U.S. Soccer Reboots

By Bill Saporito

Los Angeles is home to three professional soccer teams. There are the L.A. Galaxy and Chivas USA, which are developing a spirited Anglo-Hispanic rivalry that is played out passionately when the two meet in the Home Depot Center, a soccer-only stadium that holds 27,000 fans within its cozy confines. The third is the national team--Mexico's national team. It's not unusual for Los Tricolores, the hated rival of the U.S. national team, to draw crowds of 80,000 for its games, played in the Rose Bowl or the Coliseum. In fact, the U.S. avoids playing Mexico in Los Angeles for that reason.

What is unusual is that all those teams are managed by Major League Soccer (MLS). The pro league born of the highly successful 1994 World Cup staged in the U.S., MLS has struggled for a decade to find its place in the sports-entertainment complex. But by thinking like an entrepreneur and managing like a global business, the league is facing the prospect that many concluded was unreachable in the U.S.: success. "What we have today is far more stability, far more credibility and far more optimism about our business and far more popularity than we've had," says MLS commissioner Don Garber.

In the past 18 months, a league that has been kept whole by dipping into the deep pockets of two soccer-nutty billionaire owners has attracted close to $1 billion in outside investment from new franchises, new team owners, public stadium funding and sponsorship money. Adidas kicked in $150 million to become the league's sole uniform supplier, in part to hold off Nike. MLS is close to a new television-rights deal with ABC/ESPN, one in which it will actually get money for its games, instead of having to buy the time from the networks and hope to sell it. And earlier this year Red Bull, maker of the popular energy drink, bought the New York City franchise from Anschutz Entertainment Group for an investment that will top $100 million.

The Big Apple team, now called Red Bull New York, is building a stadium in Harrison, N.J., 12 miles from midtown Manhattan, that epitomizes MLS's effort to be a major minor sport in America. Or a minor major one. The 25,000-capacity, two-tiered Red Bull stadium is designed to deliver a more European feel to the customers, which can't be done when 15,000 fans--a typical MLS crowd--get lost in a 70,000-seat U.S. football stadium. The Harrison arena will be one of eight new stadiums, including the Home Depot Center, Pizza Hut Park in Dallas and the $100 million, publicly funded Bridgeview Stadium near Chicago, that are purpose-built for MLS teams. "It gives the public a sense that we're here to stay," says Garber.

MLS has stayed around mostly because two of its founders, Lamar Hunt and Phil Anschutz, kept it afloat (unlike the women's professional league, which disappeared last year). Hunt, an oilman who also owns the NFL's Kansas City Chiefs, and Anschutz, an oil and technology entrepreneur who owns too many things to count, have had a burning passion for the game that has consumed better than $100 million of their money. Hunt owns three and Anschutz four of MLS's 12 teams. The original idea was to unload all but one each as the franchise values increased. That was 10 years ago. Having unloaded New York, Anschutz is expected to sell his Washington franchise, D.C. United, this year.

The second big piece of MLS's strategy has been to become the North American leader in promoting and managing the sport. "We want to be the portal for soccer in the U.S.," says Ivan Gazidis, deputy commissioner of MLS. An MLS division called Soccer United Marketing (SUM) won the rights to promote Mexico's team as well as the U.S. national team. So MLS brings Los Tri to Los Angeles, Miami and other Hispanic hot spots, while the U.S. team works the entire country. Both teams conduct doubleheaders with MLS squads. "We're doing a great job for them," says Gazidis of the Mexican program. It's sort of like running the Yankees and the Red Sox at the same time. SUM also runs tournaments featuring South American teams and brings in famous foreign teams such as Real Madrid and Chelsea, some of sport's global brand names. The logic is that the higher the profile that soccer has in general, the greater the MLS benefits.

And soccer's profile continues to rise. Perhaps more than the bigger sports leagues, MLS has also been helped by the digital age. Today an American who is a fan of the Columbus Crew as well as England's champion, Chelsea, can watch both teams on any of three soccer-only channels plus ESPN/ABC or catch highlights on any of a dozen websites. The global exposure has whetted the U.S. appetite. Demographically, migration from Mexico and other Hispanic countries gives soccer (and baseball) a boost.

For all the scoring in the boardroom, though, MLS still has some problems on the pitch. Although the level of play has risen dramatically, it's no match for elite European leagues--and Americans clearly expect the best. The way the league is managed, each MLS team has a $2 million salary cap. You can't buy a star with that kind of money. So the league is planning to allow each team to sign one marquee player, a designated star, who won't count against the salary cap. "Our long-term goal is to be one of the world's best leagues. We can't do that without investing in stars," says Gazidis.

Soccer has forever been the game of the future in the U.S. No one realized in the 1970s, when the North American Soccer League (NASL) was a momentary sensation with the famed New York Cosmos, how far away that future would be. "The NASL generation is now reaching positions of power," notes Gazidis, referring to such people as ESPN programming boss John Skipper, who recently committed $100 million for World Cup English-language rights for the U.S. through 2014. "We're in the sweet spot."

The league will soon announce expansion, with a new franchise going to Toronto. Garber expects to have 16 teams by 2010. He is more than aware that soccer in the U.S. has been more promise than delivery. But the global game in one of the most globalized countries now makes sense. "The people who don't believe never will," he says. "The people who believe always will. Now we're converting people who were on the fence."