The LA Galaxy didn’t just miss the playoffs for the second year in a row. No, they’ve also lost their hold on the being named Major League Soccer’s most valuable franchise. Today, Forbes announced that Atlanta United, a sure threat for an MLS Cup in 2018, has now topped the rest of the league in total value.
United’s estimated value puts them just $10-million more than the Galaxy’s $320-million total value with a revenue of $47-million. The Galaxy, however, outpaced the rest of the league with $63-million in revenue and an operating income of $6-million.
The Galaxy increased their total value from last year’s estimates by $5-million. A modest increase that seems to come from the overall growth of the league.
Rounding out the top five most valuable franchises in the league are the Seattle Sounders ($310-million), Los Angeles Football Club ($305-million), and Toronto FC ($290-million).
When it comes to operating income, the Galaxy’s $6-million is tied with Seattle for the tops in the league with just seven total teams coming up in the positive category. That leaves 15 teams holding a negative operating income (LAFC’s numbers were not estimated as the revenue and operating income are for the 2017 season) with New York City FC and the Chicago Fire the biggest in the red by showing a negative income of $15-million and $12-million respectively.
But the league doesn’t seem concerned with the year-to-year losses. Instead, it’s seen as an investment in the future and in the overall talent and quality they’ve been able to bring to the league.
Forbes estimates that the average MLS franchise is now worth $240-million which is a 7.6% increase from last year’s estimates. And they once again point out a 650% growth in expansion fees that now top $150-million.
The Galaxy, individually, benefit greatly from their $5.5-million a year television deal with Spectrum (formerly Time Warner Sports) at a time when most MLS teams are paying for the privilege of being on local TV. In addition, the Galaxy’s sponsorship with Herbalife allows them the revenue to consistently draw big names in the sport as they fight for billing in the second largest media market in the country.
The Galaxy, labeled as the crown jewel of MLS since the league’s inception, are under some real pressure to continue to elevate the value of the franchise. And while it’s true that a rising tide lifts all boats, the club will face some significant challenges when it comes to a new television deal in the next three years, and in maintaining its level of sponsorship as LAFC competes in the same marketplace.
In general terms, the value of a franchise isn’t based entirely on its on-the-field success. But a lack of success can see a team’s overall value erode, and that’s something the Galaxy must guard against.
Note: All figures are Forbes estimates; team values do not include stadiums or real estate. Revenue and operating income are for the 2017 season, and operating income is earnings before interest, taxes, depreciation, and amortization.