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gldwrth

Joined: 8/15/98 Posts: 6697
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MLS income and expenditures: Where's it all going?


I'm aware of three recent financial dealings involving the MLS -- the fairly recent boost in MLS revenues from the new broadcasting rights deal signed a couple of years ago, the increase in franchise fees that the MLS is charging expansion teams, and the recent increase in the MLS's TAM expenditures to encourage its clubs to build a stronger support cast for their DPs. I wanted to try to get a better sense of the MLS's major income streams and expenditures. The results are given below, but to me it doesn't add up. What am I missing?

1) Income

In 2014, MLS signed a new broadcasting deal with Fox, ESPN and Univision that gives them $90M each year for the 2015 through 2022 soccer seasons. This was a 3-fold increase over the previous multi-year agreement, valued at $27M per year.

In addition to the broadcasting rights, MLS is also beginning to receive major revenue from the franchise fee it charges to new clubs that join the league. Since 2015, expansion teams have been paying a franchise fee of about $100M to join MLS. Orlando and NYCFC (teams #19 and #20) joined in 2015 with NYCFC paying ~$100M. Atlanta and Minnesota (teams #21 and #22) joined in 2017 with Minnesota paying $100M. LAFC (team #23; 2018) reportedly agree to pay $110M. So between 2015 and 2018, expansion teams 19 through 24 are paying MLS a total of ~$600M -- revenue of ~$150M per year.

2) Expenditures

The only major MLS expenditure that I'm aware of is the allocation money that MLS is giving out to each club every year. MLS gives each club in the league two types of allocation money: General Allocation Money (GAM) and Targeted Allocation Money (TAM). In 2016 GAM was $150K per team, which comes to $3.3M total for all 22 MLS teams in 2017 (assuming it's the same as last year). TAM was $100K per team when it started in 2015, but jumped to $800K in 2016, then increased to $1.2M per team for the 2017 season. That's $24M for the 20 pre-existing clubs in 2017, plus $6M in allocation money that Atlanta and Minnesota reportedly received to build their rosters ($3M each). That comes to a total of ~$33.3M per year in allocation money given to MLS clubs.

3) Conclusion

So do I understand this correctly? The MLS is getting $90M per year for its broadcasting rights and ~$150M per year in franchise fees, for a total revenue of ~$240M per year, but only has expenditures of ~$33.3M each year in allocation money? Are there any major expenditures that I haven't taken into account? I wonder what the MLS is doing with that extra $200M per year? Where's it all going?

Any input would be appreciated.



[Post edited by gldwrth at 03/09/2017 9:33PM]

Posted: 03/09/2017 at 9:15PM



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