Record fee for new MLS club

The newest US professional football club is worth more than what the Saudis paid for Newcastle United, more than what Abu Dhabi splashed out for Manchester City, more than what John Henry and associates handed over for Liverpool FC — and the buyer is a British power player.

Mohamed Mansour, the Egyptian-born, UK citizen and US-educated business mogul, is leading a $500mn purchase of an expansion franchise of Major League Soccer, the US men’s professional football league. The new team, San Diego FC, will join the MLS in 2025 and will be co-owned with the Syucan tribe — an indigenous group native to the city — as well as local Major League Baseball star Manny Machado.

The deal marks a record-setting fee for a US football club, part of a recent wave of record benchmarks in the industry across both the men’s and women’s game as North America prepares to host the 2026 World Cup. Last month, private equity firm Sixth Street agreed to pay $125mn, including a record $53mn expansion fee, to charter a new club, for a new National Women’s Soccer League team in the San Francisco Bay Area.

Underpinning the eye-popping sum for San Diego FC is the fact that MLS, unlike European leagues, features no relegation of clubs, ensuring no inherent risk of lost revenue for poor performance on the pitch. On top of that, the league this year began a $2.5bn per year media rights agreement with Apple, a contract that extends for a decade.

Like other US pro-sports leagues, including the NFL, NBA, MLB and NHL, owning a team is akin to owning a fraction of the overall league, rather than just the administration of an individual club. And recent data makes a bullish case for the placement of a pro-soccer franchise in San Diego.

Last fall, the local NWSL club San Diego Wave set the current league attendance record of 32,000 for a home fixture against Angel City FC of Los Angeles. The Wave are already playing in the future home of San Diego FC, Snapdragon Stadium, a newly constructed multipurpose sports facility at San Diego State University. At a press conference to launch the new MLS club this week, league commissioner Don Garber referenced earlier failed attempts to bring a franchise to the city which were thwarted by the failure to win a public referendum for a new football stadium in 2018.

Mansour, for his part, is the nephew of a former Egyptian national player and a self-described devoted Manchester United fan. Having studied at universities in North Carolina and Alabama, the UK Conservative party donor and early investor in Facebook, Uber and Airbnb told a crowd in San Diego on Thursday that “the club belongs to your community, we are merely custodians”.

Mansour’s investment inverts the established trend of billionaire Americans crossing the pond to buy up European football clubs, from storied powerhouses like Man United all the way to lower-division darlings like Wrexham. But despite the lack of relegation and guaranteed media revenues not all MLS clubs are profitable. Southern California, home to the most profitable clubs in Los Angeles and nearby football-mad Mexico, may be as strategic an investment as is possible in the US, but there’s no thing as a sure bet.

Wolves get raw deal from FFP

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Lau on the ropes

Financial challenges are building up for Guichan Lau whose company WBA Holdings owns 66 per cent of West Bromwich Albion. His company's accounts show that it is in default on a £2 million from a West Midlands heating company called Warmfront Holdings. Warmfront has agreed to take no action to reclaim the loan and interest until February next year. Given a punitive rate of interest of 5 per cent a month, the amount outstanding will then be around £4 million. Lai has missed three deadlines to repay a loan from the Baggies to his Hong Kong company Wisdom Smart Corporation. [sic] Meanwhile the club have a £20m loan from MSD UK holdings at an annual interest rate of 13.8 per cent.

The Political Economy of Football V2

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