Similar to the NWSLs attempts to build itself on the success of the U.S. womens national team, MLS will need to position itself smartly and probably spend significantly more money on players in order to fully capitalize on the wave of domestic interest in the sport that should come with the competition. Real estate is also a big part of the equation. The next round, for MLS team No. Another avenue is its growing relationship with Mexicos Liga MX. Los Angeles FC ranks first at $860 million, while the Colorado Rapids rank last at $370 million. mericans want to own a U.S. sports franchise, but franchise values (in mens leagues) have grown to the point of being cost prohibitive for most, said Swoboda. Its average attendance of 21,358 from 2013-2018 ranked eighth in the world among all soccer leagues in that period, narrowly behind Italys Serie A and Frances Ligue 1. The days of Bob Bradley roaming the sidelines and Peter Nowak, Chris Armas and Cuauhtmoc Blanco starring in front of sizable support were firmly in the rearview, replaced by small crowds and an ever-changing roster that almost always missed the playoffs. Celebrity superfans are frequently seen in the stands, with Justin Bieber and Wiz Khalifa attending the MLS Cup in November. The league enjoyed solid attendance in 1996 off the back of the 1994 World Cup, but that dropped off significantly in subsequent seasons. But MLS investors are still spending big to secure a share of the U.S. soccer market because their eyes are set on potential goldmines down the road: a new national TV deal in 2023, a stateside World Cup in 2026 and, if everything goes just right, a future American sports landscape wherein domestic soccer can hold its own against the likes of the NFL and the NBA. [2], The latest ranking reported that Los Angeles FC is the most valuable MLS franchise after the 2022 Major League Soccer season. Neither of those fees are even a third of the maximum Tepper could end up paying to bring Charlotte into the league. Theres little doubt that the tournament itself will generate huge interest, crowds and television audiences in the U.S. and Canada, but there are no guarantees that any of that will actually carry over to MLS. The fact that a decent number of clubs have made real inroads in their communities is good evidence for the league. There are a number of networks that could end up in the mix for the next round of MLS rights. Unlike in most of the rest of the world, there is no risk of relegation in MLS no possibility of a few injuries derailing a season so badly that a club drops a division and takes a massive hit in revenue as a result. The fact that owning a sports team is an enjoyable way for the extremely wealthy to spend their money shouldnt be underestimated. I think that that reinforces the potential on the consumer or the demand side.. Sportico talked to more than 60 stakeholders inside and outside MLS over the last five weeks to dig into the financial metrics and team valuations of a league that has long relied on expansion fees to prop up its franchises but is now ready to turn off the expansion spigot and walk on its own two feet with soccer-specific stadiums in most markets; expanded youth academies; a new TV deal on the horizon; interest in the womens game surging; and the World Cup on its way. Forbes values the club at $335 million, discounting for the control premium and the fact that, for all the hype around the downtown move, the club has long struggled to find either relevancy or financial success: Chicago has ranked among the leagues bottom five in home game attendance since 2013, and the team has yet to turn a profit in its 22 years. At the moment, MLS remains mostly governed by its conservative clubs. you cant spend on players, said the aforementioned owner. The potential associated with owning high-value land in a desirable downtown location that could be turned into a larger, mixed-use stadium district is something that is appealing to investors, though few MLS teams have activated it. The capital contribution for expansion and the protection of the capital contribution is essential to what peaks values.. Who Should Be Manchester Uniteds First-Choice Goalkeeper Next Season? That potential is the most important justification for the leagues growing valuations. The pandemic largel, y kept fans away from matches in 2020, but MLS has established itself as a well-attended league over the last five-to-10, ears. Expansion fees are distributed among other owners and effectively set a floor for other MLS valuations. And a prospective American or Canadian owner might only be interested in buying a sports team in their own community owning a European club might not have the same appeal as owning a team in their hometown. If youre putting together a pitch for why someone should buy an MLS team, I think one of the things youre including is that, most other North American leagues are already at the pinnacle of their sport, said A.J. Forbes estimated that the compan, distributed $125 million to league owners in 2018, or roughl, y $5 million per club. The one newcomer to the list is FC Cincinnati, which made its MLS debut this season; we value the club at $285 million. In 2017, SUM was valued at $2 billion after MLS bought out the stake owned by Providence Equity Partners (SUM is now wholly owned by the leagues investors). Wholly owned and operated by the league, SUM is a particularly attractive element of buying into MLS. Furthermore, he noticed . Even if the league itself grows slower than those running it hope, owners should still be able to financially capitalize on the rising tide of soccer in the U.S. and Canada through SUM. A strong academy system is one of the selling points of Real Salt Lake, which went on the market in August after owner Dell Loy Hansen was investigated by the league for allegations of previous racist remarks and his pushback on player protests over social justice. If youre not into owning yachts, owning multiple jets, then go ahead and buy a soccer team.. