MLS 3.0: MLS Expansion Critical Mass, Potential Uprising, And Black Swans

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(Editorial) – MLS expansion is one of the hottest topics in U.S. Soccer today. MLS is set to go to 24 teams by 2018, pending stadium construction in Minnesota, Los Angeles, and Miami. Even if delayed, it appears Commissioner Don Garber will meet his goal of 24 teams by 2020.

MLS 3.0: MLS Expansion Critical Mass, Potential Uprising, And Black Swans

Garber has had several meetings in other potential expansion cities recently, including Sacramento, St. Louis, and Detroit. In a bold and surprising statement last month, Garber said the league plans to go to 28 teams with those clubs joining the league as early as 2020. While expansion gets MLS fans excited and fans of potential expansion markets hopeful, what are the effects of this? What does MLS with 28 teams look like? What happens if and when MLS says it’s full? Let’s break it down.

Growth For The Sake Of Growth

Economics shows that in any context, growth for the sake of growth eventually leads to disaster. MLS isn’t there yet with 20 teams, but going beyond 24 teams might be pushing the limit. The hard part is knowing where that line is.

Most of MLS’s growth to this point has been good growth. Expansion to major TV markets (Chicago, Houston, Philadelphia) has helped increase revenue. The expansion to Cascadia has brought in some more traditional soccer markets and much needed fan culture. MLS has also expanded to markets with less professional sports presence, making it easier for the expansion team to plant their flag and win over the heart of the city (Salt Lake City, Kansas City, Orlando).

None of the current franchises is perfect, but every club is helping to make the league stronger. New York City FC has a rough stadium situation and a probably crazy-bad ownership structure. But having two teams in New York has increased buzz around the league. It appears to have reinvigorated the Red Bulls fan base as well. Chicago isn’t doing so hot on the field or at the box office, but Chicago’s a huge market. RSL might not have a big market, but they’re playing great and have a devoted fan base, even if it’s on the small side.

Furthermore, the league’s attendance, TV ratings, and revenue continue to increase gradually. The league’s clearly on an upward trajectory. Even if Garber and friends were to cap the league at 20 or 24 teams, the growth appears to be enough to sustain that many clubs and continue to prosper.

The league clearly has not hit critical mass yet and none of the individual clubs are dormant cancer cells. Great, but what about the next four in?

The next crop of expansion teams/cities are all imperfect but have their merits. Atlanta is the ninth most populated city in the country and the largest in the South. That’s a region of the country MLS has not but needs to get a foothold in. Minnesota might still have some stadium kinks to work out, but not many people are complaining about the Loons as a club or their following in the Twin Cities. Minneapolis is also an excellent landing spot for young professionals, a target demographic for the sport and league.

Chivas USA might have been a total flop, but LAFC and their ownership group joining makes Los Angeles potentially mirror the New York Soccer Warz. This could be great for the City of Angeles and the league.

Miami Beckham United seems to be the most corporate of the four. The population isn’t screaming for a team. They’re well aware of how poisonous publicly funded stadium deals can be. But Beckham wants a team, the league wants Beckham to have a team, and Beckham chose Miami. Beckham does have the money to back him up, something the Miami Fusion didn’t really have in 2002. Beckham’s cache could also help the club land an internet-breaking signing or two.

The league hasn’t seen noticable deceleration in growth of the league or signs of saturation. The next four expansion cities all bring something beneficial and different to the league. We haven’t hit critical mass and it doesn’t seem like going to 24 will get is there. What about going beyond that?

Critical Mass Black Swans And The Benefits Of Patience

In some regards, the league has hurt itself by growing too quickly. In the early 2000s, soccer-specific stadium construction was a hot topic. The problem was the league was focused on families and the soccer moms as the target audience. Just a few years after suburban located stadiums like the Home Depot Center (now the StubHub Center) and Dick’s Sporting Goods Park, the league realized that downtown stadiums were where the market was shifting.

The problem was that stadiums were being planned and designed with old information. The league grew enough to where several clubs were ready to build their own stadium. But they didn’t wait long enough to learn that some of that growth was do to a demographic shift in their popularity. The urban populations and hipsters were helping grow the sport.

Economists call this a Black Swam Event. Basically, something starts changing unexpectedly. It then has huge effects and we often don’t realize and comprehend how it happened until after the fact. In hindsight, it seemed so obvious.

If FC Dallas waited just a few years to build their stadium, they’d have realized the significance of location. Then maybe instead of building Toyota Stadium in Frisco, TX, they’d be in downtown Dallas. On the plus side, we’ve seen this realization pay off for the stadiums that followed (Houston, Montreal, Orlando).

