Cosmos, Emirates, NASL, and MLS

I’ve started following Doug Starnes at Soccer Newsday. He’s covering much the same beat as I am: focused on Indy Eleven and tracking the NASL as a whole. Check him out, it’s good stuff!

His post from Friday takes a big development for the New York Cosmos and pivots to look at the relationship between NASL and MLS. It got me thinking, and I figured I’d put down my reactions.

Emirates in New York

It might be natural to think that the announcement of FCNYC was going to steal the wind from Cosmos’ sails, but last week put paid to that idea. Cosmos begin play on August 3, at home against Fort Lauderdale, and last week saw the news machine ramp up. News includes adding to the squad, opening the team’s practice field, and discussions on a permanent home. But the huge news was the announcement of Emirates Airline as the Cosmos jersey sponsor.

Fly Emirates

Make no mistake: this is big news. The press conference received international attention (though that might be just partly because team mascot honorary president-for-life Pelé took part in the announcement). The news received international attention, from the US to England to the Netherlands to Dubai to Australia to Chile. Not bad for coverage of a press conference from a second-tier team in the US that hasn’t even played a match yet.

That “Fly Emirates” logo on the jersey means a lot, though. Look at the teams that wear it in other countries: Arsenal. AC Milan. Hamburger SV. Paris Saint-Germain. Real Madrid (starting this fall). Signing that sponsorship deal instantly places NY Cosmos in the conversation with some impressive company.

But what does it mean for the NASL? And the MLS?

NASL, Thinking Big

Doug’s speculation is that this could mark a watershed moment when the NASL starts to look like a rival to the MLS rather than an understudy. “It may very well be that in 20 years’ time, this announcement is looked back upon as the moment the competitive landscape in US professional soccer changed.” It’s an interesting point. US sports have gone through several of these competitive evolutions, including successful startups like the ABA (basketball) and AFL (football), and less successful developments like the USFL (football) and WHA (hockey). US soccer has seen this kind of competition too including the ASL competing with the original NASL, and even the current NASL supplanting the USL as the second tier league.

So it’s not a crazy thought. And stories like the Cosmos sponsorship deal, or rumors of them signing big name players, give credence to the idea. Could the NASL compete straight-up with MLS in attendance, TV audience, and news coverage?

The fair answer is “not yet”. The NASL is too new and too small. The biggest NASL teams aren’t that far from the smallest MLS teams, but the average gap is substantial. Most NASL teams average around 5,000 fans per match, with San Antonio leading the way at over 7,000 and Edmonton trailing the pack at just under 1,700. The smallest average attendance for a MLS team this year is 8,000 for the woeful Chivas USA, and the Seattle Sounders lead the league with almost 5 times that number. TV and news coverage is even more one-sided, with MLS a regular feature on ESPN and national broadcasts. NASL matches are typically streamed on UStream, or shown on local TV for some home matches. The two leagues today are just in different categories, and they’re not yet close.

Could the NASL grow in the future? Possibly. Next year’s expansion to 11 or 12 teams will be an interesting test. But even so it will take a few years to see which direction things go. The key signs for me will be:

  1. League match attendance. Stable? Increasing? Match attendance is going to be a big sign of both team revenues and of local popularity. If teams like San Antonio start losing fans due to a poor run of form, or if Fort Lauderdale seats get even emptier, it’s hard to see anything else good happening.
  2. TV deals, including regular regional coverage and occasional national coverage. Getting a couple matches on national cable would be a great sign.
  3. Stability for the existing teams, at both ends of the spectrum. If one or two smaller teams fold (Puerto Rico is pretty much there already) that’s not too disturbing. But if mid-size teams begin to look iffy, that’s not good. And at the other end, if MLS starts poaching a couple of the more popular teams, that’s going to make life rough for the NASL.
  4. Player contracts and quality of play. I don’t expect NASL rosters as a whole to be comparable to MLS for a while, as the revenues aren’t there to support the salaries. But a few of the teams could build fairly powerful squads. Competitiveness in the Open Cup will be a good marker of this, especially in the later stages when MLS teams start fielding first-choice squads. It’ll also be interesting to see if the NASL signs a few stars of quality. If, for example, Indy were able to bring on Damarcus Beasley — say in 2015, on a two-year contract, while he’s still playing well — that would be an interesting development.
  5. League competitiveness. Today the league is very competitive, with the last place teams only 5 points out of first place. If that continues, that’s great. But if big teams start dominating the league, while small teams find it difficult to climb into competition, that would be a troubling sign.

If these signs break in the right way, then maybe after two to three years, we will start to see rumblings of the NASL as a competitor to MLS. For the time being, though, it’s a clear second-tier league, somewhat more commercially viable than the old USL-1. For now, that’s enough.

Relegation?

Doug also discusses the possibility of the NASL becoming financially stable enough to serve as a promotion/relegation partner with the MLS. “I believe the Cosmos’ announcement has signaled a sea of change in American soccer,” he says, “and that such a system is now nearly inevitable.”

Look, if there’s one thing that all US soccer fans agree on — and we disagree on almost everything else! — it’s that a promotion/relegation system would make the leagues immensely more exciting. The tension surrounding a survival campaign for a bottom-dwelling team can approach the excitement of a title hunt. It also means there are a lot more meaningful matches at the end of the season, instead of lower-tier teams playing each other out of contractual obligation (and looking like it). We would all like to see it, and the resulting excitement could do much to build the public profile of soccer across the country.

