An Unlikely Case Study in Fast Growth: Major League Soccer
As soccer's popularity continues to grow stateside, MLS has added nine new clubs since 2007 (two of which, the most recent additions, will begin play in 2015). Meanwhile, the league's average attendances now rival those of the National Hockey League and National Basketball Association, and TV ratings--though they dipped in 2013--have siginificantly grown from a decade ago.
This success has translated financially, too; the Columbus Crew sold for more than $60 million--a solid midmarket number that, though it pales in comparison to the valuations for Major League Baseball and National Football League teams, is a record for an MLS club.
With 18 seasons now in the books, MLS is on the verge of breaking into the pantheon of America's major league sports. But it still faces its challenges, from competing with global soccer to growing its core audience. Commissioner Don Garber spoke to Inc. about lessons from the league's recent growth stage, and how it plans to keep it going.
With fast growth comes the capacity to run off the rails. To that end, it's important to keep measure of success--and be quick to diagnose when something might go wrong. MLS keeps tabs of its key performance indicators--which Garber listed as national and local television and media coverage, the development of soccer-specific stadiums, as well as TV ratings and stadium attendance figures.
While these indicators are all way up in the last several years, the latter two--ratings and attendance--did dip during the 2013 season. To that end, Garber and MLS were quick to identify the problems for the hiccup: One team performed particularly poorly in terms of attendance, while there is room for improvement in TV broadcasting. The timing on that front is good, as the league's TV rights are currently on the open market.
Garber says that with the reasons for the dips identified, the league still feels confident in its overall plan. The occasional breakage that comes with speed doesn't mean scrap everything. It means analyze and adjust where needed.
"We work to create a plan for the year and then go from the top down, working with the (club) owners to make sure we have the resources to be able to achieve that plan. That approach has worked very well for us over the last number of years," Garber says. "Now and then you’re going to hit some bumps in the road and you have to be smart, nimble, and focused to adjust your plan to some of the market macro-issues and micro-issues."
Meanwhile, as the league continues to grow, it also has defined standards as it continues to explore expansion opportunities. (It is currently eyeing Miami, Atlanta, and midwestern states.) Garber says the league needs to see an effective stadium plan and evidence--through secondary or amateur leagues--that the area is ready to embrace soccer before it can consider expansion into a given city. The lesson there: Growth can't be blind.
Know Your Competition
While you might first think of MLS's competition as the other American sports leagues--MLB, the NFL, the NBA--Garber doesn't see it that way.
"We’re not going after the baseball fan or the American football fan," Garber says. "We know there’s a (generational) head start that the more established leagues have in this country, and we believe there is a separate and distinct soccer market that we can focus on building and growing a long-term commitment with so that ultimately, x number of years from now, our fan base will be much larger than it is today."
It's the U.S. soccer market that MLS covets--a market that has largely been underserved stateside, but is in a state of major growth as America's demographics shift. So it should be easy pickings, right? Not so fast. MLS might not be too pre-occupied with other American sports leagues, but it does have to worry about global soccer that is all too easy to the American viewer today, such as the English Premier League.
Meanwhile, the U.S. already has its share of college soccer programs and secondary leagues that also constitute the national soccer landscape.
Having said that, recognizing competition doesn't necessarily mean going to war with it. Garber says these competitive forces--from the World Cup to international leagues--stand to benefit the league by creating more soccer fans in general.
"The larger that market, the more we will be able to capitalize and zero in on a particular fan and customer, and convert them into being a local MLS fan," Garber says. "We look at it as growing the market first, and then going in and capitalizing on the growth by presenting great product quality...
"That being said," he continues, "we do need to ensure we have a point of difference. Unlike the other major leagues, we do have competition within our sport with so many different brands and offerings."
The point of differentiation for MLS, as opposed to foreign leagues English Premier League, is that it offers a local, in-stadium experience. And it differentiates from other, secondary American leagues through the quality of its talent and by being on television. This serves as MLS's value proposition as it seeks to bring American soccer fans of all stripes into its fold. The league has identified its competition, and now it's working to leverage it.
Spread the Good Word
But if the rest of the soccer ecosystem is creating potential new fans, how does MLS lure them to the league? It starts with its hardcore supporters. Much of MLS's marketing efforts are tied up in its existing superfans, he said. This investment is meant to fuel word-of-mouth marketing to bring new customers in.
"We cater to, and are very focused, on our core market: Those people who have grown up with the game and love the game through some family history or country they’re from. That core fan base is the center of our bull’s eye and we focus a great deal of our attention on that group.
"And then there are layers that grow from that group that we cater to and spend time thinking about, but as you get further and further from the core and more to the casual fan, we tend to spend less time, effort, and resources on the outer rings of the circle.
"As we grow the center circle larger and larger, those (fans) become our prophets, helping to communicate what a terrific league we have."