MLS might be a victim of its own success with expansion. It’s only been at 20 teams for two years. Atlanta is on pace to join in 2018. If the 25th team joins in 2020, we might have less than a year to experience what 24 teams is like.

The league should really consider having a gap between the 24th team and the 25th team joining the league. If you keep growing, you never slow things down to see where you are at one point in time. Thus you don’t get to evaluate where you and analyze the trajectory of future growth and its causes. You set yourself up for a Black Swam Event.

All of the clubs/cities on the short list for expansion have their merit. They’re a bit on the small size as far as TV market, save Austin. Austin is at a disadvantage as far as market saturation though: with San Antonio, that’s potentially four MLS teams in one state, a lot even for Texas. They all have stadium situations to figure out and finalize. I’d be curious to see how well Sacramento Republic does in attendance when they have a bad season as well.

Again, more time (and thus more data) could be invaluable. I’m not saying no to having more than 24 teams. I’m not saying no to any individual market. I’m just saying be patient and prudent.

Complications Of Having 28 Teams

Twenty teams is a nice number for the first division of a domestic soccer league. FIFA recommends 20 teams at most for a top flight league. That’s probably the only FIFA recommendation the rest of the footballing world agrees with. None of the top leagues in the world have more than 20 teams.

No lower division worth knowing about even has more than 24. The English Championship has 24 teams. MLS going to 24 teams would be fairly unique. Going beyond 24 would be unprecedented. MLS has variables working for it and against it that other leagues around the world do not have. That said, the rest of the world might be right on this one.

Market saturation might be difficult to predict. The NBA, NHL, and NFL are all doing well with around 30 teams. But one thing that will be complicated is the schedule. MLS already suffers from schedule congestion with a 34 game regular season and a relatively short off-season. But 24 teams balances the schedule. Play conference opponents twice (one home, one away) and non-conference opponents once. That adds up to 34 regular season games.

MLS teams have been dealing with an unbalanced schedule for years. There isn’t a good way to make 34 games with 13 conference and 14 non-conference opponents work though. Adding more games to balance the schedule is only going to congest the schedule more and wear down the players. The league certainly isn’t going to reduce the number of games (read: reduce revenue) either.

Fan Fall Out In the Lower Divisions When MLS Closes The Door

One knock on USL (and some NASL) expansion has been the immediate MLS expansion hype. Sacramento Republic was boasting expansion potential after just their first season. FC Cincinnati was claiming to be MLS ready before playing a single game. San Antonio FC was founded on the premise of eventually joining MLS. Heck, Albuquerque Sol FC’s General Manager is thinking about MLS expansion. Sol FC is a PDL team.

There’s nothing wrong with a lower division team’s front office aspiring to join MLS. There’s nothing wrong with the fans wanting it. But when the organization publicly states that MLS expansion is the goal, there’s a problem. Especially when you make that promise it to the fans. It’s even worse when talking about it before the team has even played a game.

Most of the clubs on the short list for the 25th – 28th MLS team are still relatively new. Sacramento Republic and Detroit City were both founded in 2012. Republic are only in their third year of competition. Every other franchise is younger than that. Again, waiting more time to gather more information and make an informed decision would be the prudent move.

Eventually, MLS is going to close the door. Clubs that made an MLS promise and don’t deliver will have failed. What do they tell their fans then? How do the fans react when they are now stuck in what they might have perceived as an inferior league? Maybe some of them are only supporting their minor league team so they can get a first division team.

The #USLRising movement has been phenomenal these last few years. But several of the new clubs with buzz have buzz because of their MLS expansion hype. We could see a falling out of support and thus excitement with several of the top USL and NASL teams if and when MLS decides to end expansion. That could have seriously detrimental impacts on the leagues.

A Path To Pro/Rel Dare I Say?

So suppose MLS decides no more expansion sometime in the future. Suppose the cities that were on the short list and didn’t make the cut don’t go away quietly. Let’s say this invigorates the lower division teams and their fans even more. Potentially, the USL and NASL could unite and petition U.S. Soccer to establish promotion and relegation to reopen the door for teams to join the first division.

Maybe those short listed cities continue to see great fan support and growing profit margins. If the two leagues unite in solidarity, perhaps they gain momentum. Maybe they’re able to show that a lower division team could be competitive and profitable in the first division. Maybe they can show that the NASL or USL champion could do better than the last place MLS team.

MLS shutting the door and sustained buzz in the lower divisions could create the storm upon which a lower division uprising for Pro/Rel begins. U.S. Soccer could then be facing an civil war over the pre-existing caste system that is MLS single entity.

Is Commissioner Garber sure that publicly stating a goal to go to 28 teams is a good idea? Is pumping up prospective cities with the prospects of MLS such a good idea? It would seem another #MLSBlackSwam is inevitable, for better or worse.