FanPost

MLS needs relocation, not expansion

Editor's note: Can't say I agree with all the findings, but there is lots of interesting stuff in here that is worth discussing on the front page. - Jeremiah

K61's note: If you enjoy hyperbole and arrived here by following a link from FakeSigi, you may also enjoy how I take literary license in response.

With the announcement a few months ago that Montreal will get the league's 19th team in 2012, the recent activity with the New York Cosmos name rights, and Don Garber saying the league will eventually be larger than 20 teams, I think it's obvious that MLS has no intention of slowing down the rate of expansion.  Some point to the recent expansion success in Toronto, Seattle, and Philadelphia (and the likely similar success of Portland and Vancouver next year) as evidence of a successful league.  Unfortunately, the reality could actually be that MLS is simply ignoring its failures by focusing on these few successes.

The Seattle Times ran a great front page spread (not the front page of the sports section, the real front page) detailing the success both on and off the field of Sounders FC over the past two years with many supporting graphs and data tables.  As I absorbed the article this morning over breakfast, my mind turned to a topic I've been pondering for a while... is it healthy for the league to continue expanding?

After the jump, a brief discussion on revenue sharing, a ranking of teams based on performance off the field, and a call for #relocationnotexpansion (ala #tropiesnotfriendlies)...

It's well known that the league is built on a revenue sharing model where all of the teams are part of a single entity.  Don Garber went so far as to preach this business model to the leagues of Europe about a year ago.  I've tried to research how this works and found a number of blogs, etc. that claim facts, but I'm not sure how reputable they are.  For example, one likely true post explains that clubs have to give the league 30% of their ticket revenue, 100% of their national media revenue, and 100% of their national sponsorships.  This money is used to pay salaries for all teams within the salary cap (ie. excluding DP salaries) and allocation dollars.  The clubs get to keep the rest such as concessions, parking, and local media revenue.  Here are some links with more (and sometimes differing) facts: 1, 23, and 4.  There's also Fraser v. MLS which revealed a number of (now stale) facts about the league's revenue sharing. 

The important thing to realize about revenue sharing is that, as it sits right now, only a few teams produce more than they consume while the majority of the clubs are still in the red.  The Seattle Times article mentioned that only Toronto and Seattle are profitable this year.  Forbes did a study of the league in 2007, which concluded that Dallas, LA, and Toronto were the only profitable teams that year.  With more and more expansion teams raising eyebrows, how long will the league continue to allow poor performing teams (at the gates, not on the field) to continue looting the money produced by the more successful teams?  If I were a restaurant owner with 5 locations, and one of them consistently underperformed, I'd be stupid to keep it running at the expense of the other 4.  I'd be better off looking for a new location and moving the staff there, or just closing the under-performing location.  The sooner MLS figures this out, the sooner they can pay off all the debt they've built up since 1996.

It's not like relocation in MLS is some crazy new idea.  The team currently in Houston was relocated there from San Jose in 2006 because they couldn't secure a stadium in San Jose (more on that below).

Now that the regular season has ended, we can finally get the full picture of how teams have fared this year.  The WSJ recently covered the growth of MLS attendances in recent years.  While much of what I'm about to say (and conclude) is based on buts in seats numbers, there are more metrics to consider than just that.  The problem is most other metrics (like television ratings, merchandising sales) aren't publicly available.  However most of them, I believe, will have trends that mirror a club's attendance numbers.

So, without further ado, I'm going to try to group the teams into a quasi-power ranking based on their level of business value and production.  Remember, this has almost nothing to do with their performance on the field.

The Profitable Teams

  • Seattle - Averaging 30,943 last season and 36,173 this season, no one can argue that this is the top performing team in the league.  MLS would love to have 15 other teams doing this well.
  • Toronto - Their stadium only seats 22,000, but it's been sold out since they showed up.  There were listed as profitable in 2007 and they're still profitable today.  Proof that bad performance on the field does not necessitate bad performance at the gates.

Teams Showing Promise

  • LA Galaxy - While they were listed as profitable in 2007, they're conspicuously absent from recent reports.  Maybe they still are.  Their attendance average this season was 21,183 which has been on a slow decline since their high of 26,009 in 2008 (when Beckham arrived).  They're still second in the league behind Seattle.
  • Philadelphia - According to the Seattle Times article I mentioned above, Philadelphia came in second in the league in merchandising revenue.  They averaged 19,254 fans per game and PPL Park only holds 18,500.  This is because their first two home games were played at the much bigger Lincoln Financial Field.  The third super successful expansion team in a row after Toronto and Seattle.  No mention yet of profitability for the team, but they seem to be doing very well with what they've got.
  • New York - The new stadium has provided a big boost (something I'm sure KC, Houston, and San Jose will hope to repeat) for this team.  They're at 18,441 for the season, up 47% from last season and up 15% from 2008 when they made the playoffs last.  They have an ownership group willing to go after big names, so I don't expect it will be long before New York is listed among the profitable.
  • Salt Lake - Salt Lake puzzles me.  This season they averaged 17,095, a boost of just 4% after winning the MLS Cup.  Salt Lake was the last of the mediocre expansions (San Jose, Houston, and Chivas) before MLS expansions started to really pay off with Toronto, Seattle, Philly, and soon with Portland and Vancouver.  Denz over at RSLSoapbox claims that they'll be in the black for 2010.  That would be nice.

