Welcome to the RSL Cup blog

I've been a fan of Real Salt Lake since it joined MLS and took to the field in 2005, and I've been a fan of MLS since it began in 1996. Lately however I've started to worry about the path MLS is taking and the poor decisions they are making that in my mind threaten the growth of soccer as a whole in the US. (see "Columbus conspiracy" section) Soccer in America will grow only when we have a vibrant and diverse minor league system, something that MLS seems to be smothering at the moment. (see "American soccer wars" section) Let's keep our eyes on the situation and hope for the best, a future where grass-roots soccer and the minor leagues can not only exist but flourish, as well as where the contributions and history of the league's early clubs are appreciated and preserved.

Thursday, April 7, 2016

Why MLS’s Expansion to 28 (or 32) Teams is Good for NASL

(by Chris Kivlehan midfieldpress.com 1-17-16)

Major League Soccer has announced its intent to expand to 28 teams, and while it may seem counterintuitive, I believe this is actually a good thing for the North American Soccer League. Further, it is a good bet that MLS isn’t stopping at 28, but rather 32 seems like a more likely number. MLS shares many owners with the NFL, and more than any other league, MLS looks up to the NFL.

The NFL has 32 teams and its owners seem quite content with that number.  The NFL could easily support more than 32 teams; cities like Columbus, Salt Lake City, Portland, Orlando and Oklahoma City are as NFL caliber as Buffalo, Jacksonville, Kansas City and New Orleans.  That’s before looking North to Toronto, Montreal and Vancouver or overseas to London or Frankfurt.  So why doesn’t the NFL have 40 teams?  It’s about maximizing revenue and value of the franchises.  The scarcity of NFL teams drives the value up.  

The illusion of scarcity is why MLS, with 24 franchises awarded to date, is only saying they are going to 28 teams right now, rather than coming out and saying that 32 is the end game limit.  If there are four expansion spots left, and two of them are practically spoken for by Sacramento and San Antonio, that artificially drives up the value of the “last two” spots because there is more demand than supply.  If there were six spots readily available, they would be worth less than just two.  MLS will likely stop expanding once their owners, who again overlap in many cases with the NFL, decide they have hit a number that maximizes league revenue per owner and franchise value.   The NFL has identified 32 teams as the sweet spot for revenue and franchise value maximization.  MLS may determine the right number for their league is less than 32, but they are unlikely to decide it is more than 32 teams.

A 28-32 team cap for MLS is a boon for NASL.  There are 70 markets in the USA that could support a first division soccer team.  The top 10 metropolitan statistical areas (MSAs)  could likely support several teams, as they do in Europe only to a lesser extent here since the market for the game is less developed.  NASL can likely put teams in different parts of the 10 largest MSAs, and be the most relevant team within a comfortable drive of the area they serve.  

For example, MLS is moving into downtown Atlanta.  The city’s northern suburbs are populated and wealthy, and traffic in Atlanta is notoriously bad.  The MLB’s Atlanta Braves are moving to Cobb County north of Atlanta because of a sweetheart stadium deal and the fact that is an attractive part of the market to be in.  An NASL team could thrive in Cobb County near the Braves, while Atlanta United FC flourishes in its downtown stadium shared with the NFL Falcons.  The recent failure of the Silverbacks in that market is a result of not having the right owners in place with financial strength and determination to field a strong alternative to MLS.  Challenging in an MLS market requires a strong backing with a good strategy to carve out their own niche.

Not all markets offer this opportunity, however.   The top 10 markets, and perhaps Seattle-Tacoma, would be interesting bets as MLS-having locations NASL could compete in.  The good news is as MLS selects its final 8 markets, there are plenty of excellent metropolitan areas that will be left over NASL.

Where will MLS go?

Teams 21-24 are set with Atlanta United FC due in 2017, Minnesota United FC moving from NASL to MLS in either 2017 or 2018, LAFC debuting in 2018 and Miami Beckham United finally nailing down their stadium site.

25 and 26 appear to be locked up as well. Sacramento ticks all of MLS’s boxes like no expansion bid before, and the San Antonio Spurs acquisition of Toyota Field and launch of a USL franchise has been done with an open wink and nod from MLS.

So there are 2 more open spots “available” for MLS, and likely a hard maximum of 4 additional berths beyond that.  This is good for NASL.  It is not as good for USL.

It is good because it will attract more qualified investors in soccer across the country – more than can possibly join MLS.  These prospective owners will have three options:  invest in something other than US pro soccer, invest in a developmental league in USL or invest in an aspiring alternate major league in NASL.

MLS commissioner Don Garber says they are talking to groups in St. Louis and San Diego, which would position the league to fill gaps left in those towns by potentially departing NFL teams.  He has tossed out Detroit and El Paso in similar conversations before. Long ago, MLS coveted Cleveland and Rochester as well. The billionaire owner of FC Cincinnati probably isn’t investing in USL to stay there.  The Charlotte Independence owners have signaled their intent for MLS. Arizona United hired Frank Yallop as part of a plan to drive to MLS. Louisville is talking about a stadium plan to land MLS. MLS rejected investors from Las Vegas.

