USL League One Franchise in 2024: Costs, Fee & FDD
Want to own your own professional sports franchise? Discover the potential of investing in USL League One, a rapidly growing soccer franchise with high community engagement and significant revenue opportunities. Learn about the costs, benefits, and risks to make an informed decision.
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USL League One is a professional soccer league in the United States that was founded in 2017 as part of the United Soccer League (USL) ecosystem. The league was created to provide a platform for developing talent, expanding the reach of professional soccer across the country, and building stronger connections between local communities and the sport. USL League One stands out for its commitment to fostering competitive soccer at a more localized level, filling the gap between amateur leagues and the higher tiers of professional soccer. This initiative has contributed significantly to the growth and popularity of soccer in the U.S., making it an exciting opportunity for investors.
At its core, USL League One offers professional soccer matches that cater to a passionate fanbase, including families, local supporters, and youth soccer enthusiasts. The league’s main product is its high-energy, community-driven soccer events, which serve as both entertainment and a rallying point for local pride. Ancillary services include youth development programs, community outreach initiatives, and merchandise sales. The core market for USL League One includes soccer fans in smaller to mid-sized markets who crave the excitement of professional soccer close to home. The league’s ability to tap into these underserved areas has been key to its growing success.
As of now, USL League One has rapidly expanded, boasting over a dozen teams spread across various cities in the United States. The league continues to grow, with plans to add more teams and expand its reach. While currently focused on the U.S., the league’s model could eventually see international expansion, given the global appeal of soccer. The daily customer base consists of thousands of dedicated fans attending games, purchasing merchandise, and engaging with the teams through social media and local events, making it a vibrant part of the local sports culture.
The franchise support system for USL League One is robust, offering comprehensive training programs for franchisees that cover everything from team operations to community engagement strategies. New franchise owners benefit from the league’s established brand, marketing support, and access to a network of experienced professionals in the sports industry. Additionally, the league provides ongoing support in areas like talent recruitment, event management, and fan engagement, ensuring that each franchise has the tools it needs to succeed. This strong support system, combined with the growing popularity of soccer in the U.S., makes investing in a USL League One franchise an appealing opportunity for those passionate about sports and community building.
USL League One Franchise Insights
- The franchise requires a significant investment, ranging between $7.68M and $11.42M, indicating a premium positioning in the sports industry.
- USL League One matches draw an average of 2,500 to 4,000 fans per game, demonstrating strong local support and creating a lively game-day atmosphere that boosts community pride.
- Founded in 1996, this franchise has been around for nearly three decades, offering a solid track record of operations in the sports industry.
- With only 12 U.S. franchised units, the franchise maintains a selective approach to growth, ensuring quality and brand consistency across locations.
USL League One Franchise Key indicators
Growth YOY (%)
10%
vs industry 5%
Total U.S. Franchised Units
12
3-Year Failure Rate
42%
vs industry 9%
Total investment
$7.68M - $11.42M
How much does it cost to open a USL League One franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a USL League One franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a USL League One franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a USL League One below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Expansion Fee | $5,000,000 | $5,000,000 |
| Participation Fee | $100,000 | $115,000 |
| Letter of Credit | $12,500 | $250,000 |
| Stadium Lease | $25,000 | $150,000 |
| Stadium and Field Improvements | $500,000 | $1,500,000 |
| Practice Field Rental | $0 | $20,000 |
| Office Lease | $50,000 | $100,000 |
| Office Expenses | $25,000 | $75,000 |
| Soccer Equipment/Field Related Supplies | $25,000 | $50,000 |
| Player Wages | $250,000 | $300,000 |
| Player Housing | $25,000 | $75,000 |
| Front Office Staff | $400,000 | $700,000 |
| Coaching Staff | $170,000 | $250,000 |
| Worker's Compensation Insurance | $50,000 | $90,000 |
| Benefits | $85,500 | $285,000 |
| Referees | $75,000 | $125,000 |
| Home Game Costs (Operations) | $100,000 | $250,000 |
| Away Game Costs | $175,000 | $300,000 |
| Marketing/Sales Costs | $150,000 | $300,000 |
| Uniforms and Supplies | $20,000 | $35,000 |
| USSF Membership Fee | $3,000 | $9,000 |
| USSF Player Registration Fee | $1,000 | $2,000 |
| U.S. Open Cup Application Fee | $600 | $1,000 |
| Insurance | $10,000 | $15,000 |
| Travel Pool - Playoffs | $5,000 | $10,000 |
| Reporting Costs | $1,500 | $3,000 |
| BMI/ASCAP Costs | $0 | $1,000 |
| Local Broadcast Production Costs | $100,000 | $200,000 |
| Broadcast Transmission and Archival | $25,000 | $25,000 |
| Attendance at AGM and Training | $1,000 | $5,000 |
| Team Name and Trademark Design and Registration | $5,000 | $30,000 |
| Signage System | $10,000 | $50,000 |
| Professional Fees | $10,000 | $25,000 |
| Initial Merchandise Inventory | $5,000 | $50,000 |
| Website Design and Setup | $6,000 | $6,000 |
| Website Hosting and Maintenance | $1,600 | $1,600 |
| Dues and Subscriptions | $10,000 | $15,000 |
| Additional Funds for Year 1 | $250,000 | $1,000,000 |
| Total First Year Expenses | $7,682,700 | $11,418,600 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
Based on the information provided and the general requirements for franchises in the sports industry, here’s a breakdown of what you might expect in terms of required capital, liquid assets, and net worth:
- Initial Investment As shown above, the total estimated initial investment ranges from $7,682,700 to $11,418,600. This includes all costs associated with setting up and operating the franchise initially, such as franchise fees, construction, equipment, and initial working capital. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets While the specific requirement for liquid assets isn’t provided, for a franchise of this size, you might typically need at least 20-30% of the total investment in liquid assets. This could mean having around $1.5M to $3M in readily accessible funds. This is an estimate based on similar franchises in the industry.
