CARSON, CA - NOVEMBER 20: Landon Donovan #10 of the Los Angeles Galaxy reacts after defeating the Houston Dynamo 1-0 to win the 2011 MLS Cup and being named MVP at The Home Depot Center on November 20, 2011 in Carson, California. (Photo by Jeff Gross/Getty Images)
A friend of mine passed along this article, and while it's written from an NBA perspective, it has vital information if you're interested in the business end of MLS. Judging by how frequently I get into twitter arguments over the lower end MLS clubs, there is a great deal of interest in MLS' viability going forward. Furthermore, LA Galaxy fans seem particularly interested in expansion of the Designated Player rule and the extension of the MLS salary cap.
MLS has just passed the 16 year mark, which is exactly how many years the NASL lasted. The original ASL only lasted 12 years, which means with First Kick next year MLS will become America's longest lasting first tier soccer league. MLS had it's dark years, as it transformed "soccer for Americans" to "soccer for people who enjoy soccer".
However, what has led MLS to the point it is now is a combination of Lamar Hunt and Philip Anschutz' money with a relatively low cost of operations. As the article says, it takes about $15.4 billion dollars in available income to run an MLS franchise. That's bargain basement as compared to the other leagues, and much of that is due to MLS's salary cap.
It's no surprise that the league without a salary cap (MLB) requires twice as much income as any other league. MLS stadiums are also smaller, or are maintained by another entity, which reduces the cost of maintenance. It's the difference in staffing four stories of restaurants six days a week at Dodger Stadium versus one plaza one day a week at the Home Depot Center.
Which is why MLS is reluctant to open the floodgates on spending. Not only does it make it more difficult to attract investors, but there's the fear the owners will spend well beyond the available income, bankrupting their franchise (a la the New York Cosmos).
Now, the chart shows that Los Angeles would have no problem paying for a more expensive roster. The right signings would pay for themselves easily. Same goes for Seattle and New York. Look at the all the cities which could potentially support MLS franchises, but could not support an NBA (next most expensive) franchise:
Akron (great college program); Anchorage; Augusta; Bakersfield; Boise; Calgary; Chattanooga; Colorado Springs; Columbia; Corpus Christi; Daytona Beach; Des Moines; Edmonton; El Paso; Grand Rapids; Greensboro; Huntsville; Jacksonville; Knoxville; Madison; Memphis; Reno; San Diego; Santa Barbara; Spokane; Syracuse
That's just a sampling, but you see in there a bunch of college towns and state capitals. There's also a fair number of potential Chivas USA destinations in there. MLS 20 is more likely to happen in a city which has the available income to support multiple teams, a city like Orlando or Las Vegas, but the point stands. MLS is no more of a burden on a city's available income than a college football team or a minor league baseball team.
The difference between the Akron Zips or the Reno Aces and an MLS franchise is that for a relatively small investment MLS brings a bit of prestige. It's why Portland, OR, a city capable of supporting an NFL franchise, gave up minor league baseball in favor of MLS. The Timbers have the potential to convey civic pride the way the Beavers never could.
Now while the Galaxy could attract Frank Lampard and Didier Drogba, then find the revenue to pay them as well as their three current DPs (probably requiring a stadium expansion to generate enough revenue) it's not in MLS' best interest to raise the stakes necessary to be a winner in MLS. Denver, Salt Lake, Kansas City are already overextended while Columbus is only marginally hanging on.
The Colorado Rapids and Real Salt Lake may have been shock winners of the MLS Cup, but the fact that those moments are possible is what makes MLS an easier sell. Kansas City building the state of the art facility that it has when the city has lost NBA and NHL franchises, and the Chiefs use an outdated Arrowhead Stadium is amazing.
The Galaxy can't just play San Jose, Portland, and Seattle every year. The middle part of the country and that second team in LA are vital to MLS being a competitive league. This also goes for the East coast if there's still desire to get a team in the South. This isn't the ABA or AFL which can sell to the NBA or NFL if spending gets out of hand. This is it, MLS is all American soccer fans have. We break it, that's just one more American soccer league on the scrap heap.