KKR has made a strategic investment in MLS’ Next Pro League — the bridge between youth academies and the top flight.
MLS and KKR have formed Hometown Soccer Holdings to operate the league, which currently has 27 teams owned by MLS clubs and three independent teams. An additional four independent clubs are set to join as well and further expansion is expected.
KKR and HSH will oversee commercial strategy for Next Pro, including plans to move team-affiliated clubs to nearby mid-sized markets and build 6K-8K-seat stadiums, according to SBJ. MLS clubs can turn over business operations to HSH if they opt to; all clubs will continue to control soccer operations regardless.
While this is a professional soccer deal, the potential impacts on youth soccer are not hard to see:
1) MLS is further developing a youth-to-pro pipeline.
2) The partnership opens the door to seemingly endless synergies with KKR’s other youth sports holdings — Varsity Brands could be involved in apparel, Varsity Cheer could use the stadiums for events, PlayOn can stream MaxPrep events there, GoFan handles ticketing, etc.
3) This partnership also feels like MLS’ attempt to kneecap USL’s plans to launch a Division 1 league, which has included building stadiums and multi-purpose districts in mid-sized markets with significant youth soccer investments.
I don’t have some grand theory of everything here, but… this is another example of the lines between youth and pro blurring when it comes to sports investment— as we have a new middle layer here, resembling college or minor leagues, that’s directly connected to the youth and pro layer.
1) The obvious reason why the MLS (and soccer clubs in general) invest so much in development is because there are mechanisms to retain talent they invest in from a young age. This largely isn’t the case in other major pro leagues in the US which are built around parity (salary caps, the draft, and so on). The MLS, of course, has competition in youth development, but their ecosystem is robust still. If other “pro” leagues were to institute a mechanism by which “pro” clubs could develop and retain talent, I think you would open the flood gates to similar developmental systems beyond just the standard “community investment”. I put pro in “ “ because this feels like something that could actually happen with high-level college programs and conferences investing down to the youth level.
2) We… somewhat called exactly this on the podcast two months (you should subscribe). And at the Summit, Hudl President Matt Mueller called sports a $2.7T market. He of course is talking about the whole swim club, not just the kid’s pool. I found the comment at first to be a bit hyperbolic, but when you see deals like this happen you begin to understand why many - from KKR to Hudl to Fastbreak - are thinking much bigger than the $40-, or $60-, or $80-billion youth sports market. They’re thinking about the whole damn town.
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