I Do NOT Understand These MLS Expansion Team Fees. Manny Machado And Egyptian Billionaire Just Paid $500M To Bring A Team To San Diego
The MLS is EXPLODING. I admit that it is a blind spot for me. I love the game of soccer even if I am still kind of new to it and trying to learn. Been watching soccer every weekend it's on for like at least a decade now. In that last decade the MLS has expanded it's footprint enormously. It is now up to 30 teams with San Diego getting announced today.
$500 MILLION FOR AN MLS TEAM!?!?!
I don't get it. I know the game is growing here, but they've been saying that for a long time. I know places like Atlanta, Austin, Seattle, Portland, and a few other places draw exceptionally well. I will be going to a Chicago Fire game later this year and I am very excited for it. I just don't understand how that much money is being thrown around. That isn't too dissimilar to what the fees are for an NHL Expansion league and while I realize the NHL is also niche it is certainly bigger and way more established than the MLS. You'd think the NHL would be far less risky as an investment than MLS just because of those revenue track records. They are locked into a TV deal that is streaming only with Apple TV which got them $2.5B over 10 years. That's a nice number I guess, but if the league sticks to 30 teams (it's rumored to be expanding more) and if my math is right (big if) that is only like $8M and change per team per year.
Here is the other reason why it'll never make sense to me...at this point I don't think the MLS is even a top 10 league in the world.
1) Premier League (England)
2) Bundesliga (Germany)
3) Serie A (Italy)
4) La Liga (Spain)
5) Ligue 1 (France)
You can argue about who comes in between 5 and 10, but you probably don't start talking about the MLS until you get to No.10. And if you're really wanting to invest in a soccer club and give yourself a chance at some ROI wouldn't you rather just do what Ryan Reynolds did and buy a lower level English Club and hope for the best? Reynolds and his group paid $2M for Wrexham in 2020. The estimated valuation has gone up by 300% by some accounts since they took over. I am sure the revenue generated by the TV and jersey sales has already covered their initial investment.
My favorite team, Nottingham Forest, was just one level below the Prem when their current owner bought the club for $50M back in 2017. That's basically just a signing bonus for Manny Machado. Now that Forest is the Premier League their value is an estimated $160M. You can buy your way into the greatest league in the world for pennies on the dollar compared to the MLS. Is American sports really that much more valuable? Do they really anticipate the next World Cup to make it all worth it for the MLS? Feels like a big gamble for a league that isn't as good as the 2nd division in England and definitely doesn't have the financial upside from year to year.
This is one of those blogs where I've done some thinking and some research and this is a genuine question...where is the logic in buying a 10th rate niche sport team for $500M when you can own a better team in a better league for 10% of the price? I can't figure it out.