Doug’s argument is that there is a risk and an opportunity if the NASL becomes financially viable and even lucrative. If the NASL starts competing directly with MLS for fans, TV time, and mindshare, neither league benefits. And if top NASL teams are always angling for a jump to the bigger league, the rest of the NASL will suffer. The point — and it is intriguing — is that a promotion/relegation system could serve as a way to both reward the best NASL teams, while also allowing for a reasonable step-down for failing MLS squads.

The idea is worth considering. The problems facing Chivas USA give MLS a reason to take interest. There have been rumors of a league takeover and maybe a forced sale. Holding the threat of relegation over their head (which can also be tied to administrative problems like bankruptcy or rule violations, through points deductions) could be a powerful tool to both focus the team ownership on righting the ship, and to give motivation to the players that they’re not just looking at a meaningless season.

It All Comes Back to Money

The challenge has always been that MLS owners will have no desire to see this happen. Doug suggests that fan demand will make it desirable, and having a financially viable 2nd division league will make it feasible for owners. The big thing fighting against this is the current expansion plans for MLS… and the fees they generate. These numbers are estimated, but take a look at the progression in expansion fees:

  • 2009 – Seattle Sounders – $30 million
  • 2010 – Philadelphia Union – $35 million
  • 2011 – Vancouver Whitecaps – $40 million
  • 2011 – Portland Timbers – $40 million
  • 2012 – Montreal Impact – $40 million
  • 2015 – NYCFC – $100 million

That money goes to the existing owners in the league, so one way to look at it is that each new team helps fund the expansion fees for the previous teams. (Let’s just ignore the disturbing pyramid-scheme implications, ahem.) With NYCFC, the league is at 20 teams. If the next expansion fee is another $100 million, then NYCFC gets roughly $5 million of that. Not a full recovery, but it’s a big chunk, and with expansions happening roughly once a year, that’s a decent percentage of a team’s budget.

Now imagine that we add promotion and relegation to the mix. In effect, the next expansion team to come along isn’t buying a place in MLS; it’s buying a place in MLS or NASL. That franchise value has just dropped tremendously. That’s bad for the existing teams in two ways. For one, you’re not reaping the same level of income for future expansions, because the value has dropped. And for a second, the value of your franchise is dropped as a result too.

So it’s a big challenge to buy into this model, and I think there will be a high bar to making it happen. I see a few ways to clear that bar. One is to accept that the value of promotion and relegation — in creating excitement for the league — will be enough to make the whole package that much more valuable. Now while I won’t say that’s impossible, I do think it’s almost impossible to convince the current MLS owners that the risk is worth taking.

The second way to motivate the change is to, in effect, kill off competition buy buying them out. Now this is even more speculative in some ways. But the key for this move would be to build a NASL that has so much attention, excitement, revenue, and attendance that it starts to look like a competitor to the MLS. That creates an interesting environment where the entirety of US soccer has to look for a way to prevent the two leagues from killing each other off. The easiest way to do that is to snap up the most viable teams, promote them to the MLS, and effectively kill off the NASL. That’s how the ABA and AFL closed up shop.

So I can’t see either of these scenarios as likely. I do see a third possibility, but it’s maybe not the best one to contemplate. That’s if attention and interest in MLS starts to wane to the point that expansion looks unlikely and no fees are coming in. In this scenario, the MLS clubs are more desperate for the extra interest that promotion/relegation campaigns can generate… at the same time as the financial motivation to maintain the status quo has evaporated. Teams are already facing a reduction in value and strongly motivated to experiment to generate interest. Interestingly, in this scenario, the level of success in NASL might not be as crucial.

What About the Cosmos?

So, what’s all this mean then for the Cosmos and the Emirates deal? Financially, it might not be much at all. Emirates might not have paid all that much for the privilege. (In fact, when you think about how much attention Cosmos is receiving, it’s a weird situation where Cosmos may get more exposure from the partnership than Emirates does.) Even so, it is indeed a big deal and has probably done more to draw attention to the team and the league than any previous shirt sponsorship, anywhere.

The team obviously has serious ambitions. If they get their stadium built near Belmont, that’s a darn big deal. (Look how difficult and expensive it was for the Yankees, Mets, and Nets to get new places to play.) And if they start spending on players at a rate beyond other NASL teams, then I think we’re in a very interesting place. On one hand, it could drive a lot of attention to the league and really contribute to audience and mindshare. On the other hand, it could suck the oxygen away from the other NASL teams, and create an unbalanced image of a one-team league. That likely contributed to the demise of the original NASL and would be a bad sign for the current league. I’ll get very nervous if Cosmos dominate the league table for multiple seasons.

No doubt about it: the team and the league will be fun to watch. I’m really eager to see the Fall Season start in August, including the Cosmos; I think it’ll give us our best sense for where the NASL is going to go in its current expansion phase. About the only prediction I feel really confident in is that it’ll be interesting!

Advertisements
This entry was posted in NASL Off The Pitch. Bookmark the permalink.

One Response to Cosmos, Emirates, NASL, and MLS

  1. Pingback: First on First: Big announcements coming next Tuesday | Eleven Bricks

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s