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How Major League Soccer Plans To Overtake Baseball - YouTube
Channel: CNBC
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soccer in the US, it hasn't
always had the best track
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record. Its popularity waivers
and interest is usually tied to
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major events such as the World
Cup or the Olympics. Major
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League Soccer has spent over 25
years trying to change soccer
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sentiment in the US while
competing with more fast paced
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high scoring sports like the NFL
and NBA,
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you know, you could just tell
that the players are better than
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the speed of the game. You know,
not being the biggest soccer fan
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you could just look at it's
night and day you know, MLS it
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looks like it's more minor
league, it looks like it's
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growing. But you know, listen,
they have the signages all over
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the place, very innovative
league the MLS is but they got
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to improve that competition.
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Over the last 10 years, the MLS
has become increasingly popular,
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the league garnered the
attention of top talent across
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the world, brought in
significant investments in
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celebrity ownership, and
generated a massive presence on
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social media.
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We think the internet, you know,
puts us in a position where we
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can talk to this enormous fan
base around the world. And what
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we've done over the past 10 to
12 years is really increase the
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investment in making the US and
MLS one of the top leagues in
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the world.
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But the MLS has rise in
popularity has seen its fair
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share of obstacles, financial
woes, leadership changes and
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shakeups and its continuous
fight to draw in a TV audience
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following its 2021 season,
things may be shifting in the
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MLS favor, with new expansion
teams, rising popularity, and a
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new media deal that can bring
millions of fans and billions in
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revenue. This is
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the largest sport in the world.
And the US is the largest sports
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economy in the world. And so
there's something really special
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in the making here. And it just
requires steady investment but
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you think about the ownership
group and MLS and the amount of
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capital that has been invested,
it's never gone back. It's only
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going forward.
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Before the MLS became well the
MLS there was the North American
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Soccer League, which ran from
1968 to 1984. And it was
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considered the blueprint for
what the MLS should and
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shouldn't do. The North American
Soccer League was a free
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spending decentralized League,
meaning teams spent excessive
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money on star players like Pele
to draw in fans. The league
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never generated meaningful
revenues or substantial growth
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that it needed. By 1984.
financial tools from
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overspending cost the league
almost all of its clubs, as they
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began shuttering their
franchises. In 1985, the North
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American Soccer League
officially suspended operations.
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This is Jim Curran. He's the
head coach of the Philadelphia
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Union, and has been with the MLS
from the very beginning.
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You know, there was a time in
the 70s and 80s that, you know,
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75,000 people were coming out to
watch soccer games in the New
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York Cosmos as the kind of
example of that. But what did
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happen is, it was kind of a
reckless spending, it was maybe
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too much too soon, there weren't
the soccer specific stadiums
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that there are now and it was
kind of like a traveling circus
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almost almost. And it was a
little bit out of control. And
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without a real kind of vision
and longer term plan. I think
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the lessons learned where they
got a little too big for
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themselves too quickly, and, and
all of a sudden now the money
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dries up.
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By 1993, the new MLS League was
announced, with a centralized
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structure that controlled costs
similar to the NFL clubs were
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split into divisions and run by
investor operators or owners. 10
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clubs were created for the
initial debut in 1996, with two
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more clubs added just two years
later,
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I think back to when I first
started in Major League Soccer
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in 2001. As a rookie, we were
playing games in high school
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football stadiums in Dallas. We
were playing in division three
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colleges in Naperville. Early
on, we were down to 10 teams.
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There was real discussions in my
rookie year in the offseason
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that the league might not make
it at the time. Phil and shoots
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was in charge of an own seven of
the teams of the 10. So it was
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on life support and Don Garber
came in and injected this this
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life into a league that was
quite literally in trouble.
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The league was met with strong
pushback during its early years.
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Traditional soccer fans were
opposed to some of the rule
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changes and scoffed at the MLS
his attempt to Americanize the
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sport, then in 2002, and had to
full two teams, the Miami fusion
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and Tampa Bay mutiny.
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And what happened after that and
what was probably one of the
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most important things was the
the the building of the soccer
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specific stadiums, you know, a
real brick and mortar building
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that our supporters and fan
bases could call their own. They
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weren't, you know, old college
football stadiums or old NFL
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stadiums. They were soccer
specific. And now I think we're
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up to 27 of these state of the
art, you know, beautiful, you
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know, facilities that can can
house uh, you know, 30,000
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people and in some cases down in
Atlanta 50,000 people at a game.
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So that's something that we
really, really was important and
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it was a real turning point.
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by 2007, things begin to trend
upward for the MLS with the
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establishment of the designated
players rule. This rule allows
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teams to sign star players from
abroad, most famously the
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signing of David Beckham to the
LA Galaxy with a deal that was
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worth $250 million.
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That rule certainly has paved
the way and has been a smart
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initiative in that we grew the
league in a in a, in a smart
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way, it wasn't that you could
have 10 of 10. David Beckham's
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on your team where you know,
previously, in the former NASL,
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they may be expanded too
quickly. With the way they
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strategically went about the
designated player role slash
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David Beckham rule was
calculated, and it didn't put
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all your eggs in one basket, you
know. So I think that was a
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really intelligent move that put
our league on the global level
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because David was a, you know,
an icon on and off the field
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early 2000s was really r&d is to
figure out how do we attack this
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and I think the soccer specific
stadiums, the designated player,
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all part of that r&d process to
figure out how do you build a
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league, unique to our country,
the playoff systems, the
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different formats. When I got
involved in sort of, oh 708, I
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sort of thought the next 10 to
15 years would be the investment
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phase, where we grow from 15
teams to 30 Plus, you know, 30
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teams cover the map much more
completely, like other major
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sports.
