MLS to expand to 30 teams. $200 Million expansion fee.

Discussion in 'MLS: News & Analysis' started by CMeszt, Apr 18, 2019.

  1. gunnerfan7

    gunnerfan7 Member+

    SJ Earthquakes/Arsenal
    United States
    Jul 22, 2012
    Pleasanton, California
    Club:
    Arsenal FC
    Nat'l Team:
    United States
    You say "we drew fans for Spring training", and not the D-Backs bottom-third (20-25) attendance figures. The Coyotes are the worst NHL franchise now that the Thrashers are gone, and the Suns will historically fill about 70-90 percent of their 18K arena, 70% if they're bad, 90% if it's the Stoudamire/Nash 7-seconds and a shot days.

    The Phoenix Open is a spectacle designed to pack in as many fans as possible. It's no wonder, because the 16th hole is just a place to pack 20,000 ASU bros, which makes it easy to "draw more fans". And if this were golf, and you had more than one spectacle of a tournament, maybe you'd have an argument.

    If you're going to argue that soccer's going to be successful there, there are better places to start than moribund Big 4 franchises. You've certainly laid out a good argument why Phoenix has a good ownership group, but you've laid out a poor one about Phoenix being a bad sports town.
     
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  2. btlove

    btlove Member

    Tottenham Hotspur
    United States
    Sep 29, 2017
    The mere mention of pro/eel triggers you to the point of blocking people seems over the top but fair enough.
     
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  3. TheJoeGreene

    TheJoeGreene Member+

    Aug 19, 2012
    The Lubbock Texas
    Club:
    DC United
    In the context of a country that's bigger than the EU, with more metro areas over 2 million than the EU, and with no sports history of using pro/rel? Yeah, I'm not going to waste any time on anyone who even mentions the possibility.
     
  4. SetPeace

    SetPeace Member+

    Jun 22, 2004
    SC Illinois
    Club:
    Torquay United
    Nat'l Team:
    United States
    I don't know how old you guys are, but Hawaii did have a team in the old NASL. Team Hawaii, as it was called, played in the NASL in 1977 and finished with a record of 11 wins and 15 losses. They didn't make the playoffs, and that was the only season they had a team. It was re-located from San Antonio (nicknamed the Thunder) which had a franchise in 1975 and 1976. After playing at Aloha Stadium for one season, Team Hawaii was moved and became known as the Tulsa Roughnecks who played from 1978 till the league's demise in 1984. Tulsa won the 1983 Soccer Bowl, 2-0 over the Toronto Blizzard. The title game was played at BC Place in Vancouver and drew over 53,000 fans. For Team Hawaii, their best attended home game was against the New York Cosmos (better than 12,000 attendance). For the year, Team Hawaii averaged about 4500 fans through 13 games.

    Instability killed the NASL. During the course of the league's history, teams were moving or folding or added seemingly at whim. Hartford had a team called the Bicentennials in 1975 and 1976. In 1977, they dropped 'Hartford' and became the Connecticut Bicentennials. In 1978 the team re-located to Oakland and became 'The Stompers'. They played in Oakland one year before moving to Edmonton and changed their nickname to 'The Drillers'. Edmonton had the team for 4 years before folding after the 1982 season.

    I got all this info from Wikipedia, and it sure brought back memories for me. Some of the team names were cool. Some were cray-cray, but there is absolutely no comparison to what MLS is doing today when you look at what was happening in NASL front offices in the 70's. MLS is going to be much more stable and sustainable than NASL ever dreamed about, regardless of the number of teams the league ultimately has.
     
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  5. Ghost

    Ghost Member+

    Sep 5, 2001
    The NASL also had growth. And a successful New York franchise.
     
  6. JasonMa

    JasonMa Member+

    Mar 20, 2000
    Arvada, CO
    Club:
    Colorado Rapids
    Nat'l Team:
    United States
    What growth? And how successful was that franchise when Pele wasn’t on the roster?
     
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  7. SilentAssassin

    Apr 16, 2007
    St. Louis
    Thanks for pointing that one out, I absolutely didn't notice that the Rams are no longer in St. Louis, and it's not a low blow at all coming from a Crew fan. /s

    As for the rest of your post, I'll be honest. I didn't follow the details that closely when the teams first left LA, so I had to check a few facts. From what I read, Al Davis wanted to keep the Raiders in LA, and sued the league because they forced him to move. https://www.sfgate.com/news/article/Al-Davis-sues-NFL-for-forcing-team-from-L-A-3150141.php So, that one was a league decision. I do know that the league voted when they decided to move the Rams back to LA. The vote was 30-2. https://www.si.com/mmqb/2016/01/12/los-angeles-rams-st-louis-nfl-inglewood-stadium-vote. Also a league decision. Was there no league vote when the Rams moved to St. Louis? I couldn't find the answer to that, but given that both of those other moves were league decisions, I'm inclined to think that one was, too. If an owner proposes something, and then the league votes on it, that's a league decision. As for MLS, my understanding is that there's legally no difference between ownership decisions and league decisions. When they signed the secret agreement giving Precourt the right to pursue Austin, that was a league decision, too.

