Formatting MLS, Part 3: Market Saturation

The diversity our league faces when it comes to logistics (vast geographical distances; an array of mentalities and cultures; varying weather and climes) are enough to doom it from the very beginning. But, provided you have managed to overcome these obstacles, another challenge presents itself:  what marketing strategy do you use to expand the league and fully reach the true potential of the sport in North America?

In other words:  how much saturation of the overall and specific markets is needed to obtain a balanced, competitive, and entertaining league format, and how do you execute this strategy?

Part of successfully meeting the demand of consumers while growing at a sustainable pace and in a sustainable way is to practice target priority and select those locations best suited for the product you’re offering. This is true in any business, whether it’s hotdogs, electronics, movie theaters, or sports. Every entrepreneurial effort needs to be well-calculated. Otherwise the risk of failure is exacerbated and potentially inevitable.

Over the 17 years MLS has existed, it has practiced both poorly and fairly in this realm. The Contraction Era of the early 2000’s which saw the loss of both Florida clubs (Tampa Bay and Miami) came on the heels of the first round of expansion in 1998. One of those teams, the Chicago Fire, was successful out of the gate, cashing in on both the tradition of soccer in the midwest and its big city appeal by winning the MLS Cup and US Open Cup in their inaugural season. Their expansion brethren, Miami Fusion, failed to succeed in what MLS thought was a potentially viable market with large Hispanic populations and a tradition in the sport from the old NASL days. Many have debated why both Floridian clubs closed up shop, and I don’t suppose to expound on those theories here, but suffice it to say that I highly doubt the biggest problem they faced was a lack of enthusiasm for the sport, even in the then-soccer-opposed mentality in America.

MLS next expanded in 2005 with Real Salt Lake and Chivas USA. The former was the first in what was considered a third-tier market; the latter being introduced as a Latino alternative to the LA Galaxy with hopes of capitalizing on a potential derby between the clubs. RSL had their share of early financial troubles, but both clubs overcame their early years, and it paved the way for a more strategic approach of expansion in the league.

Commissioner Don Garber, in my opinion, now has it right — expand into areas by via pre-established clubs, or into areas that are led by immense fan support, thus minimizing the potential for failure. The former strategy was carried out first in 2009 with the essential “promotion” of Seattle Sounders FC from the old USL First Division. The latter strategy followed the next year when Philadelphia entered the fray as a brand new franchise promoted by the Sons of Ben supporter’s group.

Between 2009 and 2012, MLS has ushered in five clubs:  Seattle, Philadelphia, Portland, Vancouver, and Montreal; bringing the total to 19 teams. Capitalizing on history, lineage, nostalgia, regional rivalries, and supporter culture, the league and its leaders have forged an even stronger organization than it ever was. And with the 20th team being brought in within the next two years, we should see further growth of the sport (both financially and fanatically) over the next decade or more. That is, if Garber and Company aren’t really serious about “capping” the league at 20 teams.

You see, Garber has publicly announced on more than one occasion that MLS will be taking a break of sorts after the 20th team (which, presumably, will be in NYC). While he hasn’t said it explicitly, it may be taken that he means a very long break from expansion. With markets like Orlando, the Carolina’s, Detroit, Minnesota, Las Vegas, and San Antonio all showing intent interest in joining the ranks of MLS’s finest, Garber may be able to be lured into agreeing on 22 or 24 teams in the next five years or so instead. Garber himself has said that the MLS Map is largely vacant in the Southeast, thus suggesting that expansion there is only a matter of time.

This is all speculation, however, and I must say that I agree with The Don that a brief hiatus from expansion would do the league some favors in terms of creating stability and allowing the sport to garner more attention in the country until the next phase. Having some amount of consistent scheduling would be vital to better establishing the league. But I would be severely disappointed if the league stops at 20 teams. I would even consider 24 teams as being too few. Despite what certain leaders in FIFA may say, a league with 16 to 20 teams is not and cannot necessarily be the tried-and-true methodology for every league around the world. As I’ve already demonstrated in the previous part to this series, the United States and Canada pose an extremely different set of circumstances to implementing a league. It is unlike any other country in the world, and it should be treated as such.

So, why stop at 24? Why stop at 28 or 30 or even 35? What are the true limits of this sport in this market? What is the fullest potential of soccer here in America? Can the Beautiful Game really dominate the American sports scene by moving into previously-unthought-of markets like Jacksonville, Florida, or Chattanooga, Tennessee?

