Would you pay $40 million for a minor league franchise?

This may seem like a stark critical question but in these tough economic times this is exactly what investors must ask themselves. We’ve discussed in recent weeks the poor television ratings MLS has been receiving and the general lack of interest even among the football supporting public in the United States.

Major League Soccer must succeed for the game to grow in the US, and for player development to continue to fuel the US National Team’s international hopes. However as we approach an MLS Cup final which actually has people like me moderately excited (because some of us were sick of seeing the same teams in the final every year) questions must be asked about MLS’ viability on the American sporting landscape.

With a low payroll, unattractive football for the European or Latino tastes and a very poor record in international competition, the league has plenty of detractors. Without question and irrespective of the league’s clever propaganda, MLS is decidedly minor league on the American sporting landscape. Several indicators of this are readily apparent. Airport shops in most MLS cities don’t have any team merchandise and many MLS teams are relegated to second tier cable networks or low signal stations for their local TV coverage. Local newspapers in MLS markets cover their teams but bury the stories deep in paper even after important matches. Coverage of the league in non MLS markets is minimal and recognition of the league is almost non existent outside its core markets. Almost always DC United is an exception to these rules so please don’t tell me “United is on Comcast Sports Net, gets lots of ink in the Washington Post, and has its merchandise for sale all over the place.” I know this, and would also state Houston is developing into an exception also.

So MLS is asking the potential investors from seven cities for $40 million in order to secure an expansion franchise. Five of these cities already have teams in the lower tier USL, a league which places less restrictions on its owners and whose success in the CONCACAF Champions League has opened eyes across the region as to its quality. Despite it’s on the field success, USL remains clear minor league whose pyramid has stratified into haves and have nots. Because the league does not have the rules to ensure competitive balance that MLS does, some teams are wild successes and others are complete failures and go out of business quickly. Investing in a USL franchise is somewhat like buying a penny Wall Street stock, while MLS resembles a socialist structure with certain financial results pre-ordained.

The question those who are willing to pay the league’s $40 million price tag must answer, is whether investing in a league with limited appeal and restrictive rules in a time of economic chaos is really worthwhile? MLS is not going to be the next big thing as many of us had hoped and thought in 1996 and again upon the arrival of David Beckham. However,  it is still a nice little league whose rules make it easier to win championships and qualify for potential money making international events such as Superliga and the World Club Championship. So with all of this in mind, would you pay $40 million for an MLS franchise?

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