MLS Expansion Fee Could Rise to $200 Million

MLSA future MLS expansion fee could rise to $200 million, as officials are clearly seeking to take advantage of interest from multiple groups seeking to enter the league in coming years.

In an interview with Bloomberg News, MLS Deputy Commissioner Mark Abbott said expansion fees could rise to $200 million in coming years. No final decision has been made, according league spokesman Dan Courtemanche, but the door is clearly open to raising expansion fees when MLS expands past 24 teams. Right now MLS is at 20 years, with Atlanta set to begin play next season, Minnesota United likely to be added next year as well, and LA FC and probably a Miami team in 2018. (With no stadium solution on the table, the status of a Miami team is certainly not finalized.) When LA FC was approved as an expansion team, the fee was $110 million.

So we’re looking at the possibility of a much higher MLS expansion fee beginning with the next round of negotiations that’s expected to include bids from Sacramento, Detroit, Cincinnati and San Diego groups, among others. Twenty-eight teams is an expected number in 2020 or so; more than four qualified bids could push that number to 30 or even 32.

Reps from teams seeking an expansion franchise were expecting an expansion fee of $125-$150 million, and were taken aback when presented with the higher MLS expansion fee, per the Sacramento Bee:

It’s uncertain how a $200 million expansion fee would pencil out for owners in a small market such as Sacramento, where the city’s highly successful Republic FC minor-league club is widely expected to be next in line for graduation to MLS status. Executives with Republic FC declined to comment on Abbott’s statement.

Bay Area business consultant Andy Dolich said he thinks Sacramento could handle an expansion fee that high. Even if the price is too rich for some of the current investors, “there are plenty of people … that would love to be involved in that particular franchise” and could absorb the higher price, Dolich said.

Still, Dolich said, the $200 million figure is something of a stunner. Based on what he heard at last week’s MLS All-Star Game in San Jose, “$125 to $135 (million) is sort of the buzz,” he said.

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August Publications