USL Expansion Fees Trending Up

USL_MoneyThe cost of entering the professional ranks of soccer in the United States is on the rise. Recent reports suggest that expansion fees for new MLS franchises could balloon to a staggering $200 million. The top division is not the only stratum in the American soccer hierarchy to increase its cost for entry. A knowledgeable source within the USL divulged that expansion fees for the third-division professional league will be capped at $5 million if USSF grants the league’s application for second-division sanctioning.

Although $5 million may appear like a bargain compared to MLS, it is a steep increase over what ownership groups were spending to join the USL a few years ago. For context, consider expansion fees paid by a few of the league’s most recent entrants.

TeamFoundedBegin PlayExpansion Fee
Sacramento Republic FC20122014$250 thousand
OKC Energy FC20132014$500 thousand
San Antonio FC20162016$3 million
Nashville FC20162018$4 million

The 1900% increase from 2012 to the second-division cap gains perspective when viewed in a chart.

USL_Expansion_Fees

The USL has a policy not to discuss expansion fees, but the numbers were provided by a source intimately familiar with the league. Additionally, Evan Ream has reported Reno 1868 FC already paid $5 million to begin playing in the league in 2017.

The increase in price primarily boils down to supply and demand, but there is a little more to it than that. Yes, potential investors in markets around the country continue to express interest in owning a USL team of their own. The mark-up is also related to the league’s desire to partner with owners who are committed to running a team in the long term and have the resources to do so.

The recent additions of FC Cincinnati (Carl Lindner III), San Antonio FC (Spurs Sports and Entertainment), and Reno 1868 FC (Herb Simon) are examples that the USL’s strategy is reaping dividends.

Those dividends are not solely lining the pockets of Nurock Soccer Holdings, the company that owns the USL, though it would be naive to suggest that profits are unappreciated. The USL offices in Tampa have tripled staff over the last few years to keep up with operations as the league has expanded. The league also reinvests in itself to continually improve.

An example of the improvements that fans will soon come to appreciate is USL Productions, a standalone division that promises to enhance the quality of match broadcasts and other digital media. The individual teams will be on the hook to purchase equipment that will be used at their respective stadiums, but the league will also be spending a sizable amount of its own money.

The rising cost of expansion fees in the USL are part of an ongoing soccer boom in the United States. Angels on Parade has rightly pointed out that a number of individual busts have accompanied the boom. Hopefully, we are not witnessing the expansion of a bubble that will burst.

4 thoughts on “USL Expansion Fees Trending Up

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