This is where the application of market saturation comes in. Once again, I’ll turn to some cold, hard stats. I’ll present two charts and then discuss the data shown. The first is a list of the same countries from the Logistics part referenced last time. This time, the stats contain number of teams in the nation’s premier league; land area in square miles; square miles per team; most number of teams in a given 50 mile radius; percentage of teams in the league within that 50 mile radius.

*I failed to include New Zealand with the A-League in my last article.

The next chart has the following info:  number of teams in the nation’s premier league; percentage of the league located in cities with less than 100,000 people; number of cities with between 100,000 and 499,999 people; number of cities with between 500,000 and 999,999 people; number of cities with a million or more people.

** All percent figures represent the percentage of the league within cities that fall into the specific population grouping.

Here is an updated list of maps for each of the above leagues:  EPL, La Liga, Bundesliga, Serie A, Ligue 1, Brazilian Serie A, Primera Division, Liga ZON Sagres, RPL, Eredivisie, SuperLeague, Liga MX, A-League, J-League, MLS.

As you can see in the above data, and as explained in Part 2 of this series, the US and Canada hold within their bounds a much higher number of larger cities than any other nation that’s being looked at. But there are a few additional points that can be made regarding the data above.

Firstly, the first chart shows the consolidation of teams in and around given areas. In four of the countries listed (Argentina, Portugal, Netherlands), 50% or more of the nation’s premier league teams are centered around a 50 mile radius. Also, in eight countries (England, Italy, Brazil, Russia, Greece, Mexico, Australia, Japan), between a quarter and half of the leagues’ teams are centered around a 50 mile radius. This suggests to me that most top leagues around the world happen to be centered around dense metropolitan areas that can support multiple teams († See Footnote). For instance, Buenos Aires is home to all of the 13 clubs listed in the first list; and Portugal is such a small area that it relies on maximizing as many population centers as possible to justify its meager 16-team league. At first glance, MLS is not an obvious outlier having only 4% less of its teams in a 50 mile radius than the next closest nation (France at 15%). But if you take away the Chivas USA/LA Galaxy predicament, there are positively no teams that are within a 50 mile radius of one another. Even in the congested I-95 corridor, Philly, New York, and DC are outside of the designated radius.

Secondly, it’s quite obvious that the population centers of all non-US/Canadian countries (see the second chart) fall into one of three categories:  1) a few immense metropolis’ of several million people which host the vast majority of clubs, sprinkled with mid-range population cities with about one club each; 2) myriad low- to mid-range population cities with teams which are more-or-less evenly dispersed throughout the country; or 3) an even array of all the population centers showing host to clubs. Category #1, is probably best represented by Mexico and Japan, both of which have over two thirds of their league in cities with more than a million people, and around one-fifth in the 500,000 to a million range. The Netherlands and Portugal are examples of Category #2. Neither have a city over a million people, and only four with 500,000 or more between the two of them. This results in many low-population cities like Zwolle, Venlo, Setulba, and lowly Aveiro (population:  78,000) with their sub-200,000 and 100,000 populations hosting teams in the top tiers of soccer. We then have the likes of Italy or Spain which have virtually an even amount of representation across the population categories, even some in sub-100,000 cities.

Now, I can see a popular argument arising out of this data; one which claims an “apples and oranges” comparison to the leagues I’ve mentioned above. It could be said that all of the non-MLS leagues take special exemption to this idea of market saturation because of the promotion/relegation systems in place. But I beg to differ.

If anything, the presence of a promotion/relegation mechanism in a league is actually proof that some sort of market saturation (via target priority) is, in effect, being looked at, albeit in a roundabout way. I believe this is true because the organic nature that is exhibited by things like promotion/relegation encourage the reflection of the country’s nature in a tangible way. Meaning that what form a sports league takes on and how it is made up is a mirror image of how the country itself is developed and arranged. Moreover, that the success of clubs is determined in large part from the attention and intention of ownership and management suggests that the city which hosts the club is essentially proving its economic vitality via the individuals and groups that make up the club. When it comes down to it, healthy cities are more likely to have healthy clubs which are more likely to have a healthy supporter culture which is more likely to have a healthy hunger for the game which means that the city in question is a prime market for the league to “saturate”. This is why a league like Brazil’s Serie A sees 100% of its teams in the largest metropolis’ in the country (Sao Paulo at ~20 million, Rio at ~12 million) — the cities are made up of largely poor slums with a high concentration of impoverished football-playing youth roaming the streets. It could also be why so many clubs in Brazil (and elsewhere) are failing to pay their players the money they’re contractually obliged to pay them; a reflection of the inimical conditions of the society of Brazil. Perhaps Glasgow Rangers being relegated to the fourth tier of Scottish football due to their financial disasters is further proof of the growing fiscal issues of Scotland and the European Union in general… but that’s for another time.