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. But assume youre buying into a club that is in a league that is not at the pinnacle of its sport, for which there is so much money and attention in that sport globally. Achieving the former would require a real break with 25 years of history, however. Theres more in play than the future of MLS, though. So it makes some sense that MLS owners would invest big in a money-losing enterprise, given that theyre also securing a long-term interest in the continued success of soccer in the North America. The fact that theres not profitability is not a deterrent.. Yet, recent transactions indicate a league on fire, with teams selling at frothy multiples reminiscent of a late 1990s tech stock. The grade: B- The value, upside and fit are a huge reason why Herbig . In December 2019, hedge fund billionaire and owner of the NFLs Carolina Panthers David Tepper agreed to pay an expansion fee that could rise as high as $325 million to bring a new team to Charlotte. The network pays $200 million per year for its American broadcast rights for the NHL, the next closest North American mens league to MLS in popularity. With those sorts of dreams in play, its no wonder that Mansueto isnt alone in paying up for a piece of the action. Movement of spots in the ranking from the. Houston Dynamo FC were sold in June, and the Orlando City SC sale process should wrap this month. The challenge for MLS is to build upon its tremendous growth and development of the past decade by levering its advantage as the top U.S. domestic soccer league to gain share against other soccer leagues. If the expansion club can maintain that level of fan support, it will have the opportunity to greatly increase revenues when it moves to its $200 million West End Stadium in 2021. league; the club ranks among the top 20 global soccer teams in average home game attendance. It should be noted that the Forbes numbers are merely an estimation ultimately, a clubs value is simply what someone is willing to pay for it. /2021/07/16/lafc-tops-of-the-list-of-most-valuable-mls-franchises LAFCs ascent is the latest sign of just how much MLS has grown since it was founded in 1996. The league will expand to 29 teams next . Given the history of MLS, its probably not unlikely, either. League investors in Cincinnati and Nashville agreed to pay $150 million to join up while planned teams in St. Louis and Sacramento will come on at an expansion fee of $200 million. The latest ranking reported that the New York Yankees is the most . Cincinnatis average home-game attendance was more than 27,000 per game, third-most of any MLS team, behind Atlanta and the Seattle Sounders (the leagues fourth-most valuable team, worth $405 million). The trend continued in February 2020, when LAFC owners bought half of minority owner Vincent Tans 20 percent stake in the club at an overall valuation reportedly north of $700 million. Fans of the sport of soccer skew younger and more diverse than American fans of other sports, too. The Union sold a pair of players over the last nine months that came through its academy program. It essentially serves as an in-house agency that manages commercial rights for the U.S. Soccer Federation, CONCACAF and other properties, and runs the Mexico mens national teams lucrative U.S. tours. The owner who spoke to The Athletic on condition of anonymity likened buying a team to buying a piece of fine art. Sportico is a part of Penske Media Corporation. MLS will have plenty of inventory available for the negotiation. The transfer window, the trading of players, the academies, you look at what teams like Philadelphia and Dallas have done, theyre starting to make money in the transfer market, added Carey. To use individual functions (e.g., mark statistics as favourites, set Its a big payday, but less than the $300 million annually the league reportedly expected, especially given that MLS must pay the production costs. According to Forbes, the 23 teams that played in MLS during 2018 combined for $100 million in losses. Forbes compiles the finances of all 28 MLS teams to produce an annual ranking of the best franchises in terms of valuation. On the whole, according to Forbes, MLS clubs rose in value by 30 percent from 2018 to 2019 to an average valuation of $313 million. In fact, we estimate that, of the 23 teams that played in 2018, just seven turned a profit (and half of those were just barely in the black). To say the Blue & Orange struggled on the field would be an incredible understatementthe team won just six games all yearbut that performance didnt stop fans from turning out in droves. But the league wont keep expanding forever presumably. Which brings us to the key to all of this: Media rights. Theyre the only league in the United States thats been blessed judicially as a single entity, and that gives