Rising MLS Expansion Fees Harmful to Growth

If reports from MLS deputy commissioner Mark Abbott are to be believed, the league could be charging a lot more money for prospective expansion teams. MLS recently wrapped up its Board of Governors Meetings, and the topic of expansion was on the forefront of discussions. In a statement posted to mlssoccer.com on Monday, Abbott stated that MLS expansion fees could reach as high as $200 million as the league looks to swell to 28 teams.

Atlanta United is slated to join the league next year. Minnesota United (or whatever they will end up being called) and Los Angeles FC are hopefully joining by 2018. David Beckham’s Miami project is next in line if they can get their stadium situation sorted out. That would set the league at 24 sides. St. Louis and Sacramento lead the race to 28 teams. Detroit, San Antonio, Cincinnati, and San Diego have also expressed interest in the league.

To date, the highest expansion fee ever paid to MLS was LAFC’s $110 million.

Why are MLS expansion fees so high?

The main reason MLS can charge such ridiculous prices for admission is because there are ownership groups willing to pay. If LAFC didn’t think ponying up $110 million would be worth it, MLS wouldn’t be able to charge that much. The same would go for the prospective $200 million fee. If the investors looking to bring new teams in aren’t willing to pay that much, the number would drop. Just don’t expect that to happen.

What is the goal of charging such an exorbitant amount to enter the league? There’s the mass injection of fresh money into the league’s coffers. More money coming in quickly is hard to turn down. The windfall of quick cash is certainly the biggest motivation, but it comes at a major cost, too. There are many great fanbases out there among smaller clubs that cannot afford to fork over those sums of money to help grow their franchise. Asking for $200 million up front, before constructing a stadium, before buying exciting players, and before they even play a single match prices out all but the richest of the rich potential ownership groups.

Deep pocketed owners are good for the league, yes. More money means quicker growth and better access to top level MLS players. However, the product could grow even faster if even the extremely affluent owners were allowed to hang onto hundreds of millions up front. Whether it’s through players, a better stadium without the need for irresponsible public funding, or investments in youth academies to build talent for tomorrow.

What could clubs do if expansion fees were lower, or even non-existent?

Imagine what a new club can do with $200 million if MLS wasn’t forcing them to fork it over in exchange for a seat at the table. They could put that money towards a state of the art soccer specific stadium that can attract many fans right from the start. This would please fans a lot more than asking for truckloads of public money to do the exact same thing.

They could use that money to pay for higher profile players who are closer to the prime of their careers. Right now, MLS is seen as a retirement home for old European players. What if the league could afford to pay them more money than Europe can while they’re still young? Keeping $200 million in expansion clubs’ pockets would certainly help.

The ideal solution for that money would be for the clubs to invest in their academies, thus giving more kids the chance to play soccer at a high level. That builds better talent and provides more money spending fans for the future.

MLS needs to remember that it isn’t quite a mainstream league in the USA. Soccer is still on the fringes of popularity in many markets throughout the country. While there is no shortage of ownership groups looking to bring the league to their city, MLS needs to think about the potential impact of letting these owners hang onto $200 milion instead of forking it over to the league. It was only two short years ago that Chivas USA folded because they weren’t financially viable. The league may be a little more stable now, but it’s still in a state where the clubs need to have as much money on hand as possible.

MLS has a right to charge prospective ownership groups whatever the market is willing to bear if they want to grow their league. However, they need to weigh the benefits of the quick infusion of money with the potential club level growth that lower expansion fees could produce.


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