Major League Soccer may be in a slight bit of trouble.
The league was hoping to capitalize on the success of the 2026 World Cup that was held across the United States, Mexico, and Canada.
With the new-found surge in popularity in the sport, which former U.S. Soccer President Alan Rothenberg believes will see it ‘rocket launch’ past other major sports leagues, including the NBA and MLB, over the next decade, MLS had optimism that they could attract more money.
It has seen a plethora of elite-level talent join over the last few years – perhaps none greater than Argentina superstar Lionel Messi – while Heung-min Son, Antoine Griezmann, and latest Inter Miami recruit Casemiro are other huge names to land in America.
But there is clearly an appetite for the sport after the record-breaking numbers brought in from a US audience at the World Cup, making FOX Sports’ $485million gamble to secure the English-language broadcasting rights in the States look like a bargain.
With that in mind, MLS Commissioner Don Garber wants to cash in with the 30-team league now bringing in an estimated $2.5billion in revenue, according to Sportico.
In the weeks leading up to the World Cup Final where Spain triumphed over Messi and Argentina, MLS spent tens of millions of dollars on an ad campaign with a tag line which read: “Thanks, world. We’ll take it from here.”
But according to Global Football Rankings, the league ranks in at 10th as it pertains to being the highest-quality league in the world, despite MLS having 17 of the top 50 most valuable soccer franchises in the world.
Most of this added revenue has come from expansion teams, with the seven new teams added to MLS since 2019 having paid a collective fee in the region of $1.5bn.
Now, there is an ongoing debate of how to grow it further from here, with the most identifiable path to real – and organic – growth being through broadcast revenue.
However, this is where issues could arise.
Previously, MLS struggled with their rights negotiations the last time they hit the market, eventually settling for a ten-year deal with Apple TV in 2022 that saw them pay $250m over a decade-long span.
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For the consumer, this meant having to pay a subscription fee, which for a casual soccer fan, meant having to weigh up whether it was worth it.
Now, a report from ESPN’s Ben Strauss suggests that MLS owners have expressed their desire for a new rights fee worth almost double annually.
“Owners have discussed a desire for a new rights fee in the $400million to $500million range, which would in effect triple the money teams are getting from Apple, according to two people with knowledge of the discussions,” Strauss wrote.
“That, of course, is easier said than done.”
Lack of ‘world’s best talent’ a huge issue
Stefan Szymanski, co-author of the book ‘Soccernomics’, argues: “There is no major sports league in the world that does not rely primarily on broadcast revenues, and Major League Soccer has pitiful broadcast revenues.
“How do you become a major broadcast player in the world of sports? The answer is you have the world’s best talent.”
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The reality is, MLS can’t attract the ‘world’s best talent’ like Europe can, with their biggest stars having opted to move to the league to see out the twilight years of their careers as opposed to joining during their prime years.
“The hope would be that Americans get a taste for great world soccer this summer but not enough discernment to notice the soccer being put on in America — except Lionel Messi — isn’t being played by world-class soccer players,” Andy Schwarz, an economist at the firm OSKR, said.
“They need demand for soccer to grow so people start to appreciate soccer more, but not enough to notice the great players aren’t here. It’s a Goldilocks situation.
“The valuations have baked in a probability of that happening that is well above my pessimistic view. They could get rid of the salary cap and start spending like the Premier League, but I’m not sure how that generates positive cash flows, either.”
As it stands, MLS’ current salary cap sits at around $6.4m, though it does allow for additional spending, which sees most teams’ payrolls sitting between $13m and $20m – Inter Miami’s, though, is $46m.
“MLS is dominated by NFL ideology at the ownership level,” one person involved in league business, said via ESPN’s report.
“The quality of the player pool could go down by 25 per cent and it would have no impact on an NFL team’s valuation. The quality of play doesn’t matter. That’s just not true in a global sport.”
One lawyer who advises private wealth funds on sports investments even admitted that he actively tells his clients to avoid MLS.
“I advise all my clients to stay away from MLS,” the lawyer said. “It’s the worst investment they could make in sports.”
Nonetheless, MLS Commissioner Don Garber remains bullish on the whole situation, and told a large group of reporters prior to the World Cup final that: “I’d rather be us than any other soccer league in the world.”
