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THE BIZ: Bulletproof MLS?
Joe Lemire
December 01, 2008
MAJOR LEAGUE SOCCER'S tiny TV ratings are stagnant, attendance is down, and, according to a Forbes study in September, only three clubs are profitable. Yet MLS keeps minting franchises: A new team is slated to join in each of the next two years, and in early 2009 the league—which operates by paying virtually all of each team's payroll, then taxing team revenues—is preparing to announce two more additions, which would fatten the roster to 18 teams in 2011. Six suitors are vying to pay $40 million for one of two spots. "MLS has proven it's going to have a slow, steady rise into American mainstream sports," says Jeff Cooper, a lawyer and the lead investor of the St. Louis group, which also includes Cardinals slugger Albert Pujols.
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December 01, 2008

The Biz: Bulletproof Mls?

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MAJOR LEAGUE SOCCER'S tiny TV ratings are stagnant, attendance is down, and, according to a Forbes study in September, only three clubs are profitable. Yet MLS keeps minting franchises: A new team is slated to join in each of the next two years, and in early 2009 the league—which operates by paying virtually all of each team's payroll, then taxing team revenues—is preparing to announce two more additions, which would fatten the roster to 18 teams in 2011. Six suitors are vying to pay $40 million for one of two spots. "MLS has proven it's going to have a slow, steady rise into American mainstream sports," says Jeff Cooper, a lawyer and the lead investor of the St. Louis group, which also includes Cardinals slugger Albert Pujols.

Is pro soccer really a growth industry in North America? MLS on ESPN2 averaged a WNBA-esque 0.2 rating for the third straight year, but other vital signs have been on the upswing, and the economic crises haven't spooked many of those who want in. (Atlanta, Miami, Ottawa, Portland and Vancouver are competing with St. Louis for the slots.) The league now takes in $20 million annually in TV money, and while attendance did slip by 1.8% in 2008, that number is skewed by the 8.2% jump in '07 (when the L.A. Galaxy acquired David Beckham, left) and by the fact that Kansas City and San Jose played the 2008 season in temporary, 10,000-seat stadiums. Excluding those two, attendance rose 2.1% to 17,110, roughly what the NBA has averaged this season.

Teams are also moving from multipurpose stadiums into franchise-owned soccer venues, where they reap revenue from parking, merchandise and other sales. While the average team value of $37 million (says Forbes) is less than the expansion fee, consider teams like Toronto FC, which joined in '07 and is valued at $44 million. Toronto has sold every ticket to every game at 20,148-capacity BMO Field. It turned a profit its first year.

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