If you’re a soccer newbie catching a few World Cup games (like me), one of the first things you notice is the blissful lack of commercial interruptions. There are two 45-minute halves with the clock running continuously, leaving no time for commercials. Officials usually add a few minutes of “injury time” to the end of each half — but do so quickly, before TV networks can squeeze in an ad. The break between halves is a scant 15 minutes, just long enough to stretch your legs and hit the bathroom before play resumes.
Big-time American sports such as baseball, basketball and [American] football, by contrast, depend heavily on rich TV contracts and telecasts that sometimes feature more commercial time than play time. The American approach to professional sports — as a business first and an athletic contest second — may help explain why prospects for professional soccer in the United States remain weak, despite a spirited performance by the U.S. team in this year’s World Cup.
“Soccer is the least profitable sport on the planet,” says Stefan Szymanski, professor of sports management at the University of Michigan and co-author of Soccernomics. “The whole structure of soccer is totally at variance with the America model.”
Financial, cultural divide
That doesn’t mean soccer is unpopular in the United States. In fact, American youth soccer programs attract more kids than any other sport except basketball, according to a Wall Street Journal analysis. At the major-league level, however, soccer struggles compared with other U.S. sports, for reasons both financial and cultural.
Major League Soccer, the U.S. equivalent of the NFL or NBA, has been on an upswing, with the number of teams due to rise from 19 to 24 by 2020, and attendance at games averaging nearly 18,000 fans, more than both pro basketball and pro hockey (which play more games each season). In a few cities, such as Seattle and Portland, pro soccer games have become big civic events, complete with painted revelers and dedicated stadiums.
But pro soccer is barely profitable, and the economics of soccer impede its growth in the United States. The average MLS team is worth about $103 million, according to Forbes, which is a considerable improvement during the past few years. But a typical NFL team is worth about 17 times as much, an MLB team 8 times as much, and an NBA team 6 times as much. Even in pro hockey — limited in appeal mostly to cold-weather climates — the average franchise is worth 4 times what an MLS team is worth.
In America, TV contracts have a lot to do with a sport’s profitability. MLS recently took a step toward the big leagues with new contracts that will generate around $90 million in revenue per year, the most ever for the league. But that’s puny compared with leagues such as the NFL, which takes in about $5 billion per year from TV rights. The visibility generated by saturation TV coverage helps the NFL earn even more revenue from sponsorships, ticket fees and licensing deals.
It might be unfair to compare the MLS with the NFL, which is the world’s most profitable sports league and an almost unexplainable phenomenon. But pro soccer in the U.S. may face a chicken-and-egg problem that prevents it from ever following in the NFL’s cleats. Most NFL, NBA, MLB and NHL teams manage to be profitable whether they win or lose. That’s because of revenue-sharing deals, salary caps and other equalizers meant to keep leagues competitive and owners satisfied.
All about winning
Soccer is different. In most countries where soccer is popular, winning is so important that owners routinely overspend for the best talent, which is why the majority of soccer clubs around the world are unprofitable. Some lose so much money that bankruptcies are common.
New “financial fair play” rules in Europe are meant to put limits on spending and prevent financial chaos, but they’re controversial and some teams have indicated they won’t play by the new rules. Meanwhile, billionaire club owners such as Russian oligarch Roman Abramovich of the Chelsea Football Club and Sheikh Mansoor of Manchester City seem unconcerned with the millions spent to draw star strikers.
U.S. teams must compete for players in this global bazaar — a problem other U.S. sports don’t really have, since most top football or basketball players aren’t likely to get a better deal outside the United States. Star soccer players occasionally land on U.S. teams — as David Beckham did during a few years with the Los Angeles Galaxy, and U.S. national team star Clint Dempsey did last year with the Seattle Sounders. But most U.S. teams decline to join the global bidding war for top talent.
“The MLS is pursuing the America business model, which means it’s not pouring billions into making it successful but is actually limiting player spending,” Szymanski says. “There are probably 30 soccer leagues that spend more on wages per team than the MLS -- including the Romanian soccer league.”
Salary data reveal the huge gap between U.S. players and the rest. The average salary for a player in England’s Premier League is about $2.7 million. Players in the top leagues in Spain, Italy and Germany are close behind. Average pay in the MLS, meanwhile, is about $190,000. Many U.S. players earn as little as $37,000.
Since fans enjoy watching the best players, American interest in foreign teams sometimes eclipses interest in the home-grown league. Before the plucky performance of the U.S. team in this year’s World Cup, for instance, the most watched soccer games in the United States weren’t MLS matchups but English Premier League games broadcast here by NBC. Money follows ratings, which means teams that can afford the best talent tend to be the ones that already have it — unless a rich owner is willing to foot the bill himself, which is not how most U.S. teams operate.
Pro soccer in the U.S. may still develop a devoted following among folks who enjoy attending an occasional game and keeping up with their favorite players. But pro soccer has waxed and waned in the U.S. several times before, with leagues hyped as the Next Big American Sport going bust a few years later. Soccer might be a beautiful game, but it’s damn hard to convert into commercial success. Maybe that helps makes it special.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.