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MLS Expansion Fees Are Growing, So Why Is The League Losing Money? | Forbes
Posted
March 11, 2020
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March 11, 2020
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3:37Now PlayingMajor League Soccer’s surging expansion fees and sales prices are not being driven by financial performance. In fact, although revenues are broadly on the rise, the league and most of its teams continue to operate at a significant loss. But MLS investors are still spending big to secure a share of the U.S. soccer market because their eyes are set on potential goldmines down the road: a new national TV deal in 2023, a stateside World Cup in 2026 and, if everything goes just right, a future American sports landscape wherein domestic soccer can hold its own against the likes of the NFL and the NBA.
But the near-term bleeding hasn’t slowed the rise of MLS team values, since owners are instead making a growth bet on the league’s—and the sport’s—future. The next benchmark for that success isn’t far away: Major League Soccer’s national TV deals with ESPN and Univision expire after the 2022 season. MLS has instructed its teams not to tie up their media rights beyond that expiration date, giving the league a chance to take its full inventory to market. The current contracts pay an average $90 million per year, and although MLS has yet to begin negotiating, the expectation echoed throughout the league is that the national rights fees will see a massive jump (they’d need to increase several-fold to get the league to break-even, assuming expenses stay level).
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