By: Erik Hultstrom, VOBG Pod
Since LAFC partnered with Las Vegas Lights, My interest in the USL—the De-Facto 2nd Division has increased.
A brief history of the USL was founded at the end of the summer of 2010, with the Merger of USL 1st and 2nd divisions (USL-1 & USL-2) following the 2010 season, which saw neither league get Division 2 sanctioning from USSF. This resulted in the USSF, 12-team, D2 Pro League being formed for the 2010 season as a compromise between the feuding USL and NASL reboot in 2011. (the first NASL ran from 1968-1984 before folding.) This saw movement from existing clubs. Portland Timbers Joined MLS as an expansion team, as did the Vancouver Whitecaps, who had competed in 2010 in the USSF D2 Pro League. If you count them as the NASL Whitecaps, 2010 was the 35th Season as a Pro Soccer Club.
2011, USL’s first Season saw 15 teams compete.
Just over 10 years ago, on Jan 23, 2013, USL and MLS announced a multi-year agreement to integrate MLS Reserve teams to play with USL Pro teams. The stated goals of the partnership were to improve North American player development and generally build more interest in the game here.
The 2013 season saw 4 MLS teams opt to affiliate with an existing USL team.
(format MLS Team & USL Team)
Sporting KC & Orlando City,
Philadelphia Union & Harrisburg City Islanders,
DC United & Richmond Kickers,
NE Revolution & Rochester Rhinos.
The end of the ’13 Season saw 2 USL sides fold after only 2 seasons.
Highlighting the precarious nature of finances in Professional Soccer in North America again.
In 2014, Houston Dynamo partnered with the Pittsburgh Riverhounds, but this only lasted one year before it was dissolved.
2014 also saw expansions in Sacramento, OKC.
Orlando announced it would join MLS in ’15, and The Los Angeles Blues were rebranded as Orange County Blues (to Become OCSC)
And, in what would become a trend, the LA Galaxy announced the creation of Galaxy II and purchased a USL Pro expansion Franchise to enter its team in USL Pro.
2015 saw 7 other MLS sides purchase expansion franchises (along with USL dropping the “Pro” in its name to just USL). Also, the league added Colorado Springs, St. Louis, Tulsa, and Austin, nearly doubling the number of clubs.
Orlando sold its franchise rights to Louisville, Which Unveiled Louisville FC in June ’15.
The remaining MLS sides that didn’t purchase expansion franchises affiliated with existing USL Franchises. (Chicago with St. Louis, NYCFC with Willmington, etc.)
The league expanded rapidly, Clearing 30 teams by the end of 2015.
In 2017, 2 teams from NASL moved to USL, Tampa Bay Rowdies and Ottawa Fury.
The first time a team had moved from NASL to USL.**.
** I want to emphasize this moment because what took place here is something I see MLS doing to USL.
This led to NASL getting downgraded from Division 2 sanctioning to Provisional Sanctioning because they dropped below the 12-team minimum.
2017 saw the announcement of NISA entering the 3rd tier, to begin to play in 2018 with “8-12 teams” and a stated goal of becoming a Pro/Rel league after it hit 24 clubs, feeding into NASL.
USL 2 is also 3rd tier, formed in 1995 as “The Premier Development League) currently with 122 teams.
2018 saw NASL’s provisional sanctioning not renewed by US Soccer, while USL was granted full sanctioning under D2 year-to-year.
NASL sued US Soccer in court, asking for an order to grant NASL D2 Status, but
Lost and denied again on appeal. Effectively killing NASL in 2018.
Meanwhile, NISA never got off the ground, the Pandemic hit, and the revenue model for Soccer at the top level relies disproportionately on Ticket sale revenue. And for the lower divisions, it is even more so. It’s as far as a Pro/Rel concept has made it.
The Oakland Roots and Detroit City FC have both since moved to USL.
The Franchise Model
So, it is a coincidence that MLS and USL worked to consolidate the field. I have lived enough of my life in business to see what consolidation looks like. And it seems like other leagues in American Sports. The NFL-AFL Merger, MLB had the American League-National League Merge. It’s the end of the awkward teenage years into young adulthood.
Our Sports Teams are franchises. A corporate entity owns the league, and the teams buy-in and operate under the “Turn Key” business model provided. The Buy-in for USL sits currently at $20 Million ($5 Million USL2), and MLS sits at $325 Million.
European and South American teams came from Sports Clubs/ Athletic Clubs that were primarily supported (and often still are) by members who pay dues. There is a social function to these places as well. But they are not franchises. They are private entities that have governing bodies to set the competition rules.
But our Franchises, the League Office, is where the rules and arbitration is set up. Franchisees also have guidelines, but the teams, at the end of the day, belong to the league. So you have leagues battling other leagues for supremacy until one outcompetes the rest and is the top dog.
And here, we are down to 2 leagues left.
MLS and USL.
How will they become 1?
Almost certainly by Merger or Acquisition. And similar to how NASL finished and NISA with them. It seems inevitable that MLS and USL will merge. And I see the groundwork getting laid out, But it will be a battle for leverage in the meanwhile for when the day at the negotiating table comes.
USL has a grind ahead. Numerous teams have gone under, and multiple expansion teams have taken their place.
Minor league sports are strenuous, as anyone with experience will tell you.
And if you dig into why teams fail, usually it’s to do with changing times or a changing place, along with some poor business decisions and failure to adapt to your environment.
MLS Next Pro is Announced
On June 21, 2021, MLS announced the creation of MLS Next Pro, which was proposed and is about to begin its first Season. It is a 3rd division competition below USL.
