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MLS: Forecast clouded but far from gloomy
by Ridge Mahoney, July 31st, 2009 12:23PM

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TAGS:  mls, soccer business


Commissioner Don Garber, who begins his second decade in charge of Major League Soccer, and other sports executives give their insights on the present state and future of America's soccer league, which is coming off a period of growth yet has been hit by the same economic issues that have hurt other sports.

 
As the popularity of soccer has grown in America, so has its professional soccer league, yet there's as much trepidation about MLS as there is about just about anything else as economic crises disrupt the nation and the world.

 

"I think it is impossible to tell," says Commissioner Don Garber of the short-term future. "It's unusual for us as Americans to wake up this way, because we're born with an optimism that exists just as part of our character, and a lot of that optimism has been knocked out of the system. We wake up every day thinking tomorrow is going to be worse instead of better, which is unusual in our society."

 

There's reason for optimism regarding MLS, which has expanded from 10 to 15 teams in five years (and will have 18 teams in 2011), built new soccer stadiums, added wealthy investors and expanded its sponsorship offerings at the national and team level.

 

There's also cause for concerns. Four-time champion D.C. United is mired in stadium problems, and attendances have lagged in several cities. A new collective bargaining agreement must be negotiated with the MLS Players' Union before next year, and the return of David Beckham from Milan triggered a public spat between him and Landon Donovan.

 

BECKS REDUX. Garber believes MLS attained a greater degree of respect around the world by hammering out an agreement by which Beckham returned to the Galaxy this summer rather than acquiescing to his wish that the loan deal with AC Milan be converted into a transfer.

 

Only by buying out his contract at the end of this season can he join Milan without the club and MLS working out a proper transfer. Previously, he held the right to opt out after three seasons without hindrance. Comments by Donovan and other Galaxy teammates in the book "The Beckham Experiment" regarding his commitment to the team and clandestine move to Milan roiled the team upon his return in July, but Garber refused to regard his signing as more negative than positive.

 

"When David was signed we all believed, and I still do, that this would be a historic moment in the history of Major League Soccer," says Garber. "It was an important change in our plan that was, prior to the Designated Player rule, very slow and steady growth. Over that period, we've built stadiums, we've expanded the league, and we have many, many more owners. At that time, we were ready for a breakout moment, and that was our breakout moment."

 

That the breakout moment nearly led to an ugly breakup hasn't convinced Garber the daring move turned into a disaster, as some critics contend.

 

"The second part of that is we had an agreement," Garber says. "We had a contract and we expected [Beckham to abide by the agreement], like we expect of all of our players to abide by the commitment that they make. The sport of soccer has all sorts of different things that allow players out of their contracts but it requires mutual consent, and it took some time for us to all agree on what that consent would be."

 

Garber is happy a Beckham-MLS-Milan deal was reached.

 

Says former MLS chief marketing officer Randy Bernstein, who runs his own company, Premier Partnerships, "The Beckham experiment was just that: an experiment, one that's been successful, and there will be many more to follow."

 

LABOR ISSUES. In 2009, only expansion Seattle used its Designated Player slot on a new player (Freddie Ljungberg) and is paying him $1.25 million per year. The Crew upgraded Guillermo Barros Schelotto to a DP at a base salary of $650,000. Juan Pablo Angel (New York) and Cuauhtemoc Blanco (Chicago) were retained as DPs for 2009.

 

The DP option will be reviewed at the end of the season. Since about half the teams have yet to use it, the current allotment of one per team, with trades permitting a team to have as many as two DPs, is likely to be retained.

 

MLS must also negotiate a new collective bargaining agreement (CBA) before the start of the 2010 season. Having reduced rosters from 28 to a maximum of 24, and adhered to a salary cap per team of $2.3 million and minimum salary of $34,000 ($12,900 for developmental players), it faces some hard bargaining from the players despite a tough economic climate. Since the last CBA deal was struck in 2004, more than $200 million in expansion money has flowed into MLS's coffers and about $17 million is now generated from TV deals each season.

