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BusinessWeek: January 29, 1996 |
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Sports Business: SOCCER
IS MAJOR LEAGUE SOCCER USING ITS HEAD? Its structure may avoid problems plaguing other sports
Reared on baseball, enthralled by basketball, and steeped in the traditions of football, U.S. sports junkies have long yawned at the low-scoring game that the rest of the world loves. So Rothenberg, chairman of Major League Soccer, due to debut this spring, is counting on soccer's popularity among kids and Latinos to pull in fans. And, he says, the league's unique financial structure will help it avoid the lawsuits, sudden franchise moves, and whiny millionaire players plaguing other pro sports. "The timing is better than it's ever been for professional soccer to succeed," says Rothenberg. LATE KICKOFF. Maybe. But there have already been stumbles. For starters, poor organization and a cool response from sponsors delayed the league's kickoff by two years. The result: Instead of starting just after the successful 1994 World Cup, hosted by the U.S., and during the baseball strike, MLS's inaugural season will compete with the national pastime and the Atlanta Olympics. "We just weren't ready," says Rothenberg, who ran the World Cup. If pro soccer has any chance this time around, it will need to avoid the mistakes of past attempts, especially those of the North American Soccer League, which died in 1985. Like most sports leagues, it allowed investors to own their own teams. That led to big disparities in capital. While Steve Ross, then CEO of Warner Communications, signed stars such as Pele to his New York Cosmos and drew throngs, small-market clubs struggled. MLS's solution: Structure the league as a single entity so that investors will operate--but won't own--the teams. Instead, they'll be partners in one enterprise. The more revenue a team brings in, the better the return its operator will get--but a low salary cap will preserve parity. The setup should sidestep the lawsuits between teams and leagues common elsewhere in pro sports, says National Basketball Assn. Commissioner David J. Stern. So far, MLS has reeled in some big-fish investors, including New York billionaire John W. Kluge, self-made oilman Phillip F. Anschutz, and Lamar and Clark Hunt of the Texas oil family. Billionaire hedge-fund investor George Soros joined a group that will operate the Washington (D.C.) team. The question is whether those investors will be satisfied with holding only partial control, especially if the league grows. "It can work--as long as you keep the egos in check," says Gordon Kane, senior vice-president at Clarion Performance Properties, a marketing firm. The league has also attracted some brand-name advertisers. AT&T, Anheuser-Busch, Kellogg, and Nike are each paying up to $2 million a year for sponsorship rights. A Fuji deal will be announced soon. Add to the mix a pact with ESPN that puts 35 games on the air this year, and MLS is guaranteed far more exposure than its predecessor. To help build a U.S. market, MLS has also made a commitment to promoting U.S.-born players. Alexi Lalas, the red-haired dervish who led the U.S. to a stunning upset of Colombia in the World Cup, will play for the New England Revolution, and his face will grace a box of Kellogg's cereal later this year. That's a direct appeal to the 13 million soccer-playing kids in the U.S. The other core fan base will be Latinos, who follow foreign teams on Spanish-language television. But winning over these knowledgeable fans will take more than savvy marketing. So the league has signed international stars such as Mexican national goalie Jorge Campos. He will play for the Galaxy in Los Angeles--a clear attempt to woo the city's Mexican-Americans. Still, there are no guarantees the MLS can meet its goal of about 12,000 fans a game. Tens of thousands may have turned out for the World Cup's pageantry, but that doesn't mean they'll show up for a Tuesday night match between the Columbus Crew and Kansas City Wiz when they could be home watching the basketball playoffs. If Rothenberg and new MLS Commissioner Doug Logan can't sell games like that one, pro soccer could end up where it's been before: face down in the dirt. Return to top | |
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 TABLE A League of Their Own Team Investor/Operator NEW ENGLAND REVOLUTION ROBERT KRAFT COLUMBUS (OHIO) CREW LAMAR AND CLARK HUNT DALLAS BURN LEAGUE-RUN COLORADO RAPIDS PHILLIP ANSCHUTZ KANSAS CITY WIZ LAMAR AND CLARK HUNT LOS ANGELES GALAXY GROUP OF LOCAL INVESTORS NEW YORK/NEW JERSEY JOHN KLUGE AND METROSTARS STUART SUBOTNICK SAN JOSE CLASH LEAGUE-RUN TAMPA BAY MUTINY LEAGUE-RUN D.C. UNITED GROUP INCLUDING GEORGE SOROS DATA: MAJOR LEAGUE SOCCER Return to top |
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