A soccer diary from across the pond

Monday, June 18, 2012

MLS and the Bundesliga as role models

When I'm not an avid soccer fan, I am also a business student and what I love the most is trying combine the two. I kind of started it in my last post about Red Bull, but in this one I will continue to do so. The blog will pretty continue like this, with a lot of smaller posts about my personal experience of the soccer side of things and then once in a while longer posts about the business side of it.

During my bachelor degree I've been part of two group projects that wrote two assignments of 60 and 90 pages about the business of soccer in Europe and accordingly I feel I know a fair bit about it. What I really learned from it is that the best business model today in Europe is the one of the Bundesliga. As soccer has been extremely commercialized the benefits of a Champions League qualification or the problems of a relegation leads to aggressive risk-seeking and there is little incentive to spend responsibly. The only thing that can change this is heavy-handed regulation and a large degree of revenue sharing as it happens in the Bundesliga. I also think the key in the Bundesliga, is that soccer isn't treated as a business, but as a sports. Because 51% have the shares have to owned by fans, the purpose of profits is to strengthen the team, rather than to benefit any owner. These factors combined is what I think gives the Bundesliga the attractive combination of success both off and on-field.

This being the blog it is, I also want to add a perspective from North America. The key behind having a healthy business model is curbing the incentives to attempt to outcompete the opponent by outspending them. I also see MLS as having a good model if the ownership is going to be corporate rather than fan based. The single-entity structure, the salary cap, revenue sharing and the lack of relegation allows for teams to try and think long term without being punished by relegation and the salary cap means that teams aren't driven to unhealthy wage/revenue ratios.

Obviously, the culture and history of soccer in the individual countries needs to be factored in when designing the league, but as I the Bundesliga and MLS as two of the best leagues at controlling expenses, which can be attributed their business models, they stand in a good position of having a prominent position in the future global landscape of soccer.


  1. The purpose of profits is to strengthen the team, rather than to benefit any owner.
    Orlando Vending Machines

    1. That is a valid opinion and the idea works really well, if the club is community/supporter owned. However, how strong do you feel the incentive is to invest in something if there is no opportunity to profit?