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One guy’s opinion on MLS EXPANSION FEVER

MLS expansion fever is back in the news and presently dominates Soccer Twitter. Soccer Twitter is a place where everything is on fire at all times, everything is the worst it’s ever been, and there is no end to the misery in sight. It’s a lot like Politics Twitter in that way, but somehow slightly more civilized. I’ve tweeted and talked about my views on MLS and Louisville City’s position as it relates to the Division One league in US Soccer. Andrew Oost wrote a fantastic article earlier this year that pretty much encapsulates my feelings on the issue.

But those were his words, not mine, I’m bored, the whole Nashville thing is happening, and it’s just a few days before Christmas, so I thought I’d throw my hat in and write about it again. Buckle up!

Louisville City is not going to be in MLS in 2020 or 2024. City’s owners didn’t submit an application for the next two rounds of expansion, which will make MLS a 28 team league. Don Garber has said that he thinks the league will top out at that number of teams, but Don Garber says lots of things that aren’t entirely true. Thus, based on other top-division American professional leagues, it’s likely that MLS will expand again, and it’s likely that expansion will include four more teams for a 32-team league at some point in the future.

It’s expensive to join MLS. While team salaries are capped, and league revenues are largely shared, new and existing clubs are expected to own or at least be the primary tenants in their stadiums. Exceptions are obviously available if you’re the Crown Prince of an Arab emirate, or own a lot of giant hardware stores, or if you’re just Robert Kraft. For everyone else, it appears you must convince the taxpaying public to finance your quarter-billion dollar stadium that will house a soccer team that may or may not have any proven local support. If the taxpaying public balks at that idea because you are already playing in a soccer stadium in front of fans that have supported the team for 20 plus years, then you are free to move your team to Austin, Texas, where you’ll just run into the same problem but with different people.

That’s just the cost of running the business, to say nothing of the ever-growing fees new owners must pay just to join the club. Believe it or not, those fees, which are reportedly in the $150 – $200 million range, make a hell of a lot more sense than most anything else MLS does (see, e.g., player acquisition rules). The fees are high and higher because other owners of the league must be compensated for the dilution of their share of the business. More to the point, fees are high because people are lining up, throwing parades, and making Don Garber fatheads to pay it. One of the first things you learn in economics is that if demand is high and the availability of a product is scarce, then prices are high. For whatever reason, that’s what we’re dealing with in MLS.

And, in case it wasn’t clear before, MLS expansion doesn’t have anything to do with soccer. It has everything to do with whether the applicant club is in a city that will generate advertising revenue for the league’s sponsors. The best way to figure out how much money that equates to is by looking at matchday attendance AND TV households. MLS is slowly checking off the top 30 TV markets in the country. THAT’s the big reason why Nashville was such a no-brainer; they’re #29 on the list. That, and they’ll have a $275 million dollar stadium that they’ll control with billionaire owners willing to take operating losses to join the league. Louisville is #49, Cincinnati is #34, Sacramento is #20, Detroit is #11. The only reason Detroit didn’t get in on this round of expansion is because the folks who submitted their bid don’t want to build a stadium. How dare they! The reason MLS is dragging its feet on Sacramento might be because SRFC’s principal owner isn’t rich enough. What nerve that multibillionaire has!

Sports, at least sports in America, are entertainment. A product meant to be processed, edited, and sold to its consumers. Soccer fans like to think that their sport is different because of the idea that the game belongs to the people, not conglomerates. Sure, it started out that way a hundred or so years ago. Unfortunately, that’s not true today. Conglomerates own nearly every club in the English Football League. The Premier League was invented to funnel TV money to the richest 15-20 clubs in England, and no one else. Real Madrid, Atletico Madrid, and Barcelona negotiate their own TV rights separately from everyone else in La Liga, which is why you’ll almost never see a Real Sociedad v. Espanyol match on BeIN sports. Paris-St. Germain owns their own broadcasting platform independent of the rest of Ligue 1. Most clubs in Liga MX are tethered in some way or another to Univision, Telemundo, TV Azteca, or some other media rights company that directly affects how much money they make. The Bundesliga, ironically, is the only league that does a more equal version of revenue sharing among its clubs, comparable to what the NFL and, yes, MLS do in the US.

Sports leagues, including soccer leagues, survive and thrive on income from selling their TV rights. It’s far and away the largest source of revenue for nearly every club in the Premier League, far outpacing ticket sales (even though ticket prices are several hundred percent more than they were even ten years ago) and merchandise revenue. For many English clubs, revenue from TV deals make up more than 50% of their income.

All that gets me back to my point: MLS isn’t interested in Louisville because Louisville isn’t an attractive TV market. Louisville City plays an attractive brand of soccer, and will probably have a very attractive stadium and may even have an attractive balance sheet at some point in the future. But if Louisville isn’t able to generate revenue for MLS’s sponsors, then it’s a drain on the league. MLS isn’t in the business of bringing anchors on board, which is why they’re cool with kicking the Columbus Crew to the curb.

So, unless MLS comes calling, I say let’s appreciate our lot in the American soccer landscape. Let’s make the best of it. We play in a fun league, have great fans, a great coach, awesome players, and we’ll be playing in a stadium that’s all our own (well, we’ll feel like it is, even if it isn’t) in a couple more years.Pining for MLS when you’re straining to be a top 50 TV market will only end in disappointment, just ask the Rochester Rhinos. Unless Louisville undergoes a population explosion in the next 10-15 years, or, even less likely, promotion and relegation is instituted in USSF-sanctioned American professional soccer, this is probably where we’ll be.

And that’s fine. Come on, City.