Below is a copy of one of my final projects for a class project. It entitles a SWOT analysis of the MLS as a whole and their addition of New York Football Club; the 20th MLS Franchise. Part of my project was assuming NYCFC was granted permission to build a new stadium in Flushing, Queens.
- The funny thing is, on the day my project was due, NYCFC was granted permission to build their stadium in the Bronx, covering 10 acres and three under-developed/ bankrupt Yankee Stadium parking lots. I'm pretty excited to see what the stadium will look like upon completion in 2018.
Read with an open mind and enjoy!
Founded in 1993
as an attempt for the United States to host a world cup, the MLS is now in it’s
eighteenth year of existence. Though the league was founded in 1993, the MLS
held it’s inaugural 10-team season in 1996. Instead of your typical open league
association comprised of independently owned teams, the MLS is operated as a
closed league under a single-entity structure, where every team is owned and
controlled by the leagues investors. The MLS’ closed membership makes it one of
the few soccer leagues throughout the world not using a promotion and
relegation system.
The Current
State of the MLS and Soccer as a whole in the United States:
In my opinion, the future of Major
League Professional Soccer as a product in the United States has never been
brighter. Thanks to major events such as the US hosting of the FIFA World Cup
in 1994, acquiring international super-star David Beckham to play on the L.A.
Galaxy in 2007, current super star players such as Cristiano Ronaldo revealing
that they would like to one day be a part of the MLS, the creation of SuperLiga,
and their recent broadcasting deals with ESPN and NBC, the MLS has catapulted
into international prominence.
Expansion has continued to be the one
of the leagues main priorities. Today, there are currently 19 teams competing
in the MLS, with a second New York City team aiming to enter the league as
early as the 2015 season, becoming the 20th Professional Soccer team to enter the
league. There have also been recent rumblings of other teams emerging out of
Orlando City and Miami and joining soon after. Back in July of 2013, MLS
Commissioner Don Garber announced that there would be 24 clubs by seasons end
in 2020.
In July of 2012, Clark Hunt sold his
second MLS Team, The Columbus Crew for an MLS record of $68 million, hinting
that ownership in the MLS is as valuable as ever.
Attendance has continued to rise for
the MLS as well. According to Alex Morrell of Forbes Magazine, “Average
attendance has surged to 18,600, a more than 35% increase from 2000 nadir of
just over 13,700.”(1) An annual attendance of 18,600 is a higher total than
either the NBA (17,350) and NHL (17,720) is their recent previous seasons.
Rich Luker, an ESPN analysis who has
been conducting and polling American sports fandom since 1994 attests that “the
growth Major League Soccer fandom has experienced the past five to 10 years in
remarkable.”(Morrell 1) Of the 18,000 people he surveyed as recent as 2012,
over a third defined themselves as Major League Soccer fans. According to Luker
and ESPN Sports Poll, this is a 24% increase from five years ago and a 33%
increase since 2002. Luker’s poll also revealed that avid MLS fans, now at 7.3%
have grown approximately 35% from 2007 and close to 43% from ten years ago.
(See Table 1)
·
The
poll defines a fan as someone who is ‘ a little bit interested’ in the MLS and
an avid fan as someone who is ‘very interested’ in the MLS.
Table 1:
Though the MLS
as a product may never exceed the NFL in terms of popularity, there are many
who predict the MLS can outgrow the MLB, NBA, and the NHL. Clark Hunt, current
owner of the Kansas City Chiefs in the NFL and FC Dallas in the MLS is quoted
saying “Soccer has a chance to be the No. 2 sport in the U.S. in my lifetime.”(Morrell
2) Though the MLS is just one generation old and competing against the ‘Big
Four’ leagues that for some have been in existence well over a century, here is
another graph made Luker that supports the MLS and Clark Hunt’s
prediction. (See Table 2)
Table 2:
In terms of
revenue, according to Alan Black of the San Francisco Chronicle, “The average [MLS]
franchise is valued at 103 million dollars, up 175 percent over the past five years.”(1)
Also, Forbes Magazine estimated that ten of the current 19 MLS teams are
incurring profit on earnings. Doug Williams, the business development director
for Sports Endeavors, which owns Worlds Soccer Shop, who since 1984 has been
one of the largest soccer merchandise retailers in the entire world can attest
to the growing financial prominence of the MLS. “The dominant league (in terms of sales) is
the English Premier League- they’ve had a long time to get a good head start on
that. But the best MLS teams would be in our top 10 earners of all teams.” (Morrell
2)
In general, the U.S. soccer fan may
be emerging at a point in time when the sports popularity is seemingly
accelerating. “The demographics are moving in their direction,” said Rob
Tilliss, founder of Inner Circle Sports, a sport investment-banking boutique.
