, 493 million according to Forbes (up 80% since 2013). MLS is a single entity. There are ways companies manage debt and survive despite hemorrhaging money. It could even be floated on Nasdaq.
This is absolutely true. My point is that it (FFP) wouldn't mean anything if teams normally didn't operate at a loss and could have conceivably gone on doing so without issue.
One of the major issues causing MLS teams to lose money is reinvestment. If you own a growing business, there's a very real chance that adding more capital will increase the rate of growth. Doing so means the business lost money, because more was put into it than it generated. Yet the total value grew, and by more than the additional amount spent. This is MLS, where teams are spending money on building new stadiums, building new training facilities, and starting or purchasing youth clubs and B sides in USL. Creating these things initially costs more than their annual upkeep does, so it's remarkably easy to run a loss. And yet, club values continue to rise, and more people than ever want to invest. The other aspect is affiliated businesses. In grad school, we had one of RSL's FO officers (COO, I think) come speak to us (in 2004). When bidding to enter the league, they looked at the business models of all the existing teams and determined that they could be profitable as a total enterprise if they owned not just the team, but also the stadium and the TV and radio broadcast operations. Without that, they didn't see a path to overall profitability unless the league's fundamentals changed, but with it, they saw long-term stability.
English teams make massive losses and have extremely high payrolls, yet they survive. As long as MLS investors continue to believe that in the long-term they'll make money, and valuations continue to rise, they'll continue to invest. Several of the new stadiums are linked to urban redevelopment, so it's likely that real estate prices will rise and in many cases the stadiums are paid off in full. AT&T stadium cost $454 million allowing for inflation and is now worth $561 million. (The Giants pay $1.2 million a year in rent). Finally, payrolls are getting smaller but the quality of MLS has not declined and in some cases has improved. Attendances continue to rise, (they will flatten out below 23,300 due to maximum stadium capacities).
how can it be that the ny cosmos could sell out 80k stadium every week back in the 70s,yet today when soccer is supposedly on a rampage growth curve, MlS teams can't fill a measely 20k stadium week in,week out. for example red bulls,columbus crew etc...