    Kroenke didn't make the Rams move unilaterally. He is also, not coincidentally, an MLS owner who we can probably guess has a certain opinion on these things whenever they come up at MLS BoG meetings. Yes, LA has NFL teams again, but my point was that the largest sports league in the world moved both of their teams out of the 2nd-largest media market in America for 20 years. It's not out of the realm of possibilities that in MLS, which draws peanuts in ratings and relies much more heavily on matchday revenues, might consider moving a big market team if they can't turn them around any other way.
     
  8. GunnerJacket

    GunnerJacket Moderator
    Staff Member

    Sep 18, 2003
    Gainesville, GA
    Club:
    Arsenal FC
    #158 GunnerJacket, Apr 21, 2019
    Last edited: Apr 21, 2019
    IIRC the majority of teams within the old NASL lasted less than 6 years. Many teams lasted just 1 year before folding, relocating or rebranding. The league struggled and died because it was unable to coalesce a unified and productive vision; Other than being in the same league the members had little in common and that affected their ability to grow TV appeal, sustain fans, and especially to develop talent. The Cosmos phenomena was arguably less about soccer and more about the fleeting power of celebrity. Read through the time lines of membership and I honestly think the league never went 5 years in a row without losing teams.

    For fans wanting a domestic option NASL gave us something and in fits and spurts it featured some decent talent, but as a business and talent development model it wasn't close to established leagues around the globe. No academies, no concerted effort to stabilize teams, no plan for growing fans and media appeal other than relying on owners to buy "stars" and that those stars would pack the stands. And this at a time before global media when 99.9% of the US couldn't name a player outside of the US.

    The NASL was better than nothing and we're grateful for its contribution to US soccer history, but as a business it was ill conceived.
     
  9. billf

    billf Member+

    May 22, 2001
    Club:
    Philadelphia Union
    Nat'l Team:
    United States
    The expansion fee is distributed amongst the owners. Divide that up and is not a whole lot per owner considering what each one put it.
     
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  10. BookerT

    BookerT Member

    Mar 27, 2007
    NC
    Are we even sure that the expansion fee money gets distributed to the owners? Forgive me for bringing this up without a source, but I seem to recall reading that expansion fee money is not just divvied up and paid out like that.
     
  11. xbhaskarx

    xbhaskarx Member+

    Feb 13, 2010
    NorCal
    Club:
    San Jose Earthquakes
    Nat'l Team:
    United States
    People always say sh*t like this and think they're so funny / clever... Anchorage is the 134th largest MSA in the US (so probably around 145 with Canada thrown in)... so yeah, Anchorage will be a total no-brainer if MLS is ever expanding to like 150 teams :rolleyes:

    [​IMG]
     
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  12. don gagliardi

    don gagliardi Member+

    San Jose Earthquakes
    Feb 28, 2004
    san jose
    Club:
    San Jose Earthquakes
  13. NashSC

    NashSC Member+

    Nashville SC
    United States
    Jan 3, 2018
    It actually is quite a bit. The next 3 teams could bring in $650 million. No idea how it is all divided up but each owner could get over $20 million. That is nothing to sneeze at. No it won't repay them on their total investment but to the guys that got in early it is a huge chunk of change.

    On the flip side I guess it also means they lose a percentage of SUM...right?
     
  14. Centennial

    Centennial Member+

    Apr 4, 2003
    Centennial
    I wasn’t trying to be funny. I just think it would be fun to have teams in both Hawaii and Alaska.
    Perhaps maybe for the time being a USL Championship team in Alaska.
     
  15. SetPeace

    SetPeace Member+

    Jun 22, 2004
    SC Illinois
    Club:
    Torquay United
    Nat'l Team:
    United States
    I'll play devil's advocate here. I understand where you're coming from, and 20 million bucks is a very big deal to people like us, but today's MLS owner and ownership groups are worth hundreds of millions of dollars. To them, I feel like 20 million dollars constitutes chump change. Throw in an ownership group consisting of 5 or 6 investors, and that 20 million is considerably less.

    You would think having such a steep expansion fee to pay would turn a lot of potential cities off to the idea of having an MLS franchise. Incredibly, the opposite seems to be happening. The interest of some cities to gain entry into MLS is practically unprecedented compared to where this league was 15-20 years ago in terms of finances and public perception.
     
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  16. The Artist

    The Artist Member+

    Mar 22, 1999
    Illinois
    Club:
    DC United
    Nat'l Team:
    United States
    I don't even think of it as a fee. It's basically a security deposit or a down payment. The moment the team becomes part of the league they get money from the communal pool for the salary budget, TAM and GAM. The league also, I imagine, contributes a great deal to their legal services, national advertising, and web services. They get a share of SUM, which seems to be worth quite a bit, and immediately get to start benefitting from national streaming/TV deals that are already set up for them. I've always found the idea that the other owners are charging a fee strange. They are selling a portion of their business to a new partner.