them a lot of control over costs that none of the other leagues have, said Zimbalist. Use Ask Statista Research Service, Average player salary in the sports industry by league 2019/20, North American sports market size 2009-2023, Average player salary in MLS by team 2022, Player expenses (payroll) of Chicago Fire 2022. The Timbers, majority-owned by Merritt Paulson, also have an advantage that no other MLS team can match with their shared ownership of the most successful National Womens Soccer League team, the Portland Thorns. And MLS is losing even more money at the league levelas a single-entity operation, player salaries are paid through the league officewhich means team owners are on the hook for a sizable capital call in addition to the red ink in their local markets. You only have access to basic statistics. But the near-term bleeding hasnt slowed the rise of MLS team values, since owners are instead making a growth bet on the leaguesand the sportsfuture. Greg Careys client list could double as a directory of some of the highest-profile teams in the world. The 2022 World Cup's Highest-Paid Players, Highest-Paid NFL Players 2022: Tom Brady Leads The List For The First Time, Majors, Monopolies, Megabucks And Donald Trump: Inside The Business Of The New Saudi Golf League, The World's Highest-Paid Golfers 2022: LIV Golf Reshuffles Top Earners And Sends Pay Soaring. NFL Rookie Signing Bonuses Rise Only 1% as COVID FalloutLingers, NBA and Players Finalize CBA With Both Sides Rolling inCash, Bryce Young Partners With BodyArmor Ahead of NFLDraft. But theres only one Liverpool in the Premier League, one Chicago Fire, and so its proprietary content that people will pay to see. For the first two decades of its existence, MLS basically worked against selling players. The average MLS team is worth $240 million, up from about $40 million a decade ago, according to Forbes . Three others play in or will play in multi-sport facilities that were designed or are being retrofitted with the idea of hosting soccer in mind. The NHL doesnt have wonderful growth prospects, said Zimbalist. MLS teams are still far cheaper and, in the leagues era of rapid expansion, far more available than teams in other North American mens leagues. With fans in the U.S. and Canada able to watch all of the major European leagues and Liga MX on cable or via streaming platforms every week, whats to stop them from continuing to tune into those leagues over MLS after 2026? To rank the most valuable Major League Soccer franchises, Forbes examined recent transaction data, reviewed publicly available financial information and spoke to more than 40 team executives, owners, investment bankers and industry insiders. The ideal entry-level account for individual users. Most valuable Major League Soccer (MLS) teams in 2023 (in million U.S. dollars) [Graph]. Costs are also controlled in MLS in a way thats rare in other leagues around the world. Valuations will continue to rise, but they probably wont rise as fast as they have in recent years. Thats changed completely in recent years, with owners realizing that transfer proceeds are something of an unbounded opportunity for revenue and Garber publicly promoting the idea of turning MLS into a selling league. The Fires bottom-line wasnt any better. LAFC has ranked eighth in average home-game attendance, but thats a factor of limited capacity, not demand; the team has sold out every one of its home games despite ticket prices that are far and away the highest in the league. Tucker Kain, Brandon Schneider, Mark Shapiro, Chard Hurley, Peter Guber and Mitch Lasky are a sampling of the All-Star ownership group put together by lead investors Larry Berg, Brandon Beck and Bennett Rosenthal. These teams, theyre like tech stocks.. This site is protected by reCAPTCHA Enterprise and the Google. Forbes estimated the Sounders revenue to be $47M, and the . Mansueto has pledged to explore constructing a soccer-specific stadium and to build a training facility in Chicago, . While the owner and a club president who agreed to speak anonymously for this piece anticipate that the above line of thinking will play a role in some current owners looking to sell their clubs prior to the World Cup, those who spoke for this piece think talk of a wider bubble is alarmist. there is ample incentive for MLS not to sell any club for less than the most recent expansion fee. Mark McKenzie and Brenden Aaronson joined European clubs this year in deals that will net the Union more than $10 million. If theres even a small chance that MLS could become a top league in the world at some point, the potential return associated with that would be enticing., Part of the reason for increasing MLS team valuations in recent years is expansion. Breaking the streak of teams in giant metros is the Portland Timbers at $635 million in the 21st biggest market in the U.S. Austin introduced field ticketsequivalent to NBA courtside seatsand the 372 seats were quickly snapped up at prices ranging from $500 to $800 per game. The Seattle Mariners Are Winning. Sportico values the team at $575 million, ninth overall, based on estimated gross annual team revenue of more than $60 million. I think live sports content is going to be a great investment going forward, said Mansueto. The future for MLS investors is predicated on how much soccer continues to grow in North America, with hopes pinned on a new annual tournament between MLS and