MLS owner Paulson predicts franchise fees will rise

By Ridge Mahoney

MLS may be planning to temporarily cap expansion in the near future at 20 teams, once a proposed team in New York City gets off the ground, but Portland owner Merritt Paulson says franchise fees will continue to rise.

Interviewed by Bloomberg News earlier this month in London, Paulson  cited the increase in fees during the past seven years is a clear sign  of the league’s viability and growth. Paulson, 39, is the majority owner of Peregrine Sports LLC, which he says paid between $32 million and $34 million for the Portland Timbers to join MLS.

“The last team, in Montreal, went for $40 million,” Paulson said. “You’re going to see a really big increase on the next team coming in. That’s just a product of the league coming in and growing. The people who got in on much lower valuations paved the way and did a lot of the heavy lifting in terms of getting the league to where the franchise  valuations could be where they are.”

After MLS's contraction to 10 teams following the 2001 season, it began its expansion run with Chivas USA and Real Salt Lake (2005) and Toronto FC (2007), which each paid a  $10 million expansion fee to join. The Seattle Sounders paid $30 million to join in 2009. Portland and Vancouver began MLS play in 2011.

“The league’s done a very good job in managing costs,” he said. “There are multiple teams in the league that are cash-flow positive  including us.” Paulson didn’t give financial details.

Paulson used the term “franchise fee,” rather than “expansion fee” in the interview, leaving open the possibility a current team could move during an expected expansion hiatus once the league reaches 20 teams.

The obvious candidate is Chivas USA, which is leasing Home Depot  Center from the Galaxy under a deal that expires in 2014.  Teams can also change owners without moving, as has occurred several times during the league’s existence though the league doesn't reveal those financial details.

There are 10,000 people on the season-ticket waiting list for games at Jeld-Wen Field, according to Paulson. The Timbers struggled this season and fired head coach John Spencer, but the fans’ loyalty and  the stadium’s great location in downtown Portland still produced sellouts.

“I wouldn’t trade that for anything,” Paulson said. “If you could build me a brand new facility for free in the suburbs, I wouldn’t trade it.”

Paulson is the son of Henry Paulson, who was the U.S. Treasury Secretary at the height of the 2008 financial crisis.

EXTRA MLS COVERAGE. Wednesday's Seattle-Real Salt Lake game was one of two extra MLS games to be aired by NBC Sports Group as the MLS regular season winds down. Also added on NBC Sports Network was another midweek match on Oct. 24  between Sporting Kansas City and Philadelphia at Livestrong Sporting Park. These two telecasts increase the league’s exposure on NBC outlets to six games during the final two weeks on the season. Other games include a Saturday match between Houston and Philadelphia on NBCSN and a tripleheader on Oct. 27, including an NBC telecast of Philadelphia hosting New York.

TRI'S DRAWING POWER. Mexico had already qualified for the Hexagonal, but Friday's World Cup qualifier against Guyana in Houston still delivered 2.1 million total viewers on Telemundo and rated No. 1 on Spanish-language television among men in the 18-49 and 18-34 age groups. A small crowd of 12,115 watched the game at BBVA Compass Stadium, home of the Houston Dynamo. Mexico won the match, 5-0. Guyana sold its hosting rights to the game, but Mexico clinched qualification for the next round of Concacaf qualifying after playing just four matches.
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