    I see 40 teams in the future.
     
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  17. jaykoz3

    jaykoz3 Member+

    Dec 25, 2010
    Conshohocken, PA
    Club:
    Philadelphia Union
    Nat'l Team:
    United States
    A Communal pool??? You do realize that ALL of the investors contribute to the league EVERY year right? Let's not act like there is a money orchard out back behind MLS HQ now.

    The league does not provide the funds for the salary budget, all of the leagues investor/operators do. Along with sponsorship and media rights money that makes up the funding and determines the league's salary budget per team.

    Let's also not forget that Sac and Lou will not only be forking over $200M for an expansion fee, they will also be spending more than that on stadiums, academies and team facilities as well. Not to mention if they want to spend more on transfer fees and designated player salaries..........
     
  18. STR1

    STR1 Member

    Atlanta United
    May 29, 2010
    McAllen, TX
    Club:
    Real Madrid
    Nat'l Team:
    United States
    Why would anyone fork out $200 plus million on a franchise/league that supposedly ends in the red year after year?
     
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  19. footballfantatic

    Mar 27, 2008
    Ontario, California
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    Speculation. The NHL values are achievable sooner than later with increased TV revenue.
     
  20. Yoshou

    Yoshou Moderator
    Staff Member

    May 12, 2009
    Seattle
    Club:
    Seattle Sounders
    Nat'l Team:
    United States
    The teams may lose money, but, unless they are way overspending, I doubt the owners are.
     
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  21. STR1

    STR1 Member

    Atlanta United
    May 29, 2010
    McAllen, TX
    Club:
    Real Madrid
    Nat'l Team:
    United States
    So they aren't losing money and MLS is a profitable business? I mean, it has to be otherwise I don't see the point in spending so much money just to join plus the expense of a new stadium, players, staff etc.
     
  22. STR1

    STR1 Member

    Atlanta United
    May 29, 2010
    McAllen, TX
    Club:
    Real Madrid
    Nat'l Team:
    United States
    The TV revenue from MLS doesn't even compare to NHL. MLS isn't even the most watched soccer league in its own country. Unless MLS is about to get a TV deal worth in the 400 million per year then I could see as to why pay so much. But MLS TV ratings aren't that great to justify such an increase in a new TV deal.
     
  23. The Artist

    The Artist Member+

    Mar 22, 1999
    Illinois
    Club:
    DC United
    Nat'l Team:
    United States
    When you say ALL of the investors contribute to the league EVERY year are you just pointing out that every owner has expenses beyond the salary budget that are part of running a team? The stadium and academy costs you mention would be obvious examples. I don't disagree with that. If it sounded like I was saying that expansion teams chip in their 200 million dollars and then sit back and let the money roll in, that certainly wasn't my intention.

    But MLS as an entity does have communal money, the national and international TV deals and sponsorships being sources that get reported on. I'm sure some portion of that money goes toward funding the salary budget. There's a reason Fire and Rev fans complain about their owners only spending "Garberbux" when they acquire players. There's a reason it is called a salary budget and not a salary cap (because it is the money they have available from the league to spend rather than just a limit on how much of their own money they can spend). Why would there be a difference between TAM funded by the league and discretionary TAM funded by the owners if the owners are the ones paying for it all?

    The point is that the initial 200 million dollar investment gets trickled back to the teams year after year in various ways. That is 200 million dollars they would have spent on salary anyway in a more traditional league structure. One could certainly criticize a system that limits access to the first division to owners who can afford to basically put up ten or so years of salary before even playing a game, but that's a different argument from the one about MLS owners getting rich off expansion fees. When MLS owners accept a new expansion team they are committing to helping fund that team indefinitely even if it doesn't turn out to be the next Atlanta so it seems reasonable to me that they ask for some good faith money up front. The exact amount that is fair or how fast MLS is expanding are issues I'm not really debating. I just don't like the characterization of the expansion fees as a sort of pay off to the current owners or anything like a pyramid scheme or funding mechanism (not that you were making these claims, just that these are the claims I was responding to).
     
  24. Yoshou

    Yoshou Moderator
    Staff Member

    May 12, 2009
    Seattle
    Club:
    Seattle Sounders
    Nat'l Team:
    United States
    Try reading what I posted again.
     
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  25. ElNaranja

    ElNaranja Member

    Houston Dynamo
    United States
    Jul 16, 2017
    Let me help with our friend @JasonMa 's example of how the Rapids are run.

    Theres the Rapids team. The team store. Stadium. TV. SUM. And so on. All different businesses under what we call the Rapids.

    The team may lose money (for a host of reasons) while the sum total of the organization is profitable.
     

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