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Bend It Like??lanco


It was David Beckham, the fair-haired English midfielder, who garnered all the headlines early this year when he came to the U.S. to ply his trade for some $250 million over five years, including endorsements. But as American pro soccer has come of age this season--at least financially--the player most responsible isn't Beckham. Instead, it's Cuauhtemoc Blanco, a fiery striker who grew up in a barrio outside Mexico City. With an explosive season, Blanco has helped boost attendance across Major League Soccer (MLS), with the draw for his own Chicago Fire rising 60%, to 16,000 people a game.

Beckham may have a pop star wife and Hollywood bling. But the 34-year-old Blanco, who collects $2.5 million per season, has the support of Latinos, particularly Mexican Americans. Latinos are 44 million strong in the U.S. and growing fast as a percentage of the population. MLS, which holds its championship match between Houston and New England on Nov. 18, has a higher percentage of Hispanic fans than any other sport in the country. Don Garber, the league's commissioner, often refers to his organization as "the League of the New America." He's even taking Spanish lessons.

Tapping into that fan base is paying dividends. This year, total attendance at MLS games exceeded the 3 million mark for the first time. TV ratings are up, and the league has secured the first national TV broadcasting fees in its 12-year history. Sponsorship revenue has climbed 25%, and jersey sales have catapulted 700% from last season--all of which have helped turn the league profitable. Says Garber: "We're on a good path."

Individual franchises are starting to log operating profits, too, beginning with teams such as Chicago's, which have large fan bases and stadiums built for the sport. That has helped propel the price of a new franchise to $30 million from $10 million in 2005. "I didn't sign on to lose money," says Joe Roth, the majority owner of a Seattle franchise unveiled on Nov. 13.

Not that the league's backers have any illusions about displacing that other football as a commercial enterprise. Under Garber's leadership, expenses and expectations have been carefully managed. MLS has an unusual business model in which the league itself controls and negotiates player salaries, keeping spending in line with growth. "We need to continue to go about building this slowly over the next decade," says Garber.

Perhaps the league's riskiest move came last year, with a strategic change that led to the arrival of Beckham and Blanco. That's when Garber approved a "designated player" rule letting each club recruit a top foreign player and not have it counted against the team's salary cap. MLS was gambling it could raise the level of play a few notches without busting its business model.

So far, Garber's bet has paid off, as confirmed by the rising attendance and viewership. But many teams still are not making money. Brazilian soccer legend Pel?? recently said the MLS needs to spend more money on more top foreign players to bring up the quality of play. Salaries for most U.S. players are modest--averaging less than $70,000 per year--and are growing more slowly than the 20%-a-year rate across the rest of the soccer world.

As for Beckham, he got off to a rough start in the U.S. An injury kept him from lifting his team, the Los Angeles Galaxy, into the playoffs. Still, when he did play, he thrilled fans. League sponsor Adidas has sold more than 250,000 David Beckham Galaxy soccer jerseys, making it the best-selling soccer jersey in the world. Beckham and Blanco--Garber needs both if MLS is to realize his goal of becoming the league for the New America.

By Stanley Holmes


The Good Business Issue
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