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The State of Soccer

The State of Soccer

David Rumsey of Front Office Sports chats about the soccer industry and its impact in the United States.

The State of Soccer
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Aired Aug 01, 2023
David Rumsey of Front Office Sports discusses the state of soccer in the United States, the influence of the Women's National Team, and how Messi has already made a domestic impact.

Kinsey Grant: Hello, everybody, and welcome to the public podcast. I'm your host Kinsey Grant and today's show is brought to you by Gambling Group. Joining us today, we have a fantastic guest, David Rumsey, the journalist at Front Office Sports, and in this role covers the influence of sports on business and culture. He also co-authors a newsletter for Front Office Sports, and we have a ton to cover today because it has been a very wild summer in one specific aspect of the sports world that we're going to get into in a lot of depth and detail today that I'm personally really excited about. I've tried to follow this a little more than in recent years. We're going to talk about soccer and the influence of soccer on the U.S., on the sports entertainment business in the United States, how the United States' appetite for soccer is changing, and what that means for all of you investors out there listening. So, David, thank you so much for being here today. I really appreciate you joining us on Public.

David Rumsey: Thanks Kinsey, it's fun to be here.

KG: Yeah, for sure. So like I mentioned, you know, I think just to kind of kick things off, it's probably best to start with something that you and I are sure to agree on here, that in comparison, especially to the rest of the world, the United States is pretty famously not into soccer as a lot of the rest of the world.

DR: Absolutely.

KG: You know, we maybe just don't appreciate it as much. Maybe we just have other bigger competitors like, you know, American football or basketball or any other sport. But I'd love to hear a little bit of your perspective on why you think the United States has been kind of slow to adopt soccer as, you know, one of our favorite pastimes to watch on TV, on streamers. Tell me a little bit more about how that appetite is changing and why it had to kind of change in the first place.

DR: Right. We could have a whole other podcast discussion on the history of soccer in the world, in the U S and why baseball and football, and basketball might be more popular. But I think everybody, like you're saying, realizes soccer is maybe kind of the fourth or fifth most popular sport in the U S and it has been for some time. But to your point, it's growing and the women's world cup is going on right now. We had the men's world cup last year and when those big 10 pole events come up, America really gets behind their national soccer teams and MLS is growing. I know we're going to hit on Messi coming to the United States at Inter Miami. So there's an appetite there and even fans becoming more interested in European soccer, whether it's the Premier League, Champions League, Barcelona and LaLiga. Soccer players are global superstars, the men and the women. And I think that's really appealing to sports fans in the U.S.

KG: Yeah, I think we, you know, we'll get into the Messi stuff for sure. But to the point that this, this is a sport that's largely dominated by the superstar kind of athletes, I think is something that's really interesting. I mean, obviously in the United States, in other sports, we've shown a ton of appetite for these superstar athletes, whether it's, you know, Derek Jeter or Tom Brady, or, you know, any of the famous U S women's gymnasts that we have loved to follow. I think that we can really relate to and resonate with that kind of superstar power when it comes to a sport. So with that in mind, knowing that we are talking a lot more about the stars on the US women's national team, about stars like Messi, do we think, do you think that we as the United States are going to at any point put soccer on the same kind of league that we would, or the same level that we would, like the NFL or the NBA, do you see that ever becoming a possibility just to set the stage before we get into some of the details of why we're talking about soccer more today?

DR: Well, that's certainly what MLS would like to see happen, right? They want to become not just a top league in the U S but they want to be seen as a top-five soccer league in the world. Keep in mind, there are so many other soccer leagues. Every country has a big domestic soccer league and you rank them across the world. So MLS is goal is to be seen on a global stage, um, you know, top tier up with Premier :eague, some of the top European leagues. So that's their long-term goal. And of course to do that, they're going to need to grow in the US. I think they've been seen as the fifth most popular sport behind, of course, football, basketball, baseball, and hockey. I think an argument could be made that they're gaining some ground. But if you look at their media deal right now with Apple, it's 10 years, $250 million a year. That's, that's a lot less than the billions and billions. The other leagues are bringing in, particularly the NFL and NBA. So on an annual basis, it's going to take some time, but of course you have the men's World Cup coming here in 2026 and everybody in soccer in the US is really banking on that event to play up the interest for fans and make money off of it every way that they can.

KG: Yeah, absolutely. And it's, I think, an important point to note here, just the scale of what we're talking about here when 250 million is kind of small potatoes compared to some of these major, major deals. Like I really don't think that we can, you know, over-communicate the influence and the size and scale of some of these deals with streaming services, with broadcasters for the broadcasting rights to major sports in the United States. It's, it's a big business, I think, to say the least.

DR: Right.