Notice that the United States/Canada is one of only two leagues that has 100% of its teams in cities with more than a million inhabitants. As noted above, Brazil is unique in that it has the vast majority of its teams located in two cities:  Rio de Janeiro and Sao Paulo, by far the two most populous cities in Brazil. But for a closer examination of the contrast between these two leagues, look at the total cities with populations of a million or more — Brazil (16), US/Canada (57). This equates to nine (or 56%) of Brazil’s million-plus cities hosting teams, whereas 19 (or 33%) of the US and Canada’s million-plus cities are currently hosting MLS teams. To me, this indicates that there is plenty of room for growth in MLS.

For a better picture of what markets are being left out of top flight soccer in America, here’s a list of prominent cities with over two million people that do not currently have clubs:  Miami, Atlanta, Detroit, Phoenix (all over 4 million people); Minneapolis, San Diego, St Louis, Pittsburgh (all over 2 million people); Las Vegas, Indianapolis, Milwaukee, New Orleans, Ottawa (all over 1 million people). The fact that Salt Lake City is considered a “third-tier market” in the US yet boasts 1.45 million people (and drawing in 18,000+ fans per game) is unbelievable when compared to other markets around the world.

Lastly, the tendency for dominant, perennial-favorite clubs in any of the foreign leagues listed above to be from cities outside of the most-populated in the country is quite rare. Take, for instance, two of the most dominant clubs in the English Premier League:  Manchester United and Arsenal, who hail from Manchester and London, respectively. Manchester’s population is 2.5 million, while London’s is 13.7 million. Whereas bottom-table clubs like Burnley and Wolverhampton (both which have been relegated this past season) have populations of 78,000 and 249,000, respectively. We could expand the data I’ve collected in the above charts to include second and third division leagues from around the world to look at what population centers their teams are located in to give us a better idea of the correlation between successful clubs and larger cities, but my point here is that there is an obvious trend in many foreign leagues that see perennial favorites come from a mere one, two, or three major cities, with the rest of the league trying to gobble up the middle of the table or prevent themselves being relegated.

So, what do we make of all this data? What are the main conclusions we can reach, and how can we apply it to MLS and its format?

The most obvious conclusion I’ve reached while sifting through this data is the reiteration that the US and Canada (and the MLS specifically) faces a unique challenge that no other country even comes close to. This can be seen just by going to Wikipedia and glancing at the population figures for cities in each country. It can also be seen by glancing at the league maps referenced above, and taking note of the location of teams throughout the country. The sheer size of North America is enough to suggest that a minimum of 16 to 20 teams is entirely too few.

The other conclusion I’ve reached is that success of a soccer club off the field is not dependent on the size of a market. Instead I see it as dependent on the voracity of the target audience. The reason the Pacific Northwest has such rabid fan support of its soccer teams isn’t because they’re the largest cities (far from it!), it’s because they have a tradition of the sport. This may seem completely obvious, and it probably is. But this factors into the need for increased expansion in MLS.

For example, you could ask the question of whether or not the Sons of Ben in Philadelphia ever would’ve organized a supporter’s group before a team in the city was even talked about had it not been for the successes of DC United or the proximity to NY Red Bulls, both of which are just over 100 miles of Interstate driving to either city? Success breeds more success, and whether that initial success comes from superb ownership, a tradition of soccer being in the community, or the nearness of the sport to a certain location, I think it’s undeniable that a sport such as soccer can do anything but grow in a country like ours. It is rather contagious, and it’ll be a short while for it to infest other locations, too.

MLS can benefit from all this data and the conclusions reached by simply not restricting expansion after Team 20 enters the fray. Whether that 20th team is in NYC or Orlando, Florida, the fact that there are dozens of untapped markets in existence in America and Canada right now is all the reason needed to continue growing this fledgling, but vibrant league.

The trick to doing this growth properly is how to contain it and not get swept away with “soccer fever” like was the case in 1998. We cannot make poor expansion decisions that forces us to see another Contraction Era, 2.0. We need to do this intelligently, and so far I applaud the League and the Commissioner for how they’ve handled this challenge since 2004. But more needs to be done.

