By Charles Boehm – WASHINGTON, DC (Dec 6, 2019) US Soccer Players – Not so long ago, soccer was an extremely tough sell among the investor class in the United States. That’s putting it mildly. Even as the 1994 World Cup charmed American audiences by the millions, former US Soccer president Alan Rothenberg had such a hard time lining up Major League Soccer’s ownership group that the league’s launch had to be delayed repeatedly over several years. The magic number to move forward was $50 million, around $86.8m in today’s currency. Stalled at $10m short, it took a late buy-in from Phil Anschutz to prevent the fledgling project from dying before it began. As a condition, he insisted on the signing of Marcelo Balboa for his Colorado franchise, based on the USMNT icon’s bicycle kick in the World Cup match vs Colombia.
“Alan, you know those two free tickets you gave me to the Brazil-Italy final in 1994? So far, it’s cost me $350 million,” Anschutz is said to have deadpanned to Rothenberg two decades later, after the opening of the LA Galaxy stadium now known as Dignity Health Sports Park. At one point, Anschutz, who turns 80 later this month, owned/operated six of the league’s ten teams. After the turn of the century, he was the only person standing between MLS and extinction as his company soaked up nine-figure losses over the years in pursuit of longer-term gains.
It’s tempting to wonder what “Uncle Phil” thinks about the landscape these days. Carolina Panthers owner David Tepper is reportedly preparing to pay an expansion fee upwards of $300m just for a place in the league, 40 times what it cost Real Salt Lake to join up in 2005. Add in other costs like stadiums and training facilities, and MLS entry is now a half-billion-dollar ticket for almost every newcomer.
For pro soccer in general, that might be just the start. Last month US private equity titan Silver Lake bought a 10% stake in City Football Group, Manchester City’s parent company and the owner/operator of a global network of seven clubs that includes New York City FC, for $500m. The deal values CFG at $4.8 billion overall. If you accept that as a realistic valuation, it makes CFG the second-most valuable sports team on the planet, ahead of the New York Yankees and a few million back of the Dallas Cowboys.
Silver Lake isn’t looking for a charity case, either. It’s an estimated $43b enterprise that has fruitfully invested in the likes of Dell Computers, Tesla, Skype, AMC Entertainment, Avaya, and NASDAQ, among many others. Apparently, it sees soccer as an alluring new field to plow.
“We are excited to invest in CFG, which is redefining soccer globally and in doing so has successfully built an impressive global platform of marquee soccer clubs across five continents,” said Silver Lake managing partner Egon Durban in a press release. “We greatly respect CFG’s stewardship of more than a century of soccer tradition and the strong global fanbases of its clubs. We are excited to partner with the Board and CFG’s world-class management team to help drive the next phase of CFG’s growth in the fast-growing premium sports and entertainment content market.”
What’s so striking about these words and numbers is not just their size, scope, and jargon. Just a few short years ago, City and CFG looked like “soft-power” projects. Heavy financial losses were willingly incurred by their owners, the United Arab Emirates, to cultivate positive perceptions and both cultural and political clout. The UAE’s ruling family appears to have shoveled somewhere around $2b in into the undertaking, via the country’s sovereign wealth fund, over their first ten years of ownership.
Man City remain one of the world’s wealthiest and freely-spending clubs. The multinational empire they’ve built now offers enough revenue streams, economies of scale and potential for future growth that American captains of capital are eager to buy in, and at top dollar. That’s noteworthy, and it escalates an ongoing trend. According to the 2019 edition of Soccerex’s “Football Finance 100,” the United States accounts for the largest share of ownership in the world’s top 100 clubs. Americans control 18% of the top 100 and 23% of the top 20.
“While this figure is boosted by the US ownership of most Major League Soccer (MLS) franchises, US organizations own a quarter of Premier League teams along with clubs in Italy and France too,” noted SportsPro.
Money can generally move much faster than culture, players, and player development. We can also see reasons for cautious optimism that the US is building credibility and value beyond mere spending power. We’ve seen American players make high dollar moves. Could the currency of coaches be moving in a similar direction?
Jurgen Klinsmann, who’s lived in and been influenced by the United States long enough to count as a de facto German-American, just took over at Hertha Berlin, his first return to management since his USMNT tenure. Jesse Marsch is flying the flag and making history as the first American to coach and win in the UEFA Champions League at RB Salzburg.
It’s still early days, and small sample sizes, in that regard. Viewed with even a mildly optimistic lens, the bigger picture hints at increased integration, connection, and value for American soccer on the world scene. Could this progress chip away at old stereotypes and open further doors? It’s something to track as a new decade arrives.
More from Charles Boehm:
- What I’m grateful for in soccer this Thanksgiving
- Lessons from November as USMNT re-learn the CONCACAF ropes
- Zlatan, Rooney, and MLS’s pesky relevance quandary
- Mark Lowry on El Paso Locomotive’s unexpected year one success in USL
Photo by John Dorton – ISIPhotos.com