The business of sports – specifically Major League Soccer expansion and the next MLS television contract – makes the bulk of the conversation in this episode of On Frame.
Pro Soccer USA’s Glenn Crooks speaks with Corey Leff, the founder of the daily sports business newsletter JohnWallStreet.
Leff noted in March what MLS commissioner Don Garber suggested in his “State of the League” address before MLS Cup in November — that a team in Charlotte is likely to named the league’s 30th. Leff told On Frame the next group of expansion teams will have fees could be triple the current charge of $200 million.
“I think we’re looking at a significant jump,” Leff said. “I’m hearing for teams 31, 32, the number’s going to have to be upwards of 600 million simply because the numbers don’t make sense [to the owners] otherwise.”
While teams in other leagues generate massive income from television rights, that is not the case with MLS. Therefore, expansion fees become a valuable resource.
“In MLS that’s been kind of the business model,” Leff said. “I hate to us the term – because I certainly don’t believe that it is – but it is a little bit Ponzi scheme-ish in the sense that it’s waiting for the next guy to buy in so we can get a pay day, because most of the teams don’t make money on a year-to-year basis.
“If the TV media rights deal is only generating 3 million [per team] the question becomes is there anybody that’s willing to buy a $600 million asset that generates $30 million in revenue – that does not sound like a great investment.”