Europe has always been home to the most notable soccer clubs in the world, but in recent years Major League Soccer (MLS) – the largest American soccer league – has seen stunning growth. Both of these associations take drastically different approaches towards managing their teams and investors. 



MLS operates as a closed-league system, essentially meaning there is no promotion or demotion within the league structure. This model provides a relatively stable investment environment. The average team, according to a 2024 valuation, “is worth an estimated $678 million, up 16% from Sportico’s last MLS deep-dive in September 2022,” reflecting strong investor confidence fueled by the MLS’s strategies of controlled expansion, revenue sharing, and cost certainty.



Comparatively,  European soccer leagues operate under a less secure system, in that poor performance risks relegation from the league, causing clubs to take huge revenue losses. For example, although currently many top English Premier League (EFL) clubs generate over $600 million in annual revenue, clubs that perform poorly risk demotion to the EFL, in which clubs revenue averaged at $12.5 million. Therefore clubs teetering on the edge of demotion risk huge financial setbacks if demoted, creating huge uncertainty for investors.



The MLS’s closed structure maintains much more security through financial equilibrium, making it appealing to investors and owners who prefer long-term stability over the volatility found in Europe’s open league systems. However, some critics argue that this stability comes at the expense of end-of-season drama, as no teams on the lower end of the table rankings fear relegation. To many, there must also be incentive not to lose.



References:

“MLS Team Valuations 2024: Messi Pushes Average Value near $700m.” iSportConnect, 28 Feb. 2024,www.isportconnect.com/mls-team-valuations-2024-messi-pushes-average-value-near-700m/#:~:text=The%20average%20team%20is%20worth,deep%2Ddive%20in%20September%202022. 

“Deloitte Football Money League 2024.” Deloitte United Kingdom, www.deloitte.com/uk/en/services/financial-advisory/analysis/deloitte-football-money-league.html. Accessed 5 Dec. 2024.