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The MLS is focused on expanding
its clubs to massive sports
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markets and increasing
popularity with younger
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generations. for over 25 years,
the MLS has grown to a massive
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operation, clubs now spanning
from coast to coast, with Austin
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FC debuting in 2021, and new
clubs in 2022, and 2023. For the
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Charlotte football club in St.
Louis City, respectively.
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You've seen the break through
city by city, but the critical
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mass of the league really won't
be apparent until we reach that
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sort of 30 team milestone. And I
and, you know it is sport is
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something that you enjoy
together as a community as a
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family as intergenerationally.
So we're still building the
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storylines, we're still building
the rivalries, we're still
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building the traditions. And
that's something that takes time
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and will happen organically.
It's not something we can
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naturally unnaturally force, the
clubs
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are becoming more valuable than
ever. In 2008, the average
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valuation of MLS teams was about
$37 million. Today, clubs are
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valued at $550 million dollars,
higher than some teams in the
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Premier League. Currently, the
Los Angeles Football Club is the
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highest valued MLS team at $860
million.
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It's almost alarming to see some
of the valuations of the teams
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in Major League Soccer, because
you think of some of the old
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English teams that have 100 100
plus years of history or teams
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in in different parts of Europe
that have been around forever.
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But what you see now with our
league is is these brand new
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stadiums, these these young,
exciting ownership groups that
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are coming in the advertising
dollars that come in they
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amazing facilities, and they're
really jumping in value. At a
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really quick quick rate.
Sometimes it's shocking for
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people to see that as an
example. lafc is valued at
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higher than a even a club like
Newcastle who just had basically
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trillionaires come in and buy
you know, so it's incredible to
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see the growth of this league.
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In 2018 Gallup issued a report
that tied soccer and basketball
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for second and popularity for
sports to watch among 18 to 34
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year olds overtaking baseball,
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when I walk my kids to school in
Center City, Philadelphia and
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drop them off. I used to 10
years ago I used to only see NFL
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NBA you know maybe a Major
League Baseball, you know, a
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couple hockey flyers jerseys.
When I walk my kids to school
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now, it's not just Lionel Messi
or Cristiano Ronaldo. I'm seeing
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Philadelphia Union jerseys. But
then I'm also seeing now rivals
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of the Philadelphia Union. I'm
seeing New York City FC jerseys
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I'm seeing as LaTonya Ibrahima
vich. From the LA Galaxy jersey.
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I'm seeing a throwback you know
David via from New York City FC,
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and you're kind of going, this
is different.
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And a study done in 2020 By
morning consult, found that
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soccer is the most popular sport
among generation alpha. And Los
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Angeles football club owner
Larry Berg believes that the MLS
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could overtake Major League
Baseball as America's number
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three sport in 10 years time.
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MLS still has to improve their
product, they got to go out and
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get better players, right. And
so if again, if that soccer
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popularity continues to rise
with Generation Z and then
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Generation Y, that's going to
help the MLS right? Image
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generation Alpha Generation Z
generation generation alpha, if
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that soccer continues to you
know that trajectory that's only
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going to help the MLS again, how
big we don't know because right
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now that popularity seems to be
from an international standpoint
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they like Premier Li they like
to see the big stars they that
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competition is completely
different from MLS
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but before the MLS can attempt
to overtake the MLB anytime
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soon, the league still needs to
dominate in one crucial area TV
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viewership. While the MLS is
rapid growth has been able to
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overcome financial issues, fan
pushback, and leadership
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shakeups. The one thing that has
been slow to grow over the years
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is its television footprint.
Meteorites are a massive
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cornerstone to how league
functions and operational
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revenue. Just take the NFL for
example, in 2020, the league
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made an estimated $9.89 billion
from its media deal, which is
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evenly distributed amongst all
32 teams. This gives teams like
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the Green Bay Packers something
called National revenue of $309
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million for 2020. For the
2019 2020 fiscal year during the
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pandemic, this national revenue
help teams stay afloat as most
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stadiums remain closed, and
teams were unable to generate
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local revenue or revenue from
ticket sales, merchandise or
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stadium rentals for the Packers
2019 2020 fiscal year, they were
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only able to generate $62
million in local revenue,
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compared to its 2018 2019 fiscal
year were generated $211 million
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in local revenue. The MLS is a
localized sport, meaning a
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massive amount of the team's
revenue is generated from ticket
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sales, merchandise and player
contracts and sales to other
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leagues around the world.
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media rights keep harping on
that. But that's going to be
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that's the foundation right now
of all the leads meteorites
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because in his age of content,
content content, MLS is going to
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need that money to grow. Now
they're going to need a network
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that's really going to invest in
them be able to tell their story
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be able to introduce fans to
their stars of the sport, being
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able to market their sport
better so that people can
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gravitate because right now, a
lot of people do not watch MLS
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from a national level is more of
a localized market. Right? This
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is why your Austin's and your
Charlotte. Hopefully those two
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markets continue to rise. And
that's going to help you know
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MLS grow but they need a
national audience.
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The MLS is looking to establish
a new media rights deal in 2022.
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The MLS is current eight year
media deal with ESPN Fox, and
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Univision has generated an
estimated $90 million per year
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since 2015. The league hopes
that it can capitalize on the
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success from its younger
fanbase, social media presence,
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and the FIFA World Cup that's
being hosted in the US in 2026.
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I think the way we're going to
broadcast to our fan base,
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you'll see another leap some
time between now and 2026 in the
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way fans can participate and
consume, you know the quality of
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play and they'll see that it is
comparable to some of the best
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to best leagues.
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If we continue to do the work
that we're doing with the unique
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fan bases that we have with a
great ownership that we have
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with the product on the field
that's continuing to improve as
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the TV production gets better
and better. I think that the the
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sky's the limit for Major League
Soccer
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