LAFC is the first billion dollar franchise

Since 2019, the valuation of the average MLS team has increased 85% to $579 million.

Nearly 10 weeks after winning their first title in Major League Soccer in a thrilling penalty shootout at the Los Angeles Football Club’s University Hills training facility, lead managing owner Bennett Rosenthal said the team’s spectacular season is yet to come. processing. “It’s a life experience you don’t expect,” says the 59-year-old. “I think we can still smile every day.”

Well, Rosenthal has something else to celebrate—forbes estimates that LAFC is worth $1 billion just nine years after joining MLS at a $110 million expansion cost. This is more than double his $475 million. forbes We decided it was worth it in 2019, the last time we evaluated a North American soccer team.

It was an impressive return, but none of what Rosenthal had hoped for. “I didn’t do this because I thought it was a great place to put my capital,” said co-founder of $341 billion (AUM) Ares Management, which made his fortune finding profitable alternative investments. says. “I thought it might be interesting and I’m betting big on the growth of the sport.”

LAFC’s rise is the latest sign of just how much MLS has grown since its inception in 1996. There are now 29 teams in the league, initially he had 10, but St. Louis City SC is set to make his debut this season. Since 2019, the team’s average valuation has risen 85% from $313 million to $579 million. Also, the next expansion team (possibly Las Vegas or San Diego) is expected to cost $500 million. This is a significant increase from his previous record of $325 million, set by billionaire David Tepper. Established Charlotte FC in 2019.

Billionaires have long believed in the potential of MLS. New England Patriots owner Robert Kraft and entertainment mogul Philip Anschutz, MLS original owner Tepper, Morningstar founder Joe Mansuet (2018 Chicago Fire), Many owners including Qualtrics’ Ryan Smith (2022 Real Salt Lake). Since then, I have been in the game and adding value to the team.

“Managing an MLS team is less of a financial hurdle. [in] Rosenthal, who has an estimated net worth of $1.3 billion, said: “But I think people love it. They want to be part of the community and its trajectory.” forbes It is estimated that there are at least 19 billionaires or members of billionaire families who have a primary ownership interest in the MLS franchise.

Rosenthal, who fell in love with soccer while managing his daughter’s team, and Apollo Global Management partner Larry Berg, who has been playing the sport since the age of eight, became minority owners of LAFC in 2014. . Jointly invested in Italian football club AS Roma. “To be honest, MLS hasn’t been very sexy yet,” he says Berg. In 2016, they increased their stake, becoming co-managing owners of LAFC, along with Riot Games co-founder Brandon Beck, who invested in 2015, each rotating as principal owner of the team every four years. Rosenthal assumed the role in January. As befits a Los Angeles team, celebrities such as Will He Ferrell, Magic Johnson and Mia Hamm have minority stakes in the club. Golden State his Warriors co-owner Peter Guber is LAFC executive his chairman. Meanwhile, LAFC spent his $350 million to build a 22,000-seat soccer-only stadium in his downtown LA, vandalize soccer bars, and hold pep rallies to draw attention. They even sent fans to matches in Germany to learn about European fan culture.

These investments have yielded huge returns. LAFC has sold out every MLS regular season and playoff game since its first kickoff in 2018. Celebrity superfans are frequently seen in the stands, including Justin Bieber and Wiz Khalifa attending his MLS Cup in November. And LAFC made an estimated $8 million in operating profit last year on his $116 million earnings, best in the league. That number is set to increase in his 2023, with BMO agreeing to a league-record 10-year, $100 million stadium naming rights deal for him.

How far can LAFC and MLS go? With more than half clubs in losses and an average revenue of $55 million, MLS teams cannot compete with European football clubs for top players. “$1 billion is a huge number,” said Edwin E. Drohan, vice president of sports investment bank Parklane. It is valued at 6.9x.) The future of MLS investors will hinge on how football continues to grow in North America, with hopes set on a new annual tournament between the MLS and the Mexican La Liga. MX kicks off in 2023, and football should get an even bigger boost in 2026 when the United States, Canada and Mexico co-host the next World Cup.

More significant is a new media rights deal between MLS and Apple that combines the league’s local and national broadcast rights under one umbrella. According to the deal, MLS is guaranteed at least $2.5 billion over his ten years, and could be more based on subscriptions. That’s a big payday, but it falls short of the $300 million a year the league was reportedly hoping for, especially considering MLS has to pay for production. , added a supplemental TV deal with RDS, but the major North American sports league has not committed to a streaming-first strategy.

“It’s all about gambling,” says Rosenthal. “But it’s a really smart bet.”

MLS Valuations 2023

_No.1-7

No. 1. billion dollars

Los Angeles Football Club

_{Earnings for 2022: $116 million | | Operating Income: $8 million}

^{Key owner: Bennett Rosenthal*, Brandon Beck, Larry Berg}

No. 2. $925 million

LA Galaxy

_{Earnings for 2022: $98 million | | Operating Income: $4 million}

^{Key owner: Philip Anschutz*}

No.3. $850 million

Atlanta United FC

_{Earnings for 2022: $81 million | | Operating Income: $6 million}

^{Key owner: Arthur Blank*}

No. 4. $800 million

New York City FC

_{Earnings for 2022: $55 million | | Operating Income: -$12 million}

^{Key owner: city ​​football group}

No. 5. $700 million

dc united

_{Earnings for 2022: $70 million | | Operating Income: $8 million}

^{Key owner: Jason Levine, Stephen Kaplan}

No. 6. $690 million

Toronto FC

_{Earnings for 2022: $62 million | | Operating Income: -$15 million}

^{Key owner: MLSE (Larry Tanenbaum*)}

No. 7. $680 million

Austin FC

_{Earnings for 2022: $84 million | | Operating Income: $2 million}

^{Key owner: Anthony Precourt}