Major League Soccer owners own a share in the league and are granted right to operate a team. Major League Soccer (MLS) operates under a single-entity structure in which teams and player contracts are centrally owned by the league.[1][2][3][4] Each MLS team has an investor-operator that is a shareholder in the league.[5] In order to control costs, the league shares revenues and holds players contracts instead of players contracting with individual teams.
The league has 30 investor-operators for its 28 current and 1 future team. AEG, which at one time invested in six clubs, solely operates one team (LA Galaxy). Lamar Hunt used to operate multiple teams, but now Hunt Sports only operates one team (FC Dallas). Two of the league's teams are operated, at least in part, by neither Americans nor Canadians — Austrian Dietrich Mateschitz (New York Red Bulls), and Indonesian Erick Thohir (D.C. United).[6]
Having multiple clubs operated by a single investor was a necessity in the league's first ten years.[7] At one time Phil Anschutz's AEG operated six MLS clubs, and Lamar Hunt's Hunt Sports operated three teams. In order to attract additional investors, in 2002 the league announced changes to the operating agreement between the league and its teams to improve team revenues and increase the incentives to be an individual team operator.[8] These changes included granting operators the rights to a certain number of players they develop through their teams's academy system each year, sharing the profits of Soccer United Marketing, and being able to sell individual team jersey sponsorships.[8]
As MLS appeared to be on the brink of overall profitability in 2006 and developed significant expansion plans, MLS announced that it wanted each team to have a distinct operator.[9] The league has attracted new investors that have injected more money into the operation.[6] Examples include Red Bull's purchase of the operation rights of the MetroStars from AEG in 2006 for over $100 million.[7][10]
In Fraser v. Major League Soccer, a lawsuit filed in 1996 and decided in 2002, the league won a legal battle with its players in which the court ruled that MLS was a single entity that can lawfully centrally contract for player services.[1] The court also ruled that even absent their collective bargaining agreement, players could opt to play in other leagues if they were unsatisfied.[1]
^"Dempsey Transfer Highlights Influence of MLS Single-Entity Economic Structure", Business of Soccer, August 26, 2013. Retrieved June 4, 2014. ("Under MLS’s current structure, MLS owns all teams in the league but contracts with operator-investors (more frequently and inaccurately referred to in conversations as team “owners”) who manage teams and are entitled to certain potential benefits from running the teams. That is, the team “owners” in MLS, including AEG, the Kraft family, and others, are really operator-investors in MLS’s structure.")
^"About Major League Soccer | PRESS BOX". Pressbox.mlssoccer.com. Retrieved June 2, 2014. Major League Soccer is structured as a single, limited liability company (single-entity). In the single-entity business structure, club operators own a financial stake in the League, not just their individual team.