• Andy Marston

The rise and rise of Major League Soccer

Rapper Yo Gotti's recent investment in DC United highlights the continued growth potential of MLS franchises as values continue to go higher and higher. This week's newsletter takes a closer look at why.

Photo Source: Vincent Carchietta USA Today Sports

It was reported last week that Rapper Yo Gotti is investing in DC United at a valuation of $730m, which places it among one of the highest prices ever for an MLS team in a transaction. So, what is behind the continued rise in valuations? Well, here’s a quick overview.

Firstly, the demographics favour the MLS. The league has a younger, more diverse fanbase – with a particularly large share of Hispanic fans – than the other major leagues. Experts estimate that the proportion of Hispanics in the US population will rise to over 28% by 2060. This means ‘soccer’ will likely grow with it…

The popularity of the sport is also likely to be turbocharged by the FIFA World Cup, which returns to North America for the first time since 1994 – an event which first prompted the launch of the MLS. The league is expecting a similar ‘step up’ in terms of the fans, the excitement, the clubs, and the media deal.

The media deal is an area where, unlike other major men’s professional sports leagues, there is huge potential for explosive growth. The MLS currently nets only $90m per year from its current agreement. That’s almost half what NBC pays to broadcast the Premier League in the US. With a massive TV contract, MLS teams could in theory become billion-dollar assets.

Lastly, the structure of the league itself gives MLS owners a level of security uncommon in European professional sports. There is no risk of relegation, making team owners’ investments much safer. Furthermore, the league’s single entity setup (owners technically buy a stake in the league and then are given rights to run a particular club) mean that the risk for any one MLS club is reduced even further.

Reducing the risk of investment was at the heart of the plans for a European Super League. If owners continue not to get their way, there is a distinct possibility that they turn their attention and resources to the MLS. If this happens, Yo Gutti will have bagged himself a bargain, even if he did buy at a record high.