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MLS set to allow private equity ownership

Major League Soccer (MLS) is set to change ownership rules enabling investment funds to accompany minority stakes in clubs. This change among the footballing landscape of North America will allow the top teams in the MLS to have better access to funds, with revenues significantly impacted as a result of the coronavirus pandemic.

MLS Commissioner Don Garber has announced that the league is close to finalising a plan to allow private equity ownership to invest in local teams.

The change in rules is ‘expected’ to be approved, meaning the MLS will join both the National Hockey League (NHL) and Major League Baseball (MLB) in allowing private equity ownership. However, restrictions are to be implemented on how much a particular club can be owned, in addition to how many teams can be included in a portfolio.

Usually, owners of MLS clubs are notably wealthy, at the same time if extra cash is required traditionally this has been provided by minority investors or called upon an existing partner for investment. Allowing investment funds to be available to the owners of MLS clubs will enable a third option under the current financial uncertainty from Covid-19.

The MLS was back in action last week with the MLS is Back Tournament at Disney’s Wide World of Sports Complex in Orlando. Orlando City beat Inter Miami 2-1 in the opening game of the tournament which averaged 464,000 viewers on ESPN, becoming the fifth most-watched regular-season broadcast in five years.

MLS clubs are set to lose between US$20 million to US$30 million in income from the lack of ticket sales, as this contributes to around 40 - 50 percent of teams’ revenues, despite the league being one of the first to resume in the states. Having that be the case, recent commercial deals have been announced by MLS teams.

Los Angeles FC (LAFC) announced a multi-year deal with Truly Hard Seltzer becoming the franchise’s official hard seltzer. The Colorado Rapids added two partners, Western Union and World Financial Group, both securing shirt sleeve deals on the team’s kit. The agreement with Western Union will continue beyond the MLS is Back Tournament throughout the remainder of the 2020 season. Columbus Crew also gained a sleeve partner with, lawn, garden and pest control products manufacturer, Scotts Miracle-Gro.

Also, Seattle Sounders expanded their current relationship with WaDf Bank, the clubs banking partner since 2018, becoming their first sleeve partner. Cintas and First Financial Bank will become sleeve partners for FC Cincinnati for the remainder of 2020, while Atlanta United expanded their partnership with Truist and NAPA Auto Parts, who will appear on the clubs left shirt sleeve and shorts.

The MLS permitted the left shirt sleeve for sponsorship at the beginning of the year but have allowed clubs to secure sponsorship from other partners for both sleeves of club shirts and shorts, amidst Covid-19.

Author: James Parker