Why Are MLS Teams More Valuable Than Premier League Clubs?!

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Hey Friends,

I tweeted something last week that sparked debate. Sportico had just released its 2022 Major League Soccer valuations, so I put together the top five most valuable teams and attempted to add context by comparing them to Premier League clubs.

The information was correct, of course. But large accounts like Fox Sports Illustrated picked up the tweet, and many people were confused as to how *any* MLS team could be worth more than their English counterparts in the Premier League.

So today, I want to run through a few reasons why I think this is happenessentialt, it’s important to separate the tangible value of a club vs. the value investors are giving it. For example, the average sports team currently trades at a ~6x revenue multiple, and a highly valued sports asset might trade at an 8x revenue multiple. But Major League Soccer clubs are currently trading at a 10x average revenue multiple.

This means investors see significantly more financial upside in MLed to similar US-based leagues like the NHL, MLB, NFL, and even the NBA.

And while big-six Premier League clubs like Arsenal and Liverpool might also trade around a 6x revenue multiple, mid-table clubs like Aston Villa, West Ham, and Leeds United typically trade even lower than that.

Secondly, MLS is a closed system, so unlike the Premier League, which sends its bottom three teams down to the second-tier division every year, each MLS team is guaranteed their spot for the foreseeable future, regardless of performance.

This creates scarcity amongst the total number of clubs available for purhase,d it provides investors with significant downside protection. For example, when a team is relegated from the Premier League to the Championship, it’s estimated to cost them more than $200 million, most of which comes through a loss in TV revenue.

And thirdly, not only do MLS teams benefit from clear fixed costs (salaries, etc.) compared to their Premier League counterparts, but MLS teams also significantly benefit from being birthed within the US media market, the world’s largest economy.

Combine this with expansion fees ballooning from $5 million to $325 million over the last two decades, expensive club-owned real estate within major markets like Los Angeles and New York City, and the boost that many believe America will see domestically following the World Cup in 2026, and it’s easy to see why MLS valuations are increasing.

Now, there is still along way to go. Major League Soccer isn’t even a top-10 league in the world right now, and the Premier League makes more in a single year from their TV deals than MLS will throughout their entire ten-year deal with Apple TV.

But valuations are growing and investors are interested. That’s great for the future of the game domestically—now MLS just needs to live up to the hype.

I hope everyone has a great day. We’ll talk tomorrow.

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