Mexicos Liga MX kicking off in 2023. run well, a sports team can enhance ones status in the community, can be passed down through a family and allow an owner to have a good deal of fun. Put simply, Major League Soccers surging expansion fees and sales prices are not being driven by financial performance. All agree, however, that MLS has the power to make its product more compelling. And so I think live sports will continue to have a good future. [8][9] The report has also applied more context to MLS trends, such as the decrease in valuation in relationship with the decrease in attendance for Chicago Fire FC. It's worth noting that the current MLS TV deal pays out around $60 million per year, which works out at more than $2 million per . Below are the elements that compose the value of the league's 27 franchises, which are collectively worth $14.8 billion. Austin will serve as the only MLS team to operate as the lone major league property in its respective market, and the metro area was the largest in North America without a major pro sports team before the soccer teams arrival. . In order to grow in the way it says it wants to, MLS simply must get significantly more money from broadcast rights. The collective bargaining saga with the leagues players that unfolded over the last year is evidence of that. In addition to negotiating sponsorship and television deals for MLS, SUM handles commercial rights for the U.S. Soccer Federation, Concacaf and the Mexican national teams U.S. tours, among otherproperties. 5 teams are not over $3 billion (NYY, LAD, BOS, CHC, SF) Texas Rangers valuation increased the most year-over-year at 15%. The trend continued in February 2020, when LAFC owners bought half of minority owner Vincent Tans 20 percent stake in the club at an overall valuation. Dollars). Get our latest stories in the feed of your favorite networks. Barely a year later, Mansueto took full control, buying Hauptmans remaining 51 percent stake at a valuation of $400 million, a dramatic increase from the $240 million valuation at which he bought in just 14 months earlier. The valuations are composed of various variables in financial information and transaction data reported by several team executives. Some of the recent additions to the league teams like Atlanta and LAFC, to name two have proven that a more ambitious approach can drive success on and off the field, but most clubs havent yet adopted the same aggressive strategies. The average percentage increase MLS saw in its teams Forbes valuations from 2018 to 2019 was nearly triple that of the NBA and NFL, and roughly four times the increases seen in MLB and the NHL in the same period. In 2019, the outlet valued the Sounders at $405 million and the Timbers at $390 million more than 10 times greater than either clubs expansion fee with Seattles growth coming despite a lack of any major infrastructure investments. The more MLS can do in an authentic way with Liga MX, like the MLS All-Star Game, the better, said Octagon media rights consultant Dan Cohen in a phone interview. Spend enough time discussing these issues on social media, and youll inevitably see some chatter that MLS is in a bubble, that the growth narrative will fade and club values will fall when expansion ends if the league doesnt capitalize on 2026 that the reality on the ground will actually begin to matter when it comes to valuations. MLS valuations are growing faster, too. The possibility for a deeper relationship clearly exists, however, and is drawing the attention of the most powerful figures in the sport, with FIFA president Gianni Infantino telling reporters on March 19th that the potential of the U.S. and Mexico, each one separately, is enormous, but if they could come together, it would be incredible. In the past, FIFA has ruled against regional leagues, but the governing body has softened that stance a bit since Infantino took control in 2016. Naturally, that leads to the inevitable subsequent phase of draft analysis - parsing, evaluating . The two knew each other well from the private equity world and had together invested in Italian soccer club A.S. Roma. And where, exactly, is all of this headed? The average MLS franchise is worth $550 million led by Los Angeles FC at $860 million, while the Colorado Rapids rank last at $370 million. The deep ownership roster of LAFC has played a crucial role in the teams meteoric rise to be MLSs most valuable club in only its fourth season as a franchise, but it is not the celebrities team co-president Larry Freedman typically leans on when faced with an operations issue. Sportico is committed to transparency in our valuations. In July 2018, the Chicago area native and billionaire founder of the Morningstar investment firm reportedly paid then-majority owner Andrew Hauptman $117.6 million to buy 49 percent of the Fire at an overall valuation of $240 million. Show publisher information Team values continue to rise, as does the popularity of the sport at all levels. Theyre not going to strip themselves of that protection in favor of an open system. The average MLS team is now worth $313 million, up 30% from last year. Several have completed eye-popping MLS deals in recent years, with one of the more notable transactions coming just a few months after Mansueto gained full control in Chicago. Forbes' $660 million valuation of the Sounders is about 9% . Accessed May 02, 2023. https://www.statista.com/statistics/477837/team-value-of-mls-soccer-teams/, Forbes. MLS