Magazine

A Breakout Year For Soccer?


Suddenly, the future of Major League Soccer seems less about survival and more about a sport coming into its own. The league once dismissed as boring and doomed to fail is entering its 11th season as possibly the hottest investment in professional sports. Here are three reasons why this could be its breakout season:

1. Influx of money

Over $1 billion has flowed into MLS in less than two years as investors sense that the league may be at a tipping point. Red Bull, the sassy Austrian energy-drink company, recently plunked down $100 million to buy the New York franchise. The owners of the Toronto Maple Leafs hockey team announced they would buy an MLS franchise next season. Dave Checketts, former general manager of the NBA's New York Knicks and Utah Jazz, bought Real Salt Lake last year. Jorge Vergara, CEO of Grupo Omnilife and owner of Mexico's famed Chivas of Guadalajara soccer club, bought Chivas USA in Los Angeles.

More important, Adidas-Salomon last year said it would invest $150 million in the league over the next 10 years. Beyond money for player development, advertising, and outfitting the 12 teams with Adidas uniforms, the deal has helped generate much-needed momentum at a critical juncture. "The credibility and legitimacy that the Adidas deal brought to our league has been priceless," says MLS Commissioner Don Garber.

2. New Venues

Capital is flowing into new stadium development and into broadcast contracts. Five soccer-specific arenas are under construction in such cities as Chicago and Denver at an estimated $80 million each. That will bring the total number of soccer stadiums, which will hold roughly 20,000 fans, to eight by 2008. The league's marketing arm, Soccer United Marketing, just raked in more than $400 million for selling U.S. broadcast rights for the next two World Cups. And for the first time in 10 seasons the league may have its own TV deal: ABC(DIS)/ESPN, Univision (UVN), and HDNet are close to agreement with the league.

3. Surge in Ticket Sales

Season-ticket sales are up 20% this year, and the league drew an average of 19,073 in its first three weeks, up 26% over 2005. Also, this is a FIFA World Cup year, which means casual American fans will actually tune into the matches. The MLS will supply half the players for the U.S. Men's National Team.

The Counterargument

The quality of play has yet to reach the level of the top European leagues. The league still hasn't won over either casual or hard-core fans: The latter prefer European matches. Despite the money flowing into MLS, it has not generated an overall operating profit after 10 years. "A lot of this new money is coming in for mixed reasons, not purely to own the operating rights to an MLS team," says Jeffrey Bliss, president of Javelin Group, a marketing company specializing in soccer, who sees the investor attraction as more of a real-estate play than a bet on the sport. "I think they are turning the league toward profitability, but what they need to do is turn it toward a quality product on the pitch." For that, MLS may have to figure out soon how to pay for world-class stars.

By Stanley Holmes


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