So let’s say MLS goes to 32 teams and they are:  25. Sacramento, 26. San Antonio, 27. St. Louis, 28. San Diego, 29. Cincinnati, 30. Phoenix, 31. Charlotte 32. Detroit.

Those are eight of the biggest MSAs left on the table, so that’s a pretty significant list of open markets lost.  One region I am leaving off the MLS list is Tampa Bay.  Certainly Tampa Bay is larger than some of the other metro areas on the list and expanding to Tampa Bay strike a blow to NASL.  I left it off because the current owner, Bill Edwards, is unlikely to want to give over the control necessary to join MLS, there is a nearby MLS franchise in Orlando, and failure of the Tampa Bay Mutiny once before. However even if we replace Charlotte on the above list with Tampa Bay, and NASL loses the Rowdies with all the history and tradition they represent, the overall trend would still be favorable.

Why MLS maxing out is good for NASL

Because it means MLS is done growing, which means if you are an ambitious independent USL team owner, what are you investing for? You either need to suck it up and make peace with being minor league playing MLS reserve teams, you close up shop or you move to a more ambitious league of fellow independent teams aspiring to be first division.  This conundrum almost certainly awaits Louisville, which is too small of a market to attract one of MLS’s final spots.  I would expect a defection of spurned independent USL owners who are locked out of MLS when it stops growing at 32 teams. Tulsa, Charlotte, Louisville, Pittsburgh and Austin are all markets with more potential than what that USL would be able to harness and would be ripe for NASL to poach.

Beyond the present USL towns, where does a maxed-out MLS leave great markets like Nashville, Memphis, Buffalo, Cleveland, Las Vegas, Baltimore, New Orleans and Milwaukee?  Locked out of MLS forever, or waiting patiently until an MLS franchise falters enough to be relocated.  Those are all strong potential MSAs for NASL to move into.  Beyond that there are solid markets like Chattanooga, El Paso, Hartford and Birmingham, which MLS would never touch.

MLS going to 28 or 32 teams may mean NASL loses another franchise or two along the way, but it has so much more to gain by capitalizing on the demand generated by the prospect of MLS expansion along with the impact dwindling odds the USL independents have for moving up, as the game of soccer grows in popularity across the country.

If MLS goes to 32 teams, what could NASL grow into?

In a scenario where MLS stops at 32 teams, NASL could look every bit as major a league in terms of the markets it supports by putting teams in the top 10 MSA/TV markets as well as in top 11-50 markets passed over by MLS.

If you positioned NASL teams with the right investor backing into different sections of the top 10 MSA markets with MLS, you could put teams in Orange County, East LA, Ventura County, the Inland Empire or the San Fernando Valley in Los Angeles; in the city or northern suburbs in Chicago; in Arlington or Fort Worth in the Dallas MSA; in the Sugar Land area of the Houston MSA; in the city or northern suburbs of Philadelphia; in northern Virginia or southern Maryland in the DC area; in the city or northern suburbs of Boston.  This would be in addition to the Atlanta example above, as well as the existing New York Cosmos, Fort Lauderdale Strikers and Miami FC.  Reports have a Peter Wilt-led revival of the Chicago Sting potentially following the city/northern suburb path mentioned above, as well as the Bay Area Professional Soccer group looking to land a team in San Francisco or the eastern Bay Area.  While it might not be necessary to have teams in all of these markets, it would be helpful in getting NASL a good TV contract one day.

Add to those teams in Baltimore, Cleveland, Buffalo, Nashville, Memphis, Las Vegas, Hartford, Milwaukee, Pittsburgh, Austin, Providence, New Orleans, Virginia Beach, and more.  Not only are there enough markets to support an alternate first division of American soccer, but you have enough available markets to support a multi-tier pyramid structure with promotion and relegation, should NASL want to introduce the much in-demand system to differentiate the product it offers in the marketplace from MLS.

Available markets are not the problem, not by a long shot.  Qualified and motivated investors are the scarce resource for NASL right now.  There are sure to be many groups who fail in their bid for a MLS team, whether they are independent USL clubs or investment groups that don’t presently operate a club.  When the MLS musical chairs game is over, NASL will look more appealing to those left standing who don’t want to damn themselves to a minor league existence forever, and who are willing to make an investment in a league that has big time ambitions.  As new investors emerge after MLS is maxed out, their choice will be between NASL and a USL that offers no growth beyond minor league purgatory.

NASL is like any challenger entrant into a business market with an established leader. It needs to find a different angle in the market to be successful and appeal to an audience that is not served by the leader. That niche can be its base of strength and it can grow from there.   Just as Coke and Pepsi co-exist as successful soft drinks while there are plenty of alternative beverages (sports) available to the consumer, so too can MLS, NASL and USL each find their own path to success without requiring the failure of the other.  For MLS, that success is to be the best American style sports league in US soccer.  For USL, that is to be the best minor league supporting MLS.  For NASL, that path is to be the best traditional soccer league in North America.

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http://midfieldpress.com/2016/01/17/why-mlss-expansion-to-28-or-32-teams-is-good-for-nasl-2/

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