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July 25, 2023

Mexican-American Demographic Trends Spur Inaugural MLS-Liga MX Tourney

Leagues Cup, a World-Cup style tournament between all 47 MLS and Liga MX clubs, kicked off this past weekend. The two neighboring domestic soccer leagues have paused their respective seasons to play out the month-long competition.

It is a unique and forward-thinking endeavor that should benefit all of the stakeholders long-term.

“It’s [about] having more Mexican fans watching MLS and more MLS and U.S. soccer fans watching Liga MX at the end of this,” Sam Porter (co-owner, Club Necaxa said).

In the short-term, it is going to be an investment in growing the game for clubs in both leagues. While smaller Liga MX clubs may earn a comparable amount, on a per-game basis, to what they would have taken in had their domestic seasons continued unabated, larger clubs and their MLS counterparts will see a financial revenue model that has them retaining just a portion of their typical gate receipts.

Competitions between teams in different leagues are commonplace in international football (think: Champions League). In fact, MLS and Liga MX debuted an eight-team Leagues Cup in 2019.

But two rival leagues halting domestic play to compete against one another in an effort to co-pollinate fandom in the broader geographic region is unprecedented–and deserves to be lauded.

Macro shifts in demographic trends are behind the collaboration.

“LAT-AM, and specifically Mexican Americans, are the fastest growing demographic group [in the U.S.],” Porter said. “They have the fastest growing amount of disposable income of any demographic, and they’re [becoming educated] faster than any ethnic group.”

Naturally, MLS wants to establish a deeper connection to the growing demo.

Presumably, it hopes the tournament will spur an increase in television viewership moving forward too.

“If you’re in the MLS office, it’s impossible not to notice Liga MX’s ratings in the U.S., and that the fans over-index on passion and supporting their clubs. So, how better to [grow fandom and eyeballs] than to associate our clubs with their clubs,” Porter said.

All 77 matches of the ‘23 tournament will be held in the U.S. Liga MX should benefit from the exposure gained playing on American soil.

There are 60 million Mexicans living in the U.S. For perspective, Italy has a population of 59 million.

Folks who grew up watching, and still love, the Mexican soccer league will get the rare chance to see their favorite clubs in person. One MLS club said it sold more single game tickets for a League Cup matchup against a Liga MX opponent than any other home game this season.

The tournament should also raise Liga MX’s profile amongst American soccer fans. Remember, most league games air on Spanish-language television in the U.S.

While Apple’s MLS deal is global, there are carve-outs for the incumbent Spanish-language linear television providers in both the U.S. and Mexico. Univision and UniMas will both carry games.

The two leagues are combining to sell and will share sponsorship and ticketing related revenues. They believe the tournament has the potential to become a meaningful commercial endeavor in time, in part because of who it should appeal to.

“Aside from regular sports fans, soccer fans, and sports bettors, MLS and Liga MX, in theory, assuming people tune in for this, have created a product that gets right to a very attractive [Mexican American] demographic,” Porter said.

Smaller Mexican clubs will make more money participating in Leagues Cup than they would have had the domestic league continued on uninterrupted. Liga MX teams have been told to expect upwards of $1 million in total gross distributions for participating (a min. of two games). Clubs that make it to the later rounds could be awarded as much as $5 million. That estimate is exclusive of any prize money that may be earned.

Even on the low end, the revenues should present a nice financial arbitrage for a club like Necaxa. The team typically takes in less than half that amount in matchday revenues.

MLS teams won't enjoy the same fortunes. The league has promised them 20% of ticketing revenues for the first $600,000 in ducats sold and 30% above that figure. The tournament is being viewed as a long-term investment in marketing and fan development.

For reference purposes, an average MLS club generates roughly $1 million in ticket sales for a well-sold game. Teams that play in NFL stadiums can take in several million dollars. They're going to see just a fraction of that amount for home games played over the next month.

If matches sell-out, the tournament is a ratings bonanza, and sponsorship demand is strong, logic suggests the two leagues will look to expand Leagues Cup in the years ahead.

“When something works business wise, typically the parties involved figure out ways to continue to grow the opportunity,” Porter said (imagine: a two-month long tournament, more ancillary events).

But don’t expect a full merger anytime soon. The leagues want to be careful not to burn fans out on the concept.

There is also history and tradition at play.

“Liga MX is about 80 years old, and MLS is over 25 years old. Even if Leagues Cup is extremely successful, it would be highly unlikely for the traditional/existing league structures to be abandoned,” Porter said.

That’s if FIFA would even allow it. The governing body’s bylaws have long opposed cross-border leagues.

Then again, with enough money and heft, one must image existing rules could be navigated.

If Leagues cup is successful other leagues will look to replicate the concept. One could envision League One and Serie A giving it a run, or Major League Baseball and Nippon Professional Baseball (the Japanese league). There must be some level of parody between the leagues for it to work.

That may upset traditionalists. But Porter sees it as a good thing.

“In sports, there’s often too much unwillingness to try new and interesting things, because people are so sanctimonious about leagues and competitions” he said.

But times change and the leagues that change with it, will be the ones that thrive over the long-haul.