I laughed last week when the news of the European Super League first broke, Taylor Twellman tweeted Alexi Lalas, “Do you think the growth of the MLS influenced this?”
I laughed, because, so far ‘growth of the MLS’ is a Ponzi scheme and I’m pretty sure that Twellman and Lalas know this.
Thought, it’s not the first time I’ve seen someone on Twitter hype the ‘growth of the MLS.’
But, only two facts to support their view, neither of which indicate organic growth.
Fact #1: The number of MLS teams keeps growing.
This is true. There are no shortage of rich folks wanting to buy into the MLS, but that doesn’t indicate organic growth (like fan support), especially when you see quite a few of the franchises, prior to covid, having trouble filling seats.
Fact #2: The ‘value’ of MLS teams are growing because new owners are paying $200 – $300 million in franchise fees to the MLS, which is quite a bit more than just a few years ago.
This is where the Ponzi scheme comes in. First, without these new owners, many MLS teams would be in deeper financial trouble. It’s these franchise fees, rather than revenue from fans watching (tickets, TV ads) and merch, that is currently keeping the league solvent.
Just because there are some folks willing to take a risk that an MLS franchise will be organically valuable some day, doesn’t mean it is today.
It’s also good to know that the $200-$300 million buys them a share of a marketing company that stands to have a good chunk financial payout when the U.S. hosts the World Cup in 2026.
The question a good reporter would ask of new MLS owners is how much of their franchise fee is based on the value of the team and how much is based on that World Cup payout?
Someday, MLS might turn the corner and become profitable on fan support, but that day has not arrived, yet.