Kevin Roberts speaks to Gary Hopkins, MBA, soccer consultant and author of ‘Star Spangled Soccer: The Selling Marketing and Management of Soccer in the USA’, to discuss the health of Major League Soccer.
How would you assess the commercial performance of Major League Soccer?
GH: Assessing the commercial success of MLS against other more entrenched US sports is not easy or possibly even fair at this time. Twenty years is still very young for a league and the fact it survived at all is a resounding commercial success in itself.
Possibly nothing reflects the strength of a league more than the momentum surrounding the value assigned to its teams. In the past eight years, values have risen from an average of $37m in 2008 to $185m in 2016, according to Forbes, with an 80-per-cent increase in 2013 alone. Leading the charge are the Seattle Sounders ($285m), LA Galaxy ($255m) and the newly-formed NYCFC ($255m). Initial founding partners in 1996 paid just $5m, but of course suffered the pioneer’s curse of raging losses and rollercoaster rides.
Driving the value equation is a mix of hard core off-the-field moves that have dramatically increased the overall perception and recognition that MLS is here to stay. In a 20-team league, 14 teams have their own soccer-specific stadium, delivering the atmosphere and experience that replicates the international game their fans consume and covet. This has fuelled a 40-percent increase in average attendance in the past 10 years, making MLS the sixth highest in the world and third highest in the US. Importantly, 55 per cent of these fans are also in the much sought after 18-49 age group which represents the highest percentage of any US professional sport.
By building stadia, MLS has sent a very clear message that the owners are ‘all-in’. Having been historically perennial renters, making it easy to walk away if times got tough, MLS owners now own real hard assets in the form of stadia. Not so easy to walk if you have a $200m stadium on your balance sheet.
The fans get this and are rewarding this commitment at the gate. Sponsors of course follow fans and 20 of America’s leading sponsors have now hitched their wagon to the league, including Coca-Cola, AT&T, Adidas and Audi, among others.
Every team has a jersey sponsor at an approximate value of $3m each, with stadium naming partners bringing an estimated $3-4m each, although the new Banc of California agreement with LAFC is being reported at a league-high $6.7m per year, which proves that momentum abounds in the market. The fact is that MLS teams are now becoming an important part of the local professional sports fabric and, as such, local sponsors are engaging in record numbers.
What is the potential for future growth?
GH: The impressive growth and momentum over the past six years foretells a future that recognises the strength of the foundation now underpinning MLS and how it is now positioned for impressive, but more importantly, sustainable growth. Stadia are there and fans are becoming increasingly passionate and loyal.
The real story of the growth of soccer in the past six years in particular has been the rise of the soccer fan in America, fuelled not only by MLS, but World Cups, English Premiership and Champions League soccer. The soccer genie is now firmly out of the bottle and the next 10 years for MLS will be exponentially stronger than the past 10. Keep an eye also on their very impressive digital strategy. They are doing some great things and with the changing media landscape it just might be the game changer in the next round of rights negotiations.
What are the main barriers to that growth?
GH: I think we still need to judge success by the crowds and in-game fan experience rather than ratings at this stage. TV numbers are still not setting the world alight – 312,000 on average through ESPN – but they are up 32 per cent over 2015 and the games are now watched in 170 countries. The new TV contract signed in 2015 represented a three-fold increase from $27m to $90m per year and, while still not life-changing, it does err towards respectability and the promise of bigger things to come. If MLS is to gain a blockbuster new TV contract in 2022, it obviously needs higher ratings.
If you could make one decision to enhance the league, what would it be?
GH: Increase the salary cap. Fans are not fools and are seeing games from around the world every day. We have fans that will now support their teams to the death, which is fantastic. But support is a two-way street. Fans will begin to demand better quality on the field and owners need to deliver. I am not proposing Chinese level salaries, but the quality needs to rise in line with expectancy levels of an ever-more knowledgeable fans base. It always begins and ends ‘on the field’.
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To view data insights on the differences between football fans in the UK and US, click here.