The Major League Soccer (MLS) season has been postponed again, this time until at least June 8th (the previous target date was May 10th). The league remains hopeful that teams will be able to complete the entirety of their 34-game slates once play does resume, but Commissioner Don Garber has acknowledged that even if the league schedule were to be played in full it’s likely that most games would be held behind closed doors (aka ‘MLS Studio’ games). That’s problematic for a league reliant on ticket sales. Seattle Sounders control owner Adrian Hanauer told the Sounder at Heart podcast that league-wide losses are likely to be in the “hundreds of millions, [perhaps] billions [of dollars]” this year, regardless of how many games are ultimately played. But despite the short-term losses, MLS should find itself poised to come out of the COVID-related sports hiatus a ‘winner’. Few global soccer leagues have the financial wherewithal (see: billionaire owners) MLS does, so the league should be able to take advantage of the sport’s ‘new normal’ on the other side.
Howie Long-Short: While Coronavirus has decimated soccer leagues around the world (see: fears +/- half of Bundesliga teams could be forced into bankruptcy), MLS’ single-entity structure – which includes a salary cap and no promotion/relegation – has the domestic soccer outfit on firm footing. The existence of salary cap has made it so that team payrolls are manageable (at least relative to other top flight leagues around the world) and without the threat of relegation, MLS has been able to lure deep pocketed club owners capable of weathering an unexpected economic downturn (soccer teams are simply far less attractive investment options when a single bad season on the pitch can tank revenues). Requiring expansion franchises to build new soccer specific venues has also proven beneficial during the current shutdown. With +/- 90% of clubs playing in team-owned buildings, rent-related concerns are far and few between (NYCFC, Nashville SC and FC Cincinnati are the exceptions).
One could argue that a global recession is likely to stunt MLS’ efforts to ‘sell’ players (because presumably international club owners will have less to spend on talent) potentially eliminating one the league’s most lucrative revenue streams (see: Atlanta United collected $27 million for Miguel Almiron), but Roberto Abramowitz (Spanish voice of NYCFC) says depressed spending on player contracts is bound to be a net positive. “MLS has wealthy team owners. If transfer fees become lower, then it will be easier for them to bring in top level talent that is still in their prime and high profile signings can be a driving force for both attendance and television ratings.” Remember, MLS’ broadcast rights are up for renewal in ’22. The league’s owners will be motivated to make moves that will elevate viewership – and ultimately the value of their TV contract – over the next two seasons.
The formation of a ‘super league’ with Liga MX would also likely lead to an increase in broadcast revenues. MLS’ Mexican counterpart is more popular than the U.S. league is on domestic soil (the second leg of last season’s Liga MX Apertura final drew 3.3 million viewers, the MLS Cup final did +/- 2 million viewers between the U.S. and Canada) and the additional inventory would make the league’s offering more attractive to broadcasters. While Abramowitz doesn’t expect a full-fledged merger to take place before the ’26 World Cup, Liga MX’s financial troubles (see: teams unable to cover payroll, lack of qualified/interested investors) – which have only been exacerbated by the shutdown – would seemingly open the door to the two sides getting a deal done sooner. Count Alejandro Irarragorri among those who support the idea. The Santos Laguna and Atlas said it’s “probable” a merger between the two pro leagues would be best for both sides long-term.
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