The USL benefited from MLS reserves playing in their league. However, for a league almost wholly dependent on ticket sales for revenue, pulling the MLS reserves also pulls the draw that fans of the MLS team have to watch the USL affiliate. This potentially decreases ticket sales and revenue.
So what other steps can be taken to expand on this move?
On the MLS side, development is the goal, not results on the field. And in the Case of the Las Vegas Lights, being an LAFC Affiliate, under Coach Steve Cherundolo, in the 2021 season, finished the year in last place with 4 wins. For the local Vegas fans, supporting a team that loses so much is tough. But for LAFC Fans, it’s just for player development. It puts the Front Office in a tight spot and hamstrings them to work on the franchise’s value.
Las Vegas Lights was insolvent when LAFC came in and made it their reserve side, So it is true that without LAFC, the 2021 season wouldn’t have happened.
But what will happen to them now that LAFC is gone? Can they survive?
Meanwhile, Sacramento Republic had their first Season in the league in 2014, to a USL record sellout crowd of 20,231 at Hughes Stadium. However, before settling into their 8000-seat stadium and breaking USL Season attendance records, with 16 out of 17 sellouts, the stadium was expanded to 11,569 seats for the 2015 season.
That is what success looks like!
By January 2019, Billionaire Ron Burkle, the Pittsburgh Penguins’ lead owner, was announced as the lead investor for a proposed new expansion team, the 29th for MLS.
But, a year later, as the review process was wrapping up, the COVID Pandemic hit, and stadium attendance was not allowed. Ron backed out as that is the primary income stream and the uncertainty of when things would get back to normal.
But the Republic remains one of the most valuable USL teams. They will likely get another opportunity to join at some point, which would take a marquee franchise away.
I would put San Diego Loyal on here as a central media market team that would be a significant loss to USL, with the potential to be a substantial revenue generator, especially if they can fill out 35,000-seat Snapdragon Stadium. Still, I feel safe assuming this team, Part owned and coached by the guy that MLS (appropriately) named the MVP trophy after, Landon Donovan, It was always a shoe in that it will be an MLS club.
Orange County, SC, is another success for USL. Operating in a near-perfect environment for a successful minor league team, An area rich with youth soccer teams, disposable income, and enough of a commute to Los Angeles or San Diego to be inconvenient for an easy family night out. They are a sustainable team. Except they lease their 5000+ seat stadium from the city of Irvine. And very nearly, the MLS Next pro side, Galaxy 2, agreed with the city of Irvine to lease the stadium with priority. This would evict OCSC, USL defending champions, from the stadium.
It would kill the club.
Fans rose up very quickly, the OCSC supporters organized, and the soccer world was able to stop this from happening.
But it would have hurt USL to lose that club.
https://twitter.com/alxruiz15/status/1556745544080363520?s=46&t=5ZVBKNSBj_A91DODVhCtbw
Indy Eleven is named for “the 11th Indiana Volunteer Infantry Regiment.” which served with notoriety in the U.S. Civil War. and began due to efforts of a grassroots soccer org, “the Brickyard Battalion.”
In 2013, NASL Announced the expansion side for the 2014 season. By November 2013, over 7,000 season tickets had been sold. The limit. They became the first USL team in history to have a waiting list for season tickets. In 2017, Eleven announced they would seek to join MLS for 2020, but their bid still needed approval. They plan to build a new, state-of-the-art Billion dollar Mixed-use residential/ Commercial development with a 20,000-seat stadium.
How long will this side stay in the USL?
These moves will hurt USL and stand to benefit MLS.
Assuming MLS can manage the league’s expansion over the last 8 years, the same goes for USL.
But it isn’t like USL doesn’t make its own moves. Even with the MLS 2 sides leaving, it still has a robust 24-team lineup. And more Big and Medium media markets that can support teams.
However, MLS can pick and choose, with a waiting list of teams that want to move up to the first tier. Is there a breaking point?
USL now has Detroit, Indianapolis, Phoenix, Pittsburgh, Las Vegas, and San Diego. If the game grows, they could support 20,000-person stadiums, the minimum needed to keep an MLS team in 2023.
How many 7,000-12,000 person stadiums can get filled week in and week out?
This is where USL teams need to be to thrive.
USL in March just signed a 6-year extension with its partner Sportfive, which is described as the most lucrative in the league’s history.
It was reported in sportsbusinessjournal.com that in 2019, only 1 USL team Broke even financially based on EBITDA (Earnings before interest, taxes, depreciation, and amortization.)
Based on early 2022 reporting, over a half dozen did, and half of the 24 teams are expected to break even by 2024. Better sponsorships and increased attendance are the drivers. There have also been sizeable club-level capital investments in the league and preparing to launch USL Super League (A D2 Women’s league) in 2024.
They also hope to combine both for the next TV deal, Currently ESPN for the 2023 season on a 1-year extension.
A lot can happen, and much of this is planning. Will USL be able to sustain itself without MLS? With MLS making moves, will that hurt? Or can they use their learned experience dealing with the smaller markets to carve their Niche and sustain themselves?
It’s the latter, and both leagues sit down as equals and combine their strengths.
But this is a very rosy picture, and business, like nature, can be brutal and relentless.
But it’s up to us fans to be heard. Supporters’ culture has changed things like making teams happen in the first place and helping a team keep their stadium.
For me, it’s Support Local. As an MLS fan, I like having the USL. I will wear my LAFC shirt to an OCSC game this Season and a Lights one between the LAFC Away games I plan on seeing.
These leagues rely on ticket sales. So go enjoy a beautiful game at a stadium with some friends, as it should be.
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