The revelation that Real Salt Lake has a new jersey sponsor for next season has met with some interesting reactions.
I’ve been asked numerous questions about it, so I thought I’d write up a quick Q&A to give some perspective on what it means.
What is the major takeaway from this?
Major League Soccer is growing, and Real Salt Lake is a leading club in front office management. To put this in perspective, the league earns around $1 million per team per year for the national TV deals (which are expiring and expected to grow exponentially before next season). Tack on this front of jersey sponsorship at $3 million per year, and Real Salt Lake has $4 million per year in revenue before ticket sales, other sponsorships (like Rio Tinto, Vivint, etc.), and merchandise are even calculated.
The league salary cap this year was $2.95 million. From these two deals alone, Real Salt Lake could pay its salary cap commitments (players 1-20 on the roster), the extra money for player salaries (21-30 on the roster, Javier Morales’ and Alvaro Saborio’s DP contracts, etc.), and most of its coaches’ salaries.
In short, this is why ownership groups are clamoring to join MLS. The league is growing and it is a great investment.
Where will the extra money go?
League salaries are going to grow pretty fast over the next 5-10 years. MLS Commissioner Don Garber has laid out a goal for the league to be one of the best in the world over that time period. That means salaries must grow to attract and retain more top talents. The standard of living in the United States has already given MLS a huge advantage, but salaries need to grow to be close to those in major European leagues if MLS wants to be a top league.
I expect the next collective bargaining agreement with the players will reflect a fairly large increase in salaries.
What if I don’t like nutraceutical products or network marketing?
I saw some negative reactions on Twitter because the reported new sponsor is a nutraceutical company that does network marketing. I think this is a foolish objection for a few reasons. The biggest is that the previous sponsor Xango follows a similar model. If you dislike one’s model, you will probably dislike the other. This is just added revenue from a similar sponsor.
But, if we’re more honest, the organizations that sponsor sports teams are rarely organizations that are universally liked. Usually they have major critics. That is one of the reasons that they fork over millions of dollars for product placement with sports teams. They want the positive name recognition and to remind audiences of the good things they do in the community.
Look at soccer jerseys around the world and you’ll find the sponsors are often banks, airlines, alcoholic beverage creators, gambling websites and nutraceutical companies. These companies sell products that are frequently used, but these industries have very organized and virulent critics. One way to keep the public supportive of their businesses is to do goodwill through corporate social responsibility projects and endorsements on products like major sports teams.
That isn’t limited to soccer… Look at the Jazz’ arena. Energy Solutions might be the most controversial company in Utah. That’s why they sponsor the arena. The goal is to build a positive brand image and get an avenue to remind people that much of the negative spin environmentalists say about them is untrue.
So, long story short… I wouldn’t be worried about the jersey sponsor. If you don’t like nutraceuticals, then just remember you’ve held your nose during the Xango era. This is nothing new.