Deloitte releases results of report on potential Pro/rel in the U.S.



A new report from financial advisory giant Deloitte has stoked the perpetually burning fire that surrounds any discussion regarding the implementation of promotion and relation in the United States.

Deloitte was commissioned to conduct the report on the contentious issue by Silva International Investments, which is owned by Italian sports media rights mogul and co-owner of NASL side Miami FC, Riccardo Silva.

A summary of the report was released to the public that contained a plethora of broad conclusions, but was short on details or figures to back them up. Many of the possible benefits mentioned in Deloitte’s summary have been stressed by ardent supporters of promotion and relegation for years, as has the company’s ultimate conclusion that drastic steps need to be taken y the U.S. Soccer Federation and the leaders of individual leagues before the system can even be attempted stateside.

First and foremost, the summary asserts that moving away from the current closed league system in the U.S. would create a more compelling product, which in turn would help improve broadcast revenue and attendance woes in certain top division markets.

Perhaps more importantly, though, is the potential extra motivation of owners throughout the pyramid to invest in the roster and academy system to ensure they avoid relegation in the more traditional system. Deloitte claims this factor would have the added benefit of improving youth development and the national team’s standing in the world rankings.

The summary does acknowledge the risks and uncertainty that come with promotion and relegation — the biggest concern being the current turmoil in the country’s lower divisions at the moment. Skyrocketing player salary costs with an open system and the threat of early, longtime investors losing out in relegation are also mentioned as hurdles.

Deloitte’s summary is damning of MLS current path, suggesting that the top league’s franchise fee model has a ceiling that is rapidly approaching and that the potential benefits of promotion and relegation offer a road toward more growth in the long term.

“The closed league system, while understandable in the context of when leagues were established, may hinder the longer term growth prospects of club soccer – the closed league system is one that seeks to maximize profit for owners and protect a league’s financial sustainability. To date however, this model in US soccer is more about loss and capital call minimization, rather than profit maximization, struggling to grow revenues and to an extent reliant on expansion franchise fees that have a limited lifespan.”

Before a move can be made toward promotion and relegation, though, Deloitte outlines that the country’s second division must first stabilize and then mature and all leagues need to put a cap on expansion.

There were no bombshells dropped in Deloitte’s summary. Each side has made these assertions before. However, the weight and credibility of a company such as Deloitte wading into the issue lends credence to an argument that has largely been waged online through hash tags and snarky Reddit posts. It remains to be seen if the report will have any tangible impact on the discussion.