Where Does the Money Come From for MLS Teams?

Unlike European soccer leagues that have been around for over a century, Major League Soccer is still a relatively young league at just 29 years old. Building successful and financially sustainable franchises takes time. Where exactly does the revenue come from to operate MLS clubs as the league continues its growth?

There are a variety of revenue streams that contribute to the financial health of MLS teams. Matchday income, media rights, sponsorship deals, player transfers, merchandise sales and other streams all play a role. Let’s take a deep dive into each of these components.

Matchday Revenue

Ticket sales from home matches provide one important revenue source for MLS clubs. Based on average ticket prices and venue sizes, matchday income for the typical MLS club generally ranges from $10 million to $50 million annually.

High-drawing teams like Atlanta United and the Seattle Sounders at the top end of the league can generate $50+ million per year in matchday revenue with their large stadiums filled to capacity for every home match. They can also charge higher average ticket prices given their high demand.

However, some MLS teams struggle to consistently fill their stadiums, averaging only 12-15,000 fans per match. At lower capacities and cheaper average ticket prices, these teams are likely only bringing in $10-20 million annually in matchday revenue.

Overall, while robust ticket sales don’t completely fund team operations, they form a key piece of the revenue pie, especially for MLS’s most popular franchises. A passionate fanbase willing to consistently pack the stadium is a huge asset.

Media Rights Deals

The money that broadcasters pay for the rights to air MLS matches on TV and online is another major income stream. These media rights deals have been increasing substantially in recent years as networks bid for access to MLS content.

The current 8-year domestic media rights deal signed in 2014 is worth $90 million annually between deals with ESPN, Fox Sports and Univision. This pales in comparison to the billions brought in by the Premier League’s international TV deals. But it still represents solid growth for MLS.

Local media deals are also negotiated by each club for regional broadcast rights. More popular teams secure packages worth $5-10 million per year from regional sports networks. Less popular clubs may get only $1-2 million annually from local media.

As MLS’s popularity rises, the league will pivot to try to generate more income from major national and international broadcast deals moving forward. But for now, media revenue accounts for 20-35% of total revenue on average across most MLS clubs.

Sponsorships and Stadium Naming Rights

Sponsorship deals generate another slice of revenue for MLS teams. Jersey and kit sponsors are willing to pay millions to get their brand on a MLS club’s uniforms.

Brands also pay for signage and naming rights to MLS stadiums and training grounds. Several MLS teams play in arenas named after major corporate sponsors who paid for the privilege, like Dignity Health Sports Park (LA Galaxy) and Allianz Field (Minnesota United FC).

Popular large-market teams can command the most lucrative sponsorship and naming rights deals. For example, LAFC landed a $100 million 15-year deal for the naming rights to their new Banc of California Stadium.

On average, sponsorship revenue may account for 15-25% of total revenue for a typical MLS team, forming a smaller but still significant piece of the pie along with matchday and media income.

Player Transfer Fees

Selling top players to teams in foreign leagues generates transfer fees that are an intermittent but valuable revenue source for MLS clubs. Transfer fees collected during a given season vary wildly based on transactions.

In 2019, MLS clubs brought in around $90 million total in transfer fees from players sold abroad. The New York Red Bulls earned over $22 million from the sale of Tyler Adams to RB Leipzig in Germany. D.C. United collected $17 million selling Luciano Acosta to a French club.

While Europe’s top leagues generate hundreds of millions annually from transfers, MLS clubs are limited in how much they can earn as selling leagues since world-class players rarely develop in the league yet. But transfer fees still provide a useful revenue boost when promising players are sold.

Merchandise Sales

Fan appetite for jerseys, scarves, hats and other MLS merchandise generates retail revenue for clubs both in stadiums and online. Merchandise income accounts for 5-15% of total revenue on average.

Popular teams like Atlanta United and LAFC sell tons of gear to their huge fanbases. Limited edition or championship-related merchandise also brings spikes in sales. New franchise launches spark an initial surge in expansion gear purchases.

Overall, merchandise provides a smaller but reasonably reliable slice of the revenue mix in most years, buffered from ups and downs in other streams like media rights and transfers.

Additional Revenue Streams

Beyond the major buckets of matchday, broadcast, sponsorship and commercial revenue, MLS clubs bring in income through a few other avenues as well:

  • Government subsidies – Some teams receive public funding for stadium construction or tax breaks.
  • Loan/transfer fees – Loans or transfers of players from MLS teams to affiliates generate fees.
  • Non-MLS events – Concerts, other sports, etc. held at stadiums provide rental revenue.
  • Investor capital – MLS club owners contribute their own funds when needed.

How Does MLS Share Revenue?

A portion of MLS revenue is also distributed directly by the league office itself. MLS has a unique single-entity structure where the league owns all teams centrally. The league takes in national revenue from sources like U.S. Soccer fees, foreign media deals and major sponsors, and distributes it to teams to supplement local revenue.

In 2019 this league-shared revenue allotment was between $8-13 million for each MLS team. So combined with their local revenue streams, typical MLS clubs brought in $40-70 million in total revenue on average.

The LA Galaxy and Atlanta United likely exceeded $100 million in total revenue thanks to their market size, popularity, and venue size. Bottom feeders may have earned less than $40 million total.

How Does MLS Spending Compare to Big European Leagues?

To put MLS club revenue and spending in perspective, the average team payroll in 2019 was around $12.5 million. The LA Galaxy led with a payroll of $21.7 million.

Compare this to:

  • Premier League: Average salary spend per club = $180 million
  • La Liga: Average salary spend per club = $115 million
  • Bundesliga: Average salary spend per club = $90 million

The financial clout of the biggest European leagues dwarfs MLS teams. Significant growth is still required to reach elite levels of revenue and investment on players.

But as domestic broadcast rights continue to escalate and more foreign stars are attracted to MLS, club finances should keep improving. The league is on the right path but still has a long journey ahead to catch Europe’s super clubs.

Final Thoughts

In summary, MLS clubs draw upon a diverse mix of local revenue including matchday sales, media rights, sponsorships, merchandise and player transfers. This is supplemented by league-wide distribution and owner contributions.

Big market teams with huge fanbases and new stadiums unsurprisingly generate the most revenue, while small markets struggle in comparison. Everyone hopes for increased media rights windfalls down the road.

While financial deficits to Europe’s top teams remain massive, revenue has grown steadily along with MLS’s increasing popularity and stability. If this growth trajectory continues, clubs should gain the means to attract and retain more elite players in the years ahead.