took over the sales process in January, and most insiders think the club will fetch at least $400 million. A large number of wealthy Americans want to own a U.S. sports franchise, but franchise values (in mens leagues) have grown to the point of being cost prohibitive for most, said Swoboda. The outlets assessments are usually in the ballpark, however, and maintain a certain level of cachet in the sports world. [1]These areas are supported by applying financial metrics such as revenue and operating income to each one. While MLS has added ancillary TV deals with Fox, Univision, TSN and RDS, no major North American sports league has committed to a streaming-first strategy. And those deals have transpired alongside the rocketing expansion fees being asked fromand readily paid byprospective new owners. Soccer in the United States is still in the growth stage, compared to many of the leagues both domestically and abroad, said Inner Circle Sports co-founder Steve Horowitz, who has been the investment banker on numerous MLS transactions. Thats $325 million just to join the league not a cent of that total will go toward signing players, building facilities or hiring employees. Limited partnerships in sports teams have typically sold at discounts to control stakes because of the lack of benefits for minority partners, beyond maybe some prime seats and parking. The average MLS franchise is worth $550 million, according to data compiled by Sportico. The latest ranking reported that Los Angeles FC is the most valuable MLS franchise after the 2022 Major League Soccer season. This is a BETA experience. Subscribe to The Athletic for in-depth coverage of your favorite players, teams, leagues and clubs. And the price tag for the next expansion team (likely Las Vegas or San Diego) is expected to be $500 million, according to a well-placed industry source, a considerable increase from the previous record of $325 million set by billionaire David Tepper when he founded Charlotte FC in 2019. Its also setting a new standard for attracting cashflow from Europes top leagues: In January, Atlanta sold star midfielder Miguel Almirn to the Premier Leagues Newcastle United for an MLS-record $27 million transfer fee. Revenue and operating income are for the 2022 season, and the latter represents earnings before interest, taxes, depreciation and amortization. Bankruptcy would be highly unlikely in modern MLS, where a small salary budget governed by a CBA that will run through 2027 prevents even the most ambitious teams from spending beyond their means and allows lower-budget outfits to remain competitive. That kind of ecosystem has allowed some clubs to turn into global powers in a way all but unimaginable for an MLS team, but it has led others to become over-leveraged, which can lead to disaster. Forbes unveiled this year's list and put Atlanta United of the MLS as the number 1 teams. The 24 MLS teams in existence during the 2019 season produced $1.1 billion in revenue, including distributions from the league (2020 was an estimated $468 million for 26 teams). Los Angeles FC ranks first at $860 million, while the Colorado Rapids rank last at $370 million. The average 2019 valuation for MLS teams would be big enough to acquire all but the absolute biggest clubs in Europe. Essentially, the league and its owners are betting that overall fan interest, media rights and transfer revenue are set to increase massively on the back of the strength of the U.S. and Canada economies, the shifting demographics in both countries, a rising tide of domestic interest in soccer, co-hosting 2026 World Cup along with Mexico and a growing relationship between MLS and Liga MX. Los Angeles FC ranks first at $900 million, while CF Montral ranks last at $390 million. You dont see other content being bid up the way you see live sports being bid up.. In the upper echelons of Europe, spending massively is almost requisite for success. But now what you're seeing is the hit ratio on that is maybe not as good as people always think it would be.. in at higher price points like Mansueto and Tepper. As long as the league continues to expand and there are likely a minimum of three spots still available there is ample incentive for MLS not to sell any club for less than the most recent expansion fee. MLS might not shoot the moon in its next broadcast agreement, but, considering sports media rights are ballooning all over the world, the league is betting that it will eventuall, I think live sports content is going to be a great investment going forward, said Mansueto. In effect, SUM diversifies MLSs portfolio. We thought it could be fun and were making a great macro bet on the growth of the sport.. The proliferation of soccer on television means we can all turn on our TV or over-the-top services on Saturday morning and watch six different games of some of the best soccer in the world, said the owner. MLS is a growth company, he told The Athletic. It makes for a pretty compelling sales pitch and leads to club valuations that seem higher than one would think given the current level of fan interest. Because then a large set of owners will continue to enforce a lid on spending.. For detailed information and sourcing, please see the Methodology section of Sporticos interactive 2021 MLS Franchise Valuations. MLS valuations are growing faster, too.

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