The greater Sacramento metropolitan area has just been skipped over for a Major League Soccer expansion team, and the city, fans, and owners of the Sacramento Republic FC are rightfully outraged.
The MLS expansion committee decided that Minneapolis is a better location for expanding its brand because the potential TV revenue is bigger than Sacramento’s. That seems to be the main reason why Minneapolis was selected over Sacramento.
Both teams are in smaller revenue markets, but Minneapolis is said to have a bigger potential overall revenue base than Sacramento, relegating Sacramento behind Minneapolis for a team. This isn’t the only sport which has issues with Sacramento’s market, with the NBA’s Sacramento Kings being rumored to move to Anaheim, Virginia, and Las Vegas before a new stadium deal was agreed upon. Sacramento has a proven fan base for both basketball, baseball, and soccer, but filling a stadium with eager fans doesn’t seem to be enough for professional sports to want to stay, or expand into, the market. When asked whether Sacramento always needs to do more than the other guy, Republic founder Warren Smith said, “Whether it’s MLS, or a company we’re trying to attract to a region, there’s just a stigma that Sacramento carries.”
Sacramento’s pro soccer team the Republic FC has been a giant success. The average attendance is 11,293 people per game and games have sold out on several occasions. Minneapolis’s Minnesota United averages about half of what Republic FC does with an average attendance of 6,100 per game. Team-generated income is a key financial component to drive league wide revenue. According to Forbes’ Chris Smith, the average revenue generated by MLS teams was $26 million, but 90 percent of that came from in-stadium revenue such as tickets, luxury seating, and sponsorships. Smith also stresses the importance of fan support, explaining that MLS teams are dependent on the revenue from ticket sales and sponsors to survive. When looking at these numbers, it’s fair to question what MLS is thinking by not selecting Sacramento. The problem is that MLS is more concerned about its TV ratings and viewership and picking a market that will boost those numbers.
MLS signed a new eight-year TV contract with ESPN, Fox, and Univision worth $90 million a year. This new contract is a colossal success for the league and will deliver game broadcasts in recurring time slots on the biggest sports channels in the US. Unfortunately for MLS, its TV ratings have been horrid. Forbes’ Chris Smith reported that ESPN’s regular season broadcasts were down 29 percent, and NBC’s viewership fell eight percent to only 112,000 per game — figures that are worse than the WNBA. This is where Sacramento falls behind Minneapolis. According to Nielsen, Minneapolis has the 15th best overall TV market across the nation in comparison to Sacramento at 20th. Current MLS teams that are ranked worse than Sacramento by Nielsen are Portland (23rd), Kansas City (31st), Columbus (32nd), and Salt Lake City (34th). If you review the figure in Smith’s piece on Forbes, these small market teams are a mixed bag in terms of success.
Portland is the third most valuable team in the entire league with a value of $141 million. Kansas City is in the upper middle of the league with a value of $108 million and Columbus is in the bottom three in team value at $73 million. Teams in big markets such as Washington D.C. (8th) and San Jose (6th) are two of the three least valuable teams in the league and both are losing money. This demonstrates that teams in large TV markets might actually not be great for the league because they are hemorrhaging money every season and not filling the stands. This is where MLS’s expansion committee is gambling; should they pick the team with a proven desire for soccer (Sacramento), or the team with a slightly better TV market (Minneapolis)?
Another key aspect that must be considered for a sport like soccer in the US is how a stadium full of raucous fans can add to the broadcast experience bringing in more viewers in the process. Nothing kills the atmosphere and excitement of a game more than seeing half the stadium empty. Obviously it must not be an important game if the team couldn’t sell out the stadium or at least fill the lower bowl of seats. As discussed above, being a team in a larger TV market doesn’t always translate to big money and full stadiums. For MLS to continue its growth and become a serious revenue generating monster, it must fill stadiums. Without in-person support, TV revenue can only go so high and most teams won’t be able to survive off of TV revenue alone.
The Los Angeles Lakers’ Phil Jackson once famously called Sacramento a “cow town”; Sacramentans proudly embraced their new nickname, rocking cow bells at every Kings home game. Shaquille O’Neal referred to the Sacramento Kings as “the Queens”… and now? Shaq is a minority owner of that same NBA team.
Sacramento is building a spectacular new basketball arena, Bonney Field is adding 4,500 seats to the Republic’s home field, and the Sacramento River Cats baseball franchise has led all of Minor League Baseball in attendance over the past 14 seasons. The small market stigma may still apply to Sacramento, but cities like Portland, Kansas City and Salt Lake City are proof that professional soccer teams can thrive outside major cities. The MLS deal with Minneapolis isn’t final, so there is still a sliver of hope for Sacramento soccer fans. Minneapolis has to agree upon a stadium plan, and they must do it immediately. Perhaps someday soon Sacramento will be able to show soccer fans across the nation how proud they are to be the home of the latest MLS franchise.