 

Negotiations have begun and as of mid-July were in a preliminary stage. Player representatives have not disclosed specifics, but a raise in the minimum salary and salary cap, and greater roster protection and better contracts for players drafted after the first round are among the union's main topics.

 

CROWDED HOUSE. MLS trimmed back its league schedule this year during the FIFA international fixture dates but played straight through the Confederations Cup and Concacaf Gold Cup. That will likely be the case again next year during the World Cup, which runs from June 11 to July 11, 2010. MLS teams will probably be asked to release their players two weeks before the opening game, though U.S. Soccer won't release even a tentative plan for 2010 until qualification is clinched.

 

Scheduling proposals will be finalized by the MLS Competition Committee during the week of MLS Cup 2009 in Seattle and voted on by the Board of Directors.

 

Garber doesn't foresee a reduction in competitive or exhibition matches next year. He says the league has not yet determined a format for league play next year, though a league of 16 teams with the addition of expansion Philadelphia makes a 30-match league schedule a straightforward process.

 

"SuperLiga will take place next year, for sure," said Garber of the eight-team tournament involving Mexican and MLS clubs. "It's part of the commitment we have from the FMF [Mexican soccer federation]."

 

Garber is mindful that some sponsorship deals will come up for renewal in 2010.

 

"We've got to take a step back next year and look at the whole schedule," he said. "I'm not blind to all of the scheduling issues that we have and the stress on our players with the number of tournaments and the time frame we have to play in.

 

"I wish there was an easy solution. I've talked about it for 10 years and there isn't one. At some point, we have to find a way to address it."

 

Perhaps the only streamlining that can be done next year is with the Open Cup. Many MLS teams, though, field their backups and reserves in those games, a source of great inspiration for USL and PDL teams. U.S. Soccer president Sunil Gulati is among the advocates of the competition, so major changes aren't likely.

 

LATINO AUDIENCE. Figures released by the league office show about 33 percent of the fans attending MLS games are Hispanic this season. Director of communications Dan Courtemanche said that the percentage has "ranged from 30 to 35 percent since the league's inception."

 

The percentage of Hispanics attending MLS games varies widely from market to market, and how well the league can draw the rapidly expanding Hispanic population to attend games and watch on television is a crucial factor as it adds expansion teams and SUM continues to market soccer properties other than MLS (InterLiga, SuperLiga and club tours.

 

"Working at Univision opened my eyes to just what an enormous, powerful U.S. Hispanic population there is," said David Downs, the former president of ABC Sports and Univision Sports chosen by Gulati to head the committee bidding to host the 2018 or 2022 World Cup. "The size of it alone, 45 million approximately, is larger than most countries on earth, Canada and Argentina to name two. The growth of that population is tremendous."

 

Downs says U.S. Hispanics consume soccer, at least on television, at a rate of about seven or eight to one (compared) to non-Hispanics, making them a growth area (or unexploited opportunity) for MLS, depending on how you view the situation.

 

"You see it even in MLS," added Downs. "When I was over at Univision, we were doing similar raw delivery for Sunday MLS games on TeleFutura to what ESPN2 was doing in prime time on Thursday nights, and they're playing to an English-speaking audience of about 250 million. To get essentially the same raw numbers while playing to an audience that was basically one-fifth as large is pretty significant."

 

Prominent Hispanic players such as Jaime Moreno, Christian Gomez, Guillermo Barros Schelotto, Angel and Blanco increase the league's appeal to Hispanic viewers, though Mexican-Americans - the largest Hispanic group - are saturated with coverage of the Mexican league and are less inclined to watch MLS games than other Hispanic groups.

 

Houston president Oliver Luck, however, said he noticed an increase in Mexican-American fans at Dynamo MLS games two years ago after Houston played well against Mexican teams in the Concacaf Champions Cup (now the Champions League).

 

Garber believes MLS teams beating Mexican teams in the SuperLiga can have the same effect, though since the games are played while Mexican teams are in preseason, the games don't resonate much with that audience.