“There’s all these NFL concussion stories, and the fact that unless you’re
taller or a gifted shooter, it’s very hard to make it in the NBA, whereas the
youth participation rates for soccer are way, way up. The growth rate for the
MLS is pretty amazing.” (Lazaroff 1)
At the culmination of the 2014
season, the broadcasting contract for the MLS, which is currently between ESPN,
Comcast, Univision UniMas, and NBC Sports Network, will expire. Fortunately
this could not have come at a better time for the MLS. Although the TV ratings
have been generally low, a new television contract can change the whole dynamic
of the league by generating more revenue to support those MLS teams operating
in the red while providing much more exposure to increase the selling of
tickets. Bottom line, the opportunity to negotiate a new deal can potentially
hurtle the MLS into territories unknown in terms of generating revenue.
"To
grow your television ratings, you have to grow your fan base first, and we've been growing our fan base," Garber
said during a webcast speech with the Wall Street
Journal. "We have to find a partner that gives us the right
schedule, that gives us the
right promotion and marketing, that is embracing us in ways that will allow us to have our programming be
valuable, and be a priority both for the broadcaster
and for our fans." (Lazaroff 1)
New York City Football Club was
officially announced as the twentieth MLS franchise on May 21, 2013. The team’s
expansion rights were split between a new ownership group that includes the New
York Yankees of the MLB and Manchester City of the British Premier League for
approximately $100 million.
NYCFC intends to begin play in the
2015 season in their brand new arena in Flushing Meadows- Corona Park, Queens
N.Y. NYCFC will be the first MLS franchise located in New York, and the second
franchise in the New York Metropolitan Area alongside the New York Red Bulls,
who are based out of Harrison, New Jersey.
SWOT
Analysis: MLS/ NYCFC:
Strengths:
1.
The MLS Operated as a Closed League
The fact that the MLS is operated
and controlled as a closed league will continue to be a major strength for the
league going forward, especially in terms of expansion teams. As a closed
league, the MLS is a ‘for-profit’ association operated as a single-entity
structure, where every team is owned and controlled by the league investors. The
MLS is structured like this in order to maintain stability via overseeing
rosters, transactions, revenue distribution, etc. A single-entity structure
voids disparities in wealth that often ruin sports leagues, as it’s business
advantages include lower operation costs, higher risk allocation, and exemption
from Section 1 of the Sherman Antitrust Act. Generally speaking, this exemption
of Antitrust allows the MLS to pool all major revenue streams including
broadcasting rights, licensing rights, tickets sales, and merchandise to make
money for all twenty of its teams.
Thus, the promotion of new teams,
even if they exist in the same marketing sphere (i.e. NYCFC and the NY Red
Bulls) is never frowned upon. NYCFC as a new team in the MLS will be viewed as
an opportunity to generate more revenue for the 19 other teams that it competes
against.
2.
A A Powerhouse Ownership Group
Owned and operated by global
franchise powerhouses (NY Yankees and Manchester City FC), New York City
Football Club has the potential for great success.
From a marketing standpoint, both
the New York Yankees and Manchester City will provide NYCFC with world-class marketing
schemes. Valued at $2.3 Billion, the Yankees are the fourth most valuable
sports team in the world behind Real Madrid, Manchester City, and FC Barcelona.
Valued at $683 Million, Manchester City is the ninth most valuable soccer club
in the world. Together, the Yankees and Manchester City raked in a combined
$789 Million in revenue this past season(s). Though none of this money can
carry over to NYCFC, the numbers prove that this all-star caliber ownership
group can provide resources and budgets to equip NYCFC with a state of the art
strategic sports marketing process.