KG: But to your point, a lot of this big business revolves around more tent pole events. Like you were talking about the Men's World Cup last year and in 2026. And this summer talking a lot about the Women's World Cup. I think that it's very difficult to have a conversation about how soccer is growing in terms of influence in the United States without talking about the women's national team. They have been certainly a record-breaking and attention-grabbing team for many years now, but this summer especially we're talking a ton about women playing soccer because of the Women's World Cup, because of people like Abby Wambach and Megan Rapinoe and all of these household names. Can you tell me a little bit more about how the women's national team has influenced soccer as a sport?

DR: For sure. I think they've really given America some juice on a global stage because frankly, when we look at our men's team, we're just not up there with the other countries in the world from Europe, from South America. When we get to the Men's World Cup, we'll maybe make it out of the group stage and then usually lose in the first round of the knockout stage. And the women's team is the complete opposite. You know, it's a given that we're going to make it out of each group stage, back-to-back World Cup champions on the women's side. So I think that shows the U.S. can be a powerhouse, right? Because we're giving all these resources to our women's team. And that's a whole nother issue that maybe other countries aren't devoting as many funds to their women's teams as their men's teams. But we are here in the U.S. and that's given us four World Cup titles on the women's side and been a real leader in the space. And I think you see the fans get behind it. I mean, the viewership is there. The second group stage game in this Women's World Cup set a record viewership on Fox for the group stage in a Women's World Cup. So the interest is there, the players are there, but the world is catching up a little bit in terms of funding their women's teams more. And this World Cup, I think, is showing some fierce competition. So it's not gonna be a cakewalk for the women's team.

KG: So let's talk about how these teams are funded. Obviously here in the United States, what the women's national team gets paid has been a major topic of conversation for even casual sports fans. If I, as somebody who doesn't know a ton about soccer, know about this fight for better pay that the women's team has been fighting for a long time now, I think it's safe to say a lot of people who are just casual sports fans also know about it. So... let's talk about kind of where that money is coming from. What is the business kind of state of play in soccer in the United States right now? Can you give me kind of a lay of the land of how the money's made, where the money is spent, sort of what's going on in terms of soccer in the U.S. as a business?

DR: From a very 30,000-foot view, you have US Soccer, which is the governing body of soccer here in the United States of America. And they manage the Men's National Team, the Women's National Team, all the other junior teams, under-21 teams, all the way down into youth participation in soccer on a kids' level. So their job is a lot more than building a World Cup champion on the men's or women's side. Yes, that's part of it. And we want to compete on a global stage, but US Soccer. brings in all this money to fund soccer participation around the country, right? So they want as many kids playing soccer right now when they're six, seven years old. And two decades from now, maybe they'll be the next Megan Rapinoe, right? Or Christian Pulisic. So they get a lot of money from media rights. FIFA sells rights to the World Cup, and that brings in billions and billions of dollars. It can get a little complicated in the most recent deals on the US side. Fox was able to buy the World Cup rights for the men's and the women's through 2026. And we know that FIFA has had some corruption scandals in the past, and it's not necessarily a clean business there. But they bring in those media rights and then they distribute it back to the governing bodies around the world, U.S. Soccer being one of them. And then they allocate how they see fit based on the performance. And that's why. the women's national team has been fighting for equal pay there on that side. They're saying, you know, hey, we're winning World Cups. The men aren't performing. Why aren't we getting, you know, the same amount if not more? So that's a big argument, obviously, but that's media is a big reason these teams and the U.S. soccer gets paid money. So that's where a lot of the funding comes from.

KG: Yeah, and you know, it's hard to have a conversation around media and soccer without talking about Lionel Messi. Obviously, this has been just an enormous story in the soccer world, also in the business world, talking about how he negotiated this deal, how his team brokered this deal to come play in America. I know you've covered it extensively. Can you tell me a little bit about Messi's influence, broadly speaking, on soccer as a game, but also soccer as a business?

DR: Sure. Well, I just know personally, I've had friends who became fans of soccer because of Messi, watching him play for Argentina on a global stage, watching him play at his Barcelona days in European soccer. And back when I wasn't as much of a fan of soccer, Messi was still one of those names that I knew. Ronaldo was a name that everybody knew, even if you weren't a soccer fan. They were some of the most popular athletes in the world alongside LeBron James, Kobe Bryant, Tom Brady, and Peyton Manning here in the US at least. Messi is just he's global and he's still you know, he might not be at the peak of his elite powers now, but he still won the World Cup last year and was the most valuable player there last summer and he came to Inter Miami and it's stoking just huge amounts of excitement among American fans and bringing more attention globally to the MLS.

KG: And tell me a little bit about what this deal is that Messi struck with Inter Miami. What are some of the bigger contours of the deal that make it something that's striking enough to kind of gain national attention?

