MLS set to allow private equity ownership

Major League Soccer (MLS) is set to change ownership rules enabling investment funds to accompany minority stakes in clubs. The change among the footballing landscape of North America will allow the top teams in the MLS to have better access to funds, with revenues significantly impacted as a result of the coronavirus pandemic.

MLS Commissioner Don Garber has announced that the league is close to finalising a plan to allow private equity ownership to invest in local teams.

The change in rules is ‘expected’ to be approved, meaning the MLS will join both the National Hockey League (NHL) and Major League Baseball (MLB) in allowing private equity ownership. However, restrictions are to be implemented on how much a particular club can be owned, in addition to how many teams can be included in a portfolio.

“MLS Commissioner Don Garber has announced that the league is close to finalising a plan to allow private equity ownership to invest in local teams.”

Usually, owners of MLS clubs are notably wealthy, at the same time if extra cash is required this has traditionally been provided by minority investors or called upon an existing partner for investment. Allowing investment funds to be available to the owners of MLS clubs will enable a third option under the current financial uncertainty from COVID-19.

MLS clubs have been estimated to lose between US$20 million to US$30 million in income from the loss of ticket sales, which contributes to around 40 - 50 percent of teams’ revenues, despite the league being one of the first to resume in the states with its ‘MLS Is Back’ tournament held at Disney’s Wide World of Sports Complex in Florida.