Brilliantly, Manchester City has
also already been active in the New York community by hosting local soccer
camps and developing youth soccer in the Metropolitan Area over the past few
years. This can go a long way in getting social acceptance and forming a fan
base out of the city.
3.
Queens, NY: An Advantageous Location
Flushing Meadows- Corona Park is a
critical strength for New York City FC. First and foremost, playing in Queens
can create networks of possible NYCFC consumers in Queens, New York City,
Brooklyn, the Bronx, Long Island, and possibly even Westchester County,
Connecticut, and Staten Island.
The advantages of Queens, NY speaks
for itself. The streets of Flushing, Corona, and Astoria surrounding NYCFC
Arena in Queens are often filled with Latin Americans amongst others who are
often sporting their nationality colors on soccer jerseys and other related
apparel. Luis Montoya, an active member of youth soccer in Queens, NY is quoted
in the New York Times saying, “It’s the perfect place because Queens is the
center of soccer here in the tri-state area.” (Nir 1)
NYCFC Arena, unlike Red Bulls Arena
in Harrison, New Jersey, provides an easily accessible and central location for
fans from the Bronx, New York City, and Brooklyn to travel to and support a New
York team in the MLS. Consumers from existing boroughs can travel to NYFC games
without having to leave New York State lines and in some cases for as low as a
$2.50 subway ticket. It’s also a much easier commute for consumers in this
market to travel to Queens rather than New Jersey in terms of attending
weeknight events. Traveling within the boroughs is much easier and efficient
than having to travel to New Jersey during rush hour when trying to attend a
prime-time game. Cognitively speaking for our younger audience, parents may
also feel safer sending their children to an event within the New York boroughs
rather than to a different state without their supervision. Not to mention
children with student metro-cards can attend a majority of NYCFC weeknight games
for free so long as they use there metro card before a certain time when
traveling to NYCFC arena.
Capturing consumers from Long
Island, and in particular Nassau County may be one the biggest strengths of NYCFC
Arena. Flushing Meadows- Corona Park is located just ten minutes away from
neighboring towns in Nassau County and is also assessable by the Long Island
Rail Road. In a census conducted as early as 2010, studies have shown that the
Nassau County population is currently 1,339, 532. Of the existing population,
14.6% are of the Hispanic, Latino origin. Long Island is also home to the Long
Island Junior Soccer League, one of the largest youth soccer movements in the
world. Having NYCFC Arena close to such entities is a welcoming sign for
tickets sales, merchandise, etc.
Though NYCFC Arena is a bit a ways
from Westchester County and Southern Connecticut, it’s still much closer than
Harrison, New Jersey.
Weaknesses
1.
The MLS Product on Television
As I mentioned above the MLS as a
product has a generally weak audience on television. While the goal for their
new broadcasting deal aims to turn this slide around, there is always the
possibility of having a repeat in television ratings. Should this happen, no
matter how successful NYCFC is on television, their revenue sharing will be
negatively affected and the MLS can again face inadequate league growth.
2. NYC
FC
Though it already exists in the MLS, the
name ‘FC’ announces MLS franchises as a football club rather than a soccer
club. This may provide more of a problem in the New York City market because of
the already two long established and highly successful football clubs: The NY
Giants and NY Jets. They belong to the NFL, and the last time I checked there
are no soccer clubs operating within the NFL.
My point is, referring to clubs as
Football clubs rather than soccer clubs takes away the generic strength, the
authority, and credibility of the MLS, which includes the word soccer in it’s
title, not football. Paul Gardner of SoccerAmerica argues “the willingness on
the part of Garber and MLS to allow its member clubs to use titles signifying
another sports is a sign of weakness, a sign that the days of cultural cringe
before things English are not yet over.”(1) MLS, which has vowed to create an
American voice for the sport of soccer, should no longer chose to ignore
American word usage in the word soccer and opt for the world football, it’s
lackluster.
Opportunities
1.
The YES Network
Valued at $600,000,000, the Yankees
Entertainment and Sports Network is an American cable and satellite regional
sports network owned as a joint venture between Fox Sports Network, Yankee
Global Enterprise, Goldman Sachs, and NJ Holdings. According to Forbes
Magazine, the YES Network is the ninth most valuable sports brand in the world
and is “the most-watched regional sports network in the country the past eight
years and commands the second highest monthly subscriber fee from operator
($2.80), behind only ESPN.”(Ozanian 1) The YES Network is also available
nationally if consumers outside of New York subscribe to a participating cable
provider of YES.