One of the ways MLS can expand smartly is through appealing to more markets via any way possible. And this is why Part 4 will focus on the American Appeal of the sport.

The fact that most large metropolitan areas can support multiple teams is, to me, intrinsic to the health of the local economy rather than any other factor. That wealth tends to collect around large, bustling, vibrant cities is going to lend itself to the successful operation of a sports team. Perhaps another article on this subject is needed…

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8 Responses to Formatting MLS, Part 3: Market Saturation

  1. thomas says:

    Several points.

    What you are talking about is the growth and success of MLS, rather than the success and growth of the US soccer pyramid. This distinction becomes irrelevant once the MLS cartel is opened up to allow for promotion and relegation.

    Secondly, the general tradition of the sport is that it is an urban, international and working-class occupation – a fact which sits in opposition to the established institutions in the US (as seen from the drafting system).

    In retrospect the contraction of the two Floridian teams is lauded as the game-changer for the league, yet the rise of Orlando City added to the remergence of the Strikers and the Rowdies is in stark contrast to this recieved ‘fact’. The single greatest aspect of recent growth of soccer in the US is the emergence of a travelling fanbase, knowing that tradition is forged more strongly by the struggles to attend matches as it is determined and kept alive by a hardcore of fans.

    Garber should be appauded for his quick recognition of the appeal of rivalries, despite strong pressure to conform to the dominant 1980’s US sports business model.

    Geographical proximity was historically viewed much more positively than most MLS expansion commentators accept, so perhaps we should instead be looking forward to the day when there are 5+ teams from Florida, NY, Texas or California challenging for the title – as there was in the hey-day of US baseball.

    The best metric I’ve seen for clubs to use as a yard-stick of success is the 10% rule. That states any club should seek and be able to fill a stadium to the volume of 10% of the population based within 30minute commute of the home stadium location, as time rather than distance or cost is the primary factor in attendance. In the less-densely populated areas of the US a 1-hour mark might equally be useful, depending on common practise.

    BTW NYRB, based neither in NYC or NY state, highlights the problem that any US-definition of ‘city’ causes, which explains Garbers desire to place a ‘2nd franchise’ within the five boroughs.

    There is a huge volume of scholarly work produced in this field of soccer research stretching back more than 80 years, so perhaps I could advise some reference to it. Alternately please stop telling Grandma how to suck eggs.

    There is something grossly offensive about the measure of success being determined by external sources rather than internal ones – success is not a measure of being better than someone else, it is a measure of being better than you expected.

    Any club can be successful, by competing at the highest level possible and maximising its’ potential, but for the top division of sport in any area to be successful on its’ own terms it requires the solid foundation of support leagues filled with teams challenging to replace those on top.

    So, more interesting at this stage than MLS expansion is the expansion of NASL and USL Pro. When these two leagues reach 16 teams each then we can expect lift-off.

    Chatanooga, Des Moines, Fresno, Tulsa – who else could currently support ~5k attendance?

  2. thomas says:

    BTW London has 23 full-time professional soccer teams located within it’s 8m population.

  3. wesbadia says:

    Thanks for the comments, thomas. As this is an on-going series, the points here are more for argumentative purposes to build a future case rather than an end-all-be-all conclusion. The conclusion is yet to come, and when it does, I hope you come back and read it.

    In the meantime, I recommend reading Part 2 of the series if you haven’t already.

  4. Pingback: Formatting MLS, Part 4: Global Tradition, American Appeal | Waldlichtung

  5. Nussdorfer AC says:

    I am looking forward to reading the rest of the series, but here is a thought (that in part has been addressed). The difficulty in comparing leagues is that MLS uses the franchise model as opposed to the club model. The leagues outside of MLS do not rely on the club itself to be successful. If it is not, then the next worthy club will take its place. The PL has not had problems despite Portsmouth’s financial problems. If a team like Portsmouth descends, it gives another club the chance to ascend. Thus, such leagues have no thought to saturation.

    In MLS, the clubs are the league. If Chivas USA is failing, then too bad for the rest of the league. It is a burden on the league and on the other clubs. Once that happens, then items like revenue sharing and other artificial means are put in place to try to breathe life into the club.

    In another league, an aspiring owner would simply buy (or even start from scratch) another team, like Cal FC, and put in the money and time to have the team rise. This can be seen with a team like 1899 Hoffenheim. It’s a village of 3,500. Yet it fields a team that marched through the ranks and competes in the Bundesliga. Compare this with Hertha Berlin who are in the 2nd division yet come from the nation’s capitol.

