MLS must invite others to invest in its future - Direct Kick - Major League Soccer

Soccer Digest, August-Sept, 2003 by Scott Plagenhoef

THE NEWS OF DAVID BECKHAM'S move from Manchester United to Real Madrid was for many American sports fans their first experience with the curious world of soccer player transfers.

Ironically, the transfer arena is a more stereotypical American approach to business dealings--a free market in which players are sold to the highest bidder. By contrast, professional sports are among the least capitalist facets of American life.

Major league baseball is a legal monopoly, the NFL prospers in part through revenue sharing and a hard salary cap, and MLS has a single-entity system.

But sooner than later, MLS's financial structure--a limited-liability system in which investors own a portion of the league rather than an individual club--needs to be eliminated.

Over the league's first eight years, the single-entity structure has worked because of the generosity and patience of a pair of patrons: Philip Anschutz and Lamar Hunt. Their parent companies combine to own both of MLS's soccer-specific stadiums and nine of its 10 teams. (Robert Kraft owns the other.) Anschutz Entertainment Group also owns the American television rights for both MIS and the World Cup, leasing air time from ABC/ESPN and selling the ads itself. It's no wonder that American soccer fans call Anschutz, "Uncle Phil."

This year, AEG's most ambitious and celebrated project, the glorious Home Depot Center in Carson, Calif., was completed. The complex includes not only a soccer-specific stadium and training ground, but also facilities that serve as the headquarters for U.S. Tennis Association, USA Track, and USA Cycling. The stadium allows AEG's primary tenant, the Los Angeles Galaxy, to control their own schedule and revenue streams. Instead of renting a cavernous stadium and then missing out on profits from parking, concessions, and luxury suites, the Galaxy will now earn money--and the team is expected to be out of the red within a year.

Soccer-specific stadiums are also being planned in the New York, Chicago, and Dallas areas. In each of those cases, local governments are showing a willingness to help fund the projects--a necessary step away from the patronage system that currently supports MLS.

New stadiums will make MLS a profitable enterprise, which has been one obstacle to finding new investors. The other is the single-entity system. Anschutz and Hunt don't mind chipping in to help the league as a whole because they are emotionally invested in the growth of American soccer. But not many billionaires are, and if MLS is to expand, it needs new investors. With the league beginning to prove itself a capable long-term investment, it will soon be time to drop the safety net and involve other potentially interested parties.

Anschutz and Hunt are doing an exemplary job shepherding MLS through these early days, but I imagine nothing would please them more than being able to see this baby of theirs take its first confident steps on its own.