A recent Twitter thread explored why potential MLS team owners, like St. Louis FC, are willing to pay a $200 million franchise fee to get into the MLS.
A point made there was that a Ligue 1 side in France’s top soccer league just sold for $110 million, so how can an MLS side with no history be worth more?
Twitter users Ian Mailoux and Paul Cox laid out specifics of soccer market in the U.S. that I hadn’t considered before.
I was aware that MLS owners all each have a stake in SUM (Soccer United Marketing), which owns broadcast rights for MLS and US National Team matches.
But, I undervalued what that stake was worth.
I didn’t think MLS and national team match broadcast rights carried enough value to justify $200 million MLS franchise fees.
I considered these, plus MLS team revenue, to be a breakeven proposition for MLS owners, at best.
I assumed the owners were willing to pay high franchise fees, betting soccer would grow to NFL or MLB proportions in 10-20 years and then they could sell their teams for multiples of what they paid.
But, the folks above pointed out that SUM also owns the broadcasting rights to ANY soccer match played in the U.S., including Mexican National Team matches played here.
I’ve attended MNT friendly and USMNT Gold Cup game in the same city. The MNT friendly drew more than double the USMNT, if that’s any indication to the what the difference in value in broadcast rights might be.
So, having broadcast rights to MNT in the US starts to increase the value of a stake in SUM above breakeven.
I imagine that a stake in SUM includes broadcasting rights for games of major tournaments played on US soil like the Gold Cup and the big one: 2026 World Cup.
Adding that to the valuation starts to make the exorbitant franchise fees look more reasonable.
This also sheds light on other recent actions taken by US Soccer.
I thought the single-focus pursuit to host the 2026 World Cup was mostly for the good intentions of bringing the game to the states to stoke interest in the sport.
Silly me. It makes more sense that the payout to SUM owners from the broadcast rights to those games was the prime motivator and why the MLS (/SUM buy-in) franchise fee is up to $200 million.
The franchise fees allows SUM/MLS to monetize some of that 2026 money now, to keep the lights on.
It also makes sense how US Soccer has snuffed out competing leagues and has gained tighter control of lower divisions, like the USL: so it can control the broadcast rights of those leagues.
Those probably aren’t worth much now, but why should SUM chance another league — that it doesn’t own broadcast rights to — getting a foothold on their monopoly?