Improvement Needed - help is on the way

  • Kansas City - They've been stuck in 10,385 capacity CommunityAmerica Ballpark for the past few years and have been floundering at capacity that whole time.  They'll finally get their own SSS next season and it will be relatively close to the city (much closer than Colorado or Dallas).
  • Houston - They too have their own stadium on the way (to be shared with TSU football though) and it's also going to be in an urban location.  Problem is, their current home, Robertson Stadium, seats 32,000 and they haven't come close to filling it regularly.  Their average this season was only 17,310 which is still down from their first season in Houston when they averaged 18,935 in 2006.
  • San Jose - As I stated above, this city lost their team in 2006 because they wouldn't build an SSS.  However, in 2008, MLS expanded back into San Jose with the promise of a soccer-specific-stadium to come.  Those plans still have not materialized yet, but progress is being made toward a 15,000+ SSS near the airport.  Until then, they're stuck in Buck Shaw Stadium with a capacity of just 10,300.

Improvement Needed - no help in sight

  • FC Dallas - According to the 2007 Forbes report, Dallas was profitable that year.  That was also the year that their average attendance peaked at 15,145.  It's been downhill ever since, and this season they were the worst attended team in the league at 10,815 (excluding San Jose and KC who's stadiums don't allow for more).  My guess is they're no longer profitable.  Pizza Hut Park was built far outside of Dallas (like Dick's in Colorado) and I think that isn't helping matters at this point.  Because they were apparently once profitable with only marginally better attendance, this club gets a pass from being in the bottom.  I think the soccer complex surrounding Pizza Hut Park generates money that other clubs don't have which makes their situation a bit different than the ones below.
  • Chicago - They've been floundering around 16,000 for the past decade (15,814 in 2010).  Their experiments with DPs don't seem to be paying off so far.

Relocation Fodder

  • D.C. United - Attendance has gotten steadily worse since their high in 2007 when they averaged 20,967.  They're now at 14,531.  Their stadium is old and decrepid and there's absolutely no sign of a new one coming.
  • Colorado - I've read several reports (complaints) that Dick's Sporting Goods Park is just too far outside of Denver.  Couple that with the fact that they're competing with the Rockies, Broncos, Nuggets, and Avalanche for sport entertainment dollars, and it's no surprise that they've been hovering around 13,000 for the past decade (13,328 in 2010).  A DP might help, and it might not.  Hard to tell.
  • Columbus - 2 Supporters Shields, an MLS Cup, and a deep run in the CCL in the last two seasons.  How has it affected attendance you might ask?  They're at 14,330, pretty much exactly where they've been at for the last 6 years (+/- 500).  They're in the oldest SSS in the nation and their ownership is getting restless.  Of these bottom 5, they seem like a very likely move candidate.
  • New England - No stadium of their own in site.  2010 attendance is at 12,987.  The best average they could muster was in 2008 17,580.  They're the last team in the league with an ownership group who won't even try to hide the gridiron lines during football season.  The Kraft ownership was in MLS from the beginning, so there's probably a lot of reverence around the Revs in that regard.  They'll probably be allowed to stay on the gravy train provided by the top performing clubs for as long as they like because of this.
  • Chivas USA - They've become the insignificant (link fixed) LA team.  As an expansion team in 2005, they enjoyed 17,080 average attendance and in 2006, they peaked at 19,840.  It's been downhill ever since.  They've been playing second fiddle to the Galaxy since the beginning, and LA, as big as it is, is a one fiddle town for soccer.

So I'm sure I made a number of enemies with some of my comments towards the bottom.  Remember, none of this is about on-the-field performance.  It's all about how much each team contributes to the pot of shared revenue.  As far as I can tell, only a few teams currently contribute more than they take.  For soccer to be successful long term, this must change.

Therefore, I propose that the league stop the expansion at 19 (or maybe round it off at 20) and start relocating some of these poor performing teams to different markets.  Detroit, St. Louis, Miami, and Tampa are all markets who have been interested in the past (or even had teams previously).  At this point, if any of those places are willing to pony up a stadium in an urban location, I think any of the bottom 5 would be better off with a new start in a new market with a new stadium.

And so, may I suggest a new Twitter meme for the off-season: #relocationnotexpansion.

K61's note: Part 2 of this post can be found here and part 3 here.

FanPosts only represent the opinions of the poster, not of Sounder at Heart.

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