Article in today's The Athletic titled "An inside look at why billionaires buy into money-losing Major League Soccer (hint: It’s not really losing money)".
[Sacramento Republic owner] Burkle didn’t buy into the league just to operate Sacramento Republic FC. It may be a big reason, but another one is surely that he and other MLS owners are also automatically made investors in an entity called Soccer United Marketing (SUM).
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How much money SUM generates and the degree to which it finances MLS operations hasn’t been officially disclosed, but Forbes last year estimated the first figure at $350 million annually and valued it as a $2 billion enterprise.
The attraction for MLS owners isn’t just in those current figures, though, but also in their growth potential. Unlike teams, which are mostly limited in their chief revenue streams to game day/merchandise/ticket/corporate sponsorship sales, SUM is free to generate additional significant money through whatever avenues happen to come up as soccer continues its upward growth trajectory in the U.S.
“Its potential isn’t limited the same way soccer is limited,” said Andrew Zimbalist, a sports economist at Smith College in Massachusetts. “Owning a sports team in the U.S., you’re buying something that cannot expand the way a normal company can expand. SUM has no boundaries and it has much more potential than any single team.”
And of course for those teams building stadiums:
“Teams building facilities these days, it’s more about the real estate play and what more can you do with it,” Rishe said. “You’re seeing it across sports. All of these ownership groups, it’s a large real estate development they know they can cultivate 365 days a year.”
Owning an MLS team can be fun, but the financial incentive is contained in all the associated business opportunities
theathletic.com
www.mlssoccer.com
