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MLS business plan?

The MLS season kicked off this weekend with the contest between champions DC United, and LA's new Hispanic-oriented team, Chivas USA. United took the points with an away win (2-0) before 18,493 Angelenos. That's a rather paltry crowd: no better than many, and far worse than some from the heyday of the New York Cosmos and the North American Soccer League. And that, dear readers, was more than 25 years ago.

I caught a bit of the DC-Chivas match on TV after watching the EPL's Arsenal rout Norwich 4-1 behind a Thierry Henry hat trick. Henry is one of the world's unique sporting talents, a pure joy to watch. This past year, he finished 2nd to Barcelona's Ronaldhino for the Footballer of the Year award. Today, one could take in the Brazilian's splendid skill, on Gol TV, in the 3-3 draw with Real Betis. My allocation of TV time was 90 minutes worth of Arsenal-Norwich, 90 minutes of Barcelona-Betis, and about 10 minutes of DC-Chivas.

What relevance is my TV watching to MLS, much less economics? Well, everyone knows that media revenue is the financial driver in modern sport. And while I'm an Arsenal loyalist, the basis for my allocation had more to do with the quality of the skill on display than anything else. Arsenal and Barcelona obviously trump MLS in that regard, and that is bad news for MLS media revenue.

With modern television making competition in football truly global, MLS has a very tricky development path to negotiate. There are only a dozen teams in MLS, creating little in the way of local allegiance. Out in TV land, there are plenty of alternatives with superior skill on display. It's not even feasible to follow the best US players by watching MLS games. Most of the team that Bruce Arena sent out in Mexico City are based in Europe, for the simple fact that European teams pay higher wages.

How can MLS compete for TV viewers under these circumstances? Not very effectively, I'm afraid.

Economists are not fond of taste-based explanations, but here is a taste-based stab at what the future holds for MLS. I believe that American fans won't support what they perceive as a minor league sport. MLS is minor league because, by design, salary caps preclude the teams from competing for the world's best talent. Something has to give if MLS will ultimately be successful.

This seems rather obvious, and I presume that the brains behind MLS understand it. Hence my hunch is that they have developed a transition plan to forge a crossing to quasi-major league status. By this, I mean a "Major League Soccer" in which American clubs are on par with the best in the hemisphere, and capable of an occasional win against the giants of Europe.

Turning down $5m for striker Eddie Johnson suggests that the league is indeed interested in development, rather than merely being a seller of talent to Europe. But I can't figure out how they will make the crossing to being competitive - i.e. to put a product on display that will cause me to shift my viewing from Barcelona to DC United. Can anyone put together a thumbnail sketch of such a business plan? One that has a chance of success? I can't see it, myself, unless it involves a deluge of red ink. And that's not much of a business plan.