Are MLS Teams Profitable?

MLS owners have created the perception that MLS has been losing money since its inception. That operations haven’t created a positive cash flow. And while that may have been true prior to the last couple of seasons and still might be true for individual teams today, that perception is mostly wrong. Do you really think that after 13 years owners would continue to infuse cash into their teams in hopes of future profitability? Or is more likely that they have non-cash charges that can be taken to show that loss?

If the league really were still hemorrhaging cash, why would new investors be willing to pony up $40 million for the privilege of sharing in those losses?

Sidenote: Even the expansion from 10 to 18 teams is misleading. As of 2002, there were only 3 investors in the league. Soon there will be 18.

As of 2007, Forbes estimated that the league as a whole was not profitable, with its 13 teams posting an EBITDA operating loss of $20 million on revenue of $165 million. In 2007, Forbes estimated that the three teams that did make money–Los Angeles Galaxy, Toronto FC and FC Dallas–had a combined operating profit of $6.7 million.

But again, that’s profits and losses on paper. Accounting speak for “we’ve lost a lot of money over our first decade of existence and now we are taking accounting charges which result in a ‘loss’ even though we are are generating more cash than we’re spending.”

MLS teams averaged approximately $13 million per team in revenue in 2007. Real Salt Lake forecasts that revenues will increase from $7.6 million to $20.3 million in 2009, its first full year in Rio Tinto Stadium.

Portland’s bid projects EBITDA of about $4.6 million, based on revenues of about $14 million and expenses of $9.4 million based on paid attendance of just under 12,000 and a turnstile count of about 10,000.

MLS, as a whole, is either profitable, or extremely close to. A team or two may actually be losing cashy-money, but fortunately, that is now the exception rather than the rule.

What Are MLS Teams Worth?
Forbes’ first independent study on the finances of Major League Soccer places an average value of an MLS franchise at $37 million, in line with recent expansion fees of $40 million and the sale of the Houston Dynamo which valued the team at $45 million.

(Source)