Is MLS Heading Toward a Bubble With Plans to Expand to 24 Teams?
There’s been a lot said lately about MLS expansion, but on a recent edition of ESPNFC, analysts Taylor Twellman and Steve Nicol had a fiery exchange that distilled the MLS expansion debate right down to its essence. Lincoln v. Douglas-esque in its gravity, the showdown also evoked Kennedy v. Nixon in its stark visual contrast between Twellman’s gleaming visage and Nicol’s gray grimace. But Twellman was the cold realist, all but chanting “C.R.E.A.M.,” while Nicol, belying his days as a hard-nosed Anfield Red, played the dreamy idealist.
Twellman and Nicol only went at it over Orlando for a minute or so, but in their battle they hit on what the expansion tension is all about, namely, art versus commerce. It’s a question we normally associate with music and movies, but in this case it’s also the essential question behind MLS’ growth strategy. Should MLS take the badly-needed cash being offered now? Or should MLS shun it in favor of beauty and with it, potentially greater riches down the road?
In beauty’s corner was Nicol, pleading with MLS to patiently work on improving the quality of play before spreading its talent thinner. In money’s corner was Twellman, countering that it’s unrealistic for MLS to resist the ridiculous expansion fees being thrown its way. They’re both right, but in this fight Nicol won by T.K.O.
Tellingly, Nicol and Twellman didn’t battle over Orlando specifically. Rather, refreshingly, they focused on the forest, not the trees. The big money pouring into MLS via expansion fees and soccer specific stadium building can be seen as an affirmation of the league’s bright future. After all, why would supposedly savvy businessmen invest in a product they thought would fail? On the other hand, just like basement-dwelling day traders pumping money into Wall Street while ignoring fundamentals like P/E ratio, we’ve seen out-of-whack valuations inflate bubbles before. Is MLS’ foundation strong enough to support adding additional clubs when the existing ones are still heavily reliant on attendance for revenue? There simply is no massive pie to split, for at NBC’s $10 million a year, MLS clubs are pecking at a Lil Debbie’s. And those scraps would be even more meager when split among 24.
Twellman insisted that expansion would stop at 24, but by his own logic, what would stop MLS from taking another cash-stuffed briefcase from a 25th suitor, and a 26th, and so on? Without robust revenue, expansion fees can only be seen as short money. For money infused now will demand its comeuppance in the future. Or as Three 6 Mafia succinctly put it, it’s “short cheese.” MLS, with the pressure of trying to feed an ever-increasing amount of clubs, could be forced to make rash or ruinous business decisions just like any distressed company trying to appease stockholders. Every dollar put in now must be repaid in kind. Or as Ted DiBiase warned, “Everybody’s got a price. Everybody’s gonna pay.”
Nicol’s belief in slow growth through an ever-improving product is not sexy, but it’s the right way. The path to cash lies in more butts in seats and eyeballs on screens. That’s done by presenting a premium product, not by trotting out too many irrelevant clubs with too few stars playing matches with no relevance.
Look around at how expansion has bloated other leagues. How have the Jacksonville Jaguars, Carolina Panthers, Arizona Diamondbacks, Colorado Rockies, Tampa Bay Rays, Miami Marlins, Nashville Predators, Florida Panthers, Columbus Blue Jackets, Minnesota Timberwolves, Orlando Magic, Memphis Grizzlies, New Orleans Hornets, and Charlotte Bobcats improved their respective leagues? Sure, those leagues are gurgling with green compared to the pre-expansion era, but that’s in spite of the teams they’ve added. Few, if any, of the many franchises added since the early 90’s enjoy national appeal. Few circle the calendar when these teams come to town. Moreover, league and network executives cringe whenever any of these teams make it to a season’s latter stages. Tellingly, very few of the teams added have come close to tasting titles.
Nicol understands that 24 clubs is far too many for MLS’ current climate. Twellman alluded to the fact that other countries have dozens of professional clubs. But no country’s top flight boasts more than 20 clubs, and some soccer-mad countries such as Germany, Mexico, and Russia have even fewer. Moreover, soccer has almost no serious competition in most countries. Take England for example. The stifling shadow cast by the 20 Premier League clubs leaves little room for domestic cricket or rugby.
In America, MLS asks for attention when the common fan is already following the NFL, the NBA, the NHL, MLB, college football, and college basketball. Are we to believe that MLS can financially support 24 clubs when the mighty NFL has only eight more?
Stars, not breadth of regional coverage, are what sell. Going to 24 would put what few MLS stars has alone and adrift on a sea of anonymity. Limiting the amount of clubs would allow MLS, as Nicol argues, to develop talent so that each club has several good players worth watching. But turning down short-term money is a brave business decision, one routinely ignored by enterprises far larger than MLS.
When MLS began, its founders vociferously invoked Santayana in vowing to avoid the NASL’s fate. But they learned the wrong lesson. It’s a misconception that the NASL failed because the Cosmos, by hogging stars, ruined the league’s competitiveness. The NASL collapsed because the second the league started to taste success, they took the short cheese and expanded wildly. At its peak, the NASL had 24 clubs. Within four years, it was gone. Thirty years later, the stakes are far greater.