 

"I just really believe we need to continue to prove to the hardcore soccer fan that our teams can stand toe-to-toe with our Mexican counterparts," says Garber. "They have a league that's been very, very successful playing international games. They are powerful competitively and commercially.

 

"Our players feel the same way we do, and as a result those games have a real edge to them and create an energy that's great in our stadiums. The ratings have been terrific on Univision, and they're an important part of our league's future."

 

LOCATION, LOCATION. Chicago, Colorado and Dallas built their stadiums in the suburbs partly to lure the youth soccer crowd - in the case of Colorado and Dallas, the facilities serve the needs of youth players locally and nationally with vast complexes of playing fields - but politics and economics also played a vital role.

 

"You have to go where the land is - and the best deal is," said former Fire president John Guppy of Toyota Park in Bridgeview, about 15 miles from downtown Chicago.

 

Securing political backing is a crucial factor, as D.C. United's futile quest to find a home to replace RFK Stadium demonstrates.

 

Two stadium proposals in Columbus were voted down before Hunt Sports Group reached an agreement to build on the grounds of the Ohio State Fair; a city council reversal scuttled a stadium in McKinney, Texas, before the Hunts struck pay dirt in Frisco; and the list goes on.

 

While attendance has slipped at Chicago's suburban Toyota Park and the outlying stadiums in Colorado and Dallas, MLS has found success elsewhere.

 

The stadium formula has been tweaked somewhat by the success of downtown facilities of Toronto and Seattle, and presumably Portland, which starts play in 2011, will enjoy the same success at PGE Park. Vancouver is contracted to play downtown in B.C. Place until plans for a waterfront stadium come to fruition.

 

The New York Red Bulls will move next year into their new stadium in Harrison, N.J., with better public transportation options than those available to get to Giants Stadium.

 

Next year's newbie, Philadelphia, will play in Chester, Pa., about 15 minutes from the city, and management is also counting on easy access by public transportation to draw fans from the urban center as well as surrounding communities in New Jersey, Pennsylvania, Delaware, and northeastern Maryland.

 

"Our fan base is kind of changing," says Garber of luring more young professionals to MLS matches than in the past. "Early on in the league's existence, there was a real focus on the youth soccer community, and what has happened in a few markets is we've seen a real emergence in the young male and female soccer supporter demographic. They're from the game but they don't necessarily play the game.

 

"They represent a real opportunity for us because it's much easier to deliver to that audience when you're in a downtown setting rather than the suburbs, but I have to say, if any of our teams got the opportunity to build a Pizza Hut Park or Toyota Park they would jump on it in a minute. It really speaks to the integration we want to focus on with the soccer community at large."

 

UP AND DOWN TIME. To keep up with demand, Seattle has increased its MLS capacity at Qwest Field from 27,000 to 34,200 and is averaging more than 30,000 fans per game. Toronto regularly sells out BMO Field (capacity: 20,500), but even those crowds haven't been able to stem a leaguewide drop in attendance of roughly 1,000 per game from 16,460 last year to 15,435 midway through 2009.

 

Noticeably down are Los Angeles (26,009 to 19,292), FC Dallas (13,024 to 9,026), New England (17,580 to 13,616), Chicago (17,034 to 12,640), and New York (15,928 to 11,385).

 

The Galaxy was without Beckham for the first half of the season, and New York has a terrible team, so drops there are understandable.

 

Modest increases for Chivas USA (15,114 to 16,211), the success in Toronto and Seattle, and new stadiums set to open for the Red Bulls and Kansas City Wizards as well as the expansion Philadelphia Union are causes for guarded optimism.

 

"It's too early to talk about what our ticket or attendance experiences will be," claims Garber. "MLS is not immune to the economic affects going on around the country. But overall I would say we've got some really good things going on in a handful of markets, a lot of markets that are doing things as they usually do, and some markets that have had some challenges."

 

(This article originally appeared in the August 2009 issue of Soccer America magazine.)



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