Should NYCFC partner with the YES
Network to broadcast their games, they will open themselves up to the
possibility of expanding their television fan base to NYCFC fans across the
country. With the audience that the YES Network provides, New York City FC
should feel confident that their club will be well-exposed to their target
markets in NYC as well as significant surrounding markets such as New Jersey,
Southern Connecticut, Buffalo, Albany, Syracuse, ad Binghamton.
2.
“The Cross River Rivalry” NYCF v. NY Red
Bulls”
As marketed in the NHL with the New
Jersey Devils and the New York Rangers, the Hudson River can provide the
boundaries for a new cross-river rivalry the will benefit both teams as well as
the MLS between NYCFC and the New York Red Bulls. In an article in the New
Jersey Journal, Commissioner Garber states:
“The league feels very strongly that rivalries
drive passion, in sport generally but especially
in soccer. Two teams trying to be the king of the New York region. That’s a good thing for soccer. It will make
everyone work harder. We’ll have some
challenges as we always do, but we have challenges everyday. This is one we’ll turn into an opportunity.” (Fensom
1)
3.
The First
Even though the New York Red Bulls
were the first MLS team in the New York market, the fact that they play in
Harrison, NJ takes a significant toll on their brand image. For years they’ve
failed to gain acceptance from the New York Market and have struggled to fill
their arena during home games. With the NYCFC v. NY Red Bulls rivalry already
being tagged as the ‘Cross River’ or ‘Cross Town’ rivalry and NYCFC set to
build there own arena in one of New York’s borough’s, the door is wide open for
NYCFC to swoop in and be the first premier MLS soccer club out of New York
City.
4.
Economy Boost
The economics of NYCFC Arena are candid:
The arena will be entirely funded NYCFC’s ownership group and will create an
estimated 2,200 construction jobs as well as 160 full-time and 750 part-time
game-day jobs.
Threats
1.
Tax- Backlash
Though NYCFC has secured approval to
begin building NYCFC Arena, one potential weakness may be being backlashed or
shunned by the locals surrounding Flushing Meadows-Corona Park. This can
potentially be an exact replica of the re-launching of the New Yankees Stadium
in 2009. Because Parkland is the only type of land in New York City that is
property tax free, the New York Yankees and Manchester United ownership group
have secured free land for the construction of NYCFC Arena. Locals may view
this as a free handout that will only increase the value of the ownerships
groups franchises as well as saving them millions of dollars in cash that
otherwise filters right back into the city’s economy.
Will Sweeney, co-founder of the
Fairness Coalition of Queens stated his disappointment when he said: “They want
the stadium to be smack dab in the middle of the park. It would render whole
sections of the park useless on game day and possibly render the park
permanently less useful by its location.” (Bradley 1)
Many other locals have spoken out
against the construction of NYCF Arena. They’ve expressed displeasure in the
fact that the MLS wants to take over 10 + acres of parkland so it can host 17
games a year, the diminishing of open green space for the people of Queens, and
the depletion of hundreds of million in potential tax revenue from the city of
New York.
In order for the New York Football
Club as a product to thrive in the New York market I firmly believe that they
need to brand themselves as a franchise that is separate and distinct that that
of the New York Red Bulls. I also however, feel that they need to be very
careful and not show tell tale signs that they are an Americanized replica and
Manchester City FC.
In terms of product development, I
think NYCFC will benefit from giving their product a tremendous New York
Metropolitan feel. That said, in terms of their logo I think they should
somehow incorporate a symbolic piece of NYC into it, whether it be the NYC
Skyline, or a badge outlined with the empire state building, there logo should
bleed New York City. Because a majority of their fans are projected to use
means of public transportation to travel the NCFC arena, I think there logo
should incorporate something that illustrates the NYCMTA like a subway logo or
something of that nature as well. Color wise, I think NYCFC should keep it very
basic and blend the dark blue of the New York Yankees with the Baby blue of
Manchester City FC. I think they should stay far away from pinstripes so that
they aren’t associated to close with the Yankees or European soccer.
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