The Great Blanco Hope
It was David Beckham, the fair-haired English midfielder, who garnered all the headlines early this year when he decided to come to the U.S. to ply his trade for an estimated $250 million. But as American pro soccer has come of age this season—at least financially—the player most responsible isn't Beckham. Instead, it's Cuauhtemoc Blanco, a fiery striker who grew up in the barrio outside Mexico City. With an explosive season, Blanco has helped boost attendance across Major League Soccer, with the draw for his own Chicago Fire rising 60% this season, to 16,000 people a game.
Beckham may have a pop star wife and Hollywood bling, but the 34-year-old Blanco has the support of Latinos, particularly Mexican Americans. Latinos are now 44 million strong in the U.S. and growing fast as a percentage of the population. Major League Soccer, which holds its championship match between Houston and New England on Nov. 18, has a higher percentage of Hispanic fans than any other sport in the country. Don Garber, the league's commissioner, often refers to his organization as "the League of the New America." He's even taking daily Spanish lessons.
Tapping into this fan base is paying dividends. With rising attendance and a new television contract, MLS itself has turned profitable. Individual franchises are starting to log operating profits, too, beginning with teams such as Chicago's, which have large fan bases and stadiums built specifically for the sport. That has helped propel the price of a new franchise to $30 million from $10 million in 2005. "I didn't sign on to lose money," says Joe Roth, the majority owner of a Seattle franchise unveiled on Nov. 13. Roth figures his team should be profitable within five years: "I am a soccer nut, but I am also a business person."
Not that the league's supporters have any illusions about displacing that other football as a commercial enterprise. MLS officials have built the league with the assumption that it will be overshadowed by the country's other professional sports. Growth has been measured, expenses and expectations carefully managed. MLS has an unusual business model in which the league itself controls and negotiates player salaries, keeping spending in line with growth. "We need to continue to go about building this slowly over the next decade," says Garber. "One way to certainly derail our current success is to move away from our slow and strategic growth strategy."
Perhaps the league's riskiest move came last year, with a strategic change that led to the arrival of Beckham and Blanco. That's when Garber approved a "designated player" rule that allowed each club to recruit one top foreign player and not have it counted against the team's salary cap. It was a gamble that the MLS could raise the level of play a few notable notches, without busting its business model.
So far, Garber's bet has paid off. MLS saw average attendance increase 8.2% in 2007, to 16,770 per game, and total attendance exceeded the 3 million mark for the first time in league history. TV ratings are up, and the league has secured the first national television broadcasting fees in its 12-year history. Sponsorship revenue is up 25%, and jersey sales have catapulted 700% from last season. "We're on a good path," Garber says.
Long Sponsor List
The careful cultivation of Latino fans has been instrumental. It started in 2005 when the owners of Mexico's most popular soccer team, Chivas Guadalajara, bought an MLS franchise, Chivas USA, which became an immediate hit with Mexican American supporters. Behind the scenes, MLS officials developed grassroots campaigns such as Futbolito, a four-against-four soccer tournament, to reach out to the Hispanic community across the country. And the league created a Latin American Advisory Board committed to the growth of the MLS and soccer in the U.S.
Perhaps most important was the inauguration of the Superliga tournament this year—a competition between top Mexican and MLS teams. To make the tournament meaningful, the MLS offered $1 million to the winning team. Pachuca, a Mexican club, won over the Los Angeles Galaxy, and TV ratings among Hispanic viewers in the U.S. hit the roof. Univision, the largest Spanish-language TV network in the U.S., averaged 637,000 households during the tournament, compared with 435,000 households for top Mexican League matches. "That tournament did wonders for MLS," says David Downs, president of Univision Sports.
The league has gained a long list of big-name sponsors. They include Adidas (ADSG), Anheuser-Busch (BUD), Gatorade (PEP), Honda Motor (HMC), and Kraft Foods (KFT). "The MLS has helped us communicate with our Hispanic customers and show them the value of our products," says Ken Hefley, senior vice- president for marketing at power-tool maker Makita USA (MKTAY), another sponsor. "It's just been tremendous for us."
Investor interest has been on the rise, too, despite the surge in franchise prices. Ten new owners have bought into the league in the past three years, either acquiring new franchises or existing ones, and more are on the way. Lewis Wolff, who heads MLB's Oakland Athletics, is leading the group buying a new San Jose (Calif.) team, the Earthquakes, for next season. The group of investors backing the new Seattle franchise includes billionaire Microsoft (MSFT) co-founder Paul Allen and comedian Drew Carey.
The league still faces challenges. Many teams are not making money. Brazilian soccer legend Pelé recently criticized the league for over-hyping Beckham and said the MLS needs to spend more money on more top foreign players to bring up the quality of play. Meanwhile, many U.S. players' salaries are modest and growing more slowly than the 20%-a-year rate across the rest of the soccer world.
Beckham also got off to a rough start. He was injured shortly after arriving in the U.S. and couldn't help lift his team, the Los Angeles Galaxy, into the league's playoffs. Still, when he did play, he thrilled fans around the country. Perhaps even more important, league sponsor Adidas has sold more than 250,000 David Beckham Galaxy jerseys, making it the best-selling soccer jersey in the world.
Beckham and Blanco. Garber needs both if MLS is to realize his goal of becoming the league for the New America.