    I do not know if the examples I gave support this section of your MLS entries, but they certainly demonstrate a model or organic growth in order for stability in a league. I understand the use of the franchise system for getting MLS running in the US and, following the other US leagues, it appears, unfortunately, that model is here to stay.

    As a aside, it’s interesting to note how other nation’s use a market based system for their domestic leagues and the US does not.

    • wesbadia says:

      Thanks for the comment Nussdorfer.

      I actually agree with what you’re saying. It is extremely hard to compare MLS directly with other leagues around the world because of the single-entity structure and pseudo-franchise model. Apples and oranges and all that. I think it’s more like apples and pears, though. Very similar, from the same family, but you know the difference when you bite into it and taste it and feel the textures.

      Here’s my issue with this whole thing: if you can’t compare MLS to other soccer leagues, then what do you compare it to to have a better measure of success? Some compare it to other American leagues like NFL, MLB, NHL. I can’t agree with that because the NFL plays 16 games per year and has the lineage to warrant 65,000 seat stadiums. MLB plays 80-some home games with an average attendance of ~10,000. NHL and NBA are arena sports with limited capacities. All of these leagues operate differently from one another. Talk about apples and oranges…

      The only thing we’re left with as a gauge is world leagues. The closest model to compare MLS to would be the A-League, and they are in an abysmal state right now with clubs folding almost every year and/or being relocated. Much more turbulent and volatile than MLS ever was, even in 2000 or 2001. Every other league has some sort of pro/rel in place, and this supposedly automatically disqualifies any kind of comparison. But I would argue that it’s not as far away as one might think, for the reasons I stated in the article.

      Generally, I think it’s a good idea to look at ALL of these things at least at some point. Maybe looking at MLB and their lack of a salary cap and presence of a franchise model to see how it compares with MLS from a franchise perspective. And maybe compare MLB, MLS, and the EPL all together to see how they compare for salary and payroll purposes. But in the end, there will never be a direct comparison with MLS and any other sports league, soccer or not. We must make do with what we have. Hence the constant comparisons to European leagues.

      I think what would be akin to the Euro-style system would be a state-level league across all 50 (or maybe just the lower 48) states and whatever Canadian provinces want in. Essentially that’s what Europe does by allowing each country which are the size of our states and provinces to have leagues. Imagine all of the EU forming one 20-team league. That’s what America is. Of course, the “Euro-snobs” here would say that that’s not what they want to see happen, but that’s the only avenue I could see it taking if they wished to have a league operated exactly as a European league.

      My conclusion, which is to come, is to strike a compromise. To make it extremely American yet finding a balance that would mitigate some of our geographical barriers while still creating competition on a regional or local level. This will allow smaller markets to gain access to a top-flight league, which is really my point in this specific article about market saturation. Focusing on smaller areas is key. After that, we can start talking about filling the potential of lower leagues. And after THAT, we can start talking promotion/relegation… which would essentially mean that the current franchise, single-entity model would need to go. But that’s a long way off. This thing’s a process, and fans must be patient, eh?

      Again, thank you for your comment. It’s much appreciated, and I hope you do come back to read my other writings. Looking forward to more input from you.

      Also, Hoffenheim is the team I support from Bundesliga. My ancestors came from Sinsheim area, and so I chose to support a club that has some history to me and my family. Thanks for bringing it up.

      • Nussdorfer AC says:

        That’s a very good point about comparing leagues. MLS seems to be a creature unto its own.

        I don’t see MLS growing to the point of splitting, either geographically or competitively. The owners won’t go for it without revenue sharing or some other financial incentive. I do see one positive, and I see it as a big positive, that as MLS grows in financial capability, the travel will soon be on chartered flights and will ease the burden. The problem isn’t necessarily the miles, but the time it takes. Flying coach means the flights aren’t direct and there are layovers and other problems. Once all flights are chartered, then that is a big problem that is averted

        • wesbadia says:

          I would agree that allowing teams to charter flights would be a great first step in solving the travel crisis. I understand the league rules against chartered flights, but I can’t see how this would be a financial burden to very many clubs right now. At the very least, allowing chartered flights for trips “over X miles” would be a good compromise. It’d at least allow teams like LA or Seattle or Colorado the ability to make those cross-country trips to the North East a bit more comfortable, while still cutting costs on the more local or regional trips.

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