DR: Well, MLS is different than a league like the NFL or NBA that has a hard salary cap and you can only pay players a certain amount and you have to spread it out over equally over the players pretty much. In MLS, you can have designated players where their salaries don't count towards the salary cap because there are financial structures in place to limit the spending of these teams because... Frankly, they don't have as much money to spend. As we talked about, only $250 million of media rights coming in per year compared with 10 billion for the NFL. There's not as much money to go around, but I bring that up because when you have a player like Messi, he comes in, he's bigger than the team. Everybody would say that. So he can be a designated player and get paid in different ways. So Inter Miami knows that. they're going to get a lot, a lot of revenue from Messi coming in, whether it's Jersey sales, ticket sales. Messi actually brokered a deal with Apple reportedly to receive some equity of season ticket, uh, um, signups to the MLS season pass subscription service because Apple said, you know what? We know people are going to pay more and be more interested in our service. If Messi is here. So they were willing to give him a cut of their proceeds basically to help him lure him to MLS. So it's a very interesting deal between his salary, between an ownership stake potentially with his club, Inter Miami after his playing days, some incentives from Apple, some reported incentives from Adidas on the Jersey supply side. So he could be making well north of a hundred million dollars a year. And, you know, a typical MLS player is lucky to be breaking, you know, a few million.

KG: Yeah, it's really incredible to, again, recognize just the scale of some of these deals and the scope of some of them. Certainly something interesting as, again, a casual sports fan, but also somebody who loves to understand more about these incentive structures in the business world and especially in media. This is just a really interesting story to watch unfold. So I'm excited to kind of continue to keep an eye on it. And with that, as we close out our conversation here, David, I would love to hear a little bit of your perspective on just big-picture thinking and things that you're expecting, expectations from soccer in the next couple of years, knowing that we do have some of these big stories on the horizon, like we talked about today with Messi, with the US Women's National Team. What are you expecting from soccer as a sport and soccer as a business in the coming years? Tell me a little bit more about your expectations for the future.

DR: Well, I think right now, this summer, I'm interested to see if the U.S. Women's National Team can get a third straight World Cup title and what they would be able to do from a marketing perspective and investment perspective of saying we're really the dominant force in global soccer on the women's side to keep propelling their fight for equal pay and pushing those stars that you have the National Women's Soccer League in the U.S. So certainly that's going to keep. a World Cup victory would keep propelling that, you know, our domestic league here in the US. But beyond that, you know, I think it's coming up in 2026 is the Men's World Cup is going to be in North America. So primarily in the US, but also in Canada and Mexico, it's a joint bid. All three of those countries are going to be hosting the World Cup. And it's just going to be huge. In 1994, the US hosted the World Cup. And that's kind of what kicked off Major League Soccer in the US. And that was kind of FIFA wanted to wake up the American fan base and it's worked. It's a slow burn. Obviously, we've been talking about how MLS is not quite on the level of NFL, NBA, MLB, NHL. But everybody in soccer is just so bullish on the men's World Cup coming here in 2026. And then, by the way, the US is bidding to host the women's World Cup the year after that in 2027. So it's just going to be. so much opportunity if they were to get that on the heels of the men's World Cup. There's nothing like a kid being able to go to a World Cup game. Yes, it's fun to go to an MLS game or a Premier League friendly that might be playing at a football stadium during the summer. But being able to see the World Cup and just kind of the stature of that, that's going to stoke so much excitement. And it's a long-term play, obviously. You know, if you're a kid, 10 years old, you become a fan of soccer. It's You're not going to make an impact if you become a player for, you know, at least a decade. But that's what everyone is bullish on. And, of course, the commercial financial opportunities. Fox is going to be broadcasting that World Cup, but all these NFL stadiums will be hosting games. It's not decided yet where the World Cup final will be taking place. Of course, New York wants to host it. Los Angeles wants to host it, maybe even Dallas. So there's everybody wants a piece of the pie, and they want to capitalize on that. So any time. You see a new venue being built. You see somebody investing in a soccer team. They're always citing the World Cup in 2026. That's the inflection point. And then beyond that, it's going to be up to the soccer stakeholders in the U S to capitalize on that and bring in the most interest in the sport as they can beyond that.

KG: Yeah, absolutely. All right. Well, David, what a way to end this conversation, I think, to look ahead to understand where we might go next is always super interesting. I'm eager to watch how, you know, 2026 and 2027 potentially play out. I think this could be another interesting conversation to keep track of as a sports fan, and as an investor. So, David Rumsey, thank you so much for joining us today on Public. I appreciate your time.

DR: Absolutely, thanks for having me on.

KG: Of course. Thank you all so much for listening. Once again, that was David Rumsey from Front Office Sports. I'm Kinsey Grant. This is the Public Podcast and we will be back soon with even more updates from the sports world and beyond.

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