SUM for Sale?

The big business story to hit the web today was the possible sale of a minority stake in SUM.  The Sports Business Daily is reporting that Providence Equity Partners is seeking to purchase 25% of SUM for $125-150 million. The deal would certainly infuse cash into the investors and operators of MLS franchises, but whether the funds would be used to improve the standard of play is an open question.  On a per team basis, an investment of $150 million into SUM is significant, but not a game changer for league owners.  The article suggests that the league might use the money on high end players to attract the elusive soccer fans that don’t follow the league.

From SUM’s website, here is how SUM describes its own role.  “SUM holds the exclusive rights to the most important soccer properties in the region, including: all commercial rights to Major League Soccer; the United States Soccer Federation; promotional and marketing rights to Mexican National Team games played in the United States; and the marketing and promotion of the CONCACAF Gold Cup™. Since 2008 SUM oversees a long-term partnership with La Liga’s historic club FC Barcelona, which includes tours of the legendary Spanish club. SUM also manages promotional and marketing rights in the United States for Mexico’s most popular sports team, Club Deportivo Guadalajara (Chivas).”

From our perspective, this seems like a curious move.  MLS has taken great steps over the last few years aimed at growing the game in the United States, while increasing the television and web presence of the league.  Now the league seems to be considering introduction of a purely for profit entity who may have motivations solely based on profits.  While the current league investors/operators don’t shy away from making money, they have devoted significant resources towards advancing soccer in the United States and a new partner may not share that vision.

 

Advertisements

2 Responses

  1. If the MLS owns an entity valued at 500-600M, I wonder if Forbes adds that to the individual team values in its analysis (or 27-33M per team).

  2. MLS doesn’t own SUM, the owners do. I think some of them are just tired of slow growth and want to get a quick cash infusion after paying so much to get in the league. 25% wouldn’t be controlling interest anyway. Also since SUM is filed in Delaware the corporate decisionmaking is easier to control so the Providence Equity Partners won’t have a lot of say.

    If anybody finds that I’m wrong please clarify … studying SUM can give me a headache.

Comments are closed.