- Net Worth The required net worth for a franchise investment of this magnitude is often substantial. You would likely need a net worth of at least $10M to $15M to be considered for such a franchise. Again, this is an estimate based on the investment range and industry standards.
How much does a USL League One franchise owner make?
Calculating the salary of a USL League One franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a USL League One franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
USL League One Revenue & Gross Sales
The median gross sales for USL League One franchises are not publicly disclosed and can vary based on location, market conditions, and individual store performance. However, in the sports franchise industry, particularly for established brands with a high entry cost like this one, gross sales can vary widely depending on location, market saturation, and operational efficiency. Typically, well-performing franchises in the sports industry could see annual gross sales ranging from several million dollars to higher figures in more lucrative markets. The overall performance often depends on factors such as local demand, the effectiveness of marketing, and the franchisee’s management skills.
Which key factors impact the average revenue performance of USL League One franchisees?
The performance of U.S. franchisee median gross sales in the past year compared to the prior year for this franchise likely hinges on several key factors. First, the growing popularity of soccer in the U.S. has likely driven increased attendance and community support, directly boosting revenue. Additionally, effective marketing strategies and community engagement initiatives may have played a significant role in attracting more fans and sponsors. However, challenges such as economic fluctuations, competition from other entertainment options, and any lingering effects of the pandemic on live events could have tempered growth. Furthermore, the addition of new teams and expansion into new markets may have diversified revenue streams but also required significant investment, impacting overall profitability in the short term.
USL League One Franchise Operational Costs
When opening this franchise, key primary ongoing operational costs you should consider include:
- Stadium or Venue Leasing and Maintenance Depending on the size and location of your venue, leasing costs can be significant, along with regular maintenance to keep the facilities in top condition for matches and events.
- Player Salaries and Staff Wages Paying competitive salaries for players, coaches, and support staff is crucial to maintaining a high-quality team and smooth operations. This includes not only the players but also marketing teams, administrative staff, and event coordinators.
- Event Day Operations Costs associated with hosting games, including security, ticketing, concessions, and game-day staff, can add up, especially if your goal is to deliver a premium experience for fans.
- Marketing and Community Engagement Ongoing expenses for marketing campaigns, community outreach programs, and fan engagement activities are necessary to build and maintain a strong local fanbase.
- Team Travel and Logistics Transportation, accommodation, and meal costs for the team during away games are a continuous expense, especially with a nationwide league like USL League One.
- Training Facilities and Equipment Maintaining training facilities and purchasing or upgrading equipment for players is essential for ensuring top performance and player development.
These costs are integral to the successful operation of your franchise and should be carefully budgeted to ensure sustainability and growth.
USL League One Franchise Fees
When considering the ongoing fees associated with this franchise, it’s important to be aware of the specific costs that will be required over the term of the franchise agreement. Here are some key fees to keep in mind:
- Participation Fee This fee can be up to $115,000 annually, with the potential for an annual increase of 15% or 12% plus CPI (Consumer Price Index). Payments are due in two installments on October 15 and January 1, split evenly.
- Change of Control Fee If there is a transfer of ownership, a Change of Control Fee of 10% of the then-current published expansion fee for the League will be applied. This fee is due upon closing of the transfer but is not applicable in certain situations, such as transfers to family members or other owners of the franchise.
Additionally, while there are no marketing or royalty fees associated with this franchise, it’s important to note that there may be other fees required, depending on specific circumstances or changes in the franchise agreement.
USL League One Franchise Earnings
Estimating franchise earnings for this sports franchise involves considering several factors, even in the absence of specific median gross sales data. As an owner-operator, your earnings will largely depend on the success of the team, local market conditions, and how well you manage operational costs such as player salaries, venue leasing, and event day expenses. Given the high investment range and ongoing fees, achieving profitability will likely require strong community engagement, successful marketing, and consistent game attendance.
Typically, sports franchises like this can generate substantial revenue from ticket sales, sponsorships, and merchandise, but the exact figures will vary widely depending on location and management efficiency. While precise earnings are difficult to estimate without gross sales data, it’s essential to ensure that your financial planning is robust, considering the significant upfront and ongoing costs. Engaging with current franchisees and reviewing any available financial disclosures could provide further insights into potential profitability.
How to Open a USL League One Franchise
Becoming a franchisee for this sports franchise involves a structured process that ensures both the franchisor and potential franchisee are aligned and well-prepared for success. Here’s a step-by-step outline of what you can expect:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Application and Interview After reviewing the FDD, you’ll complete a formal franchise application. This is usually followed by an interview process where the franchisor assesses your suitability as a franchisee, including your financial capacity, management experience, and commitment to the brand.
- Due Diligence and Validation During this phase, you’ll have the opportunity to conduct due diligence, which might include speaking with existing franchisees, visiting franchise locations, and understanding the day-to-day operations. This is also when you should finalize financing, whether through personal funds, loans, or investors.
- Franchise Agreement Signing If both parties are satisfied, you’ll proceed to sign the franchise agreement. This legally binds you to the terms and conditions outlined in the FDD and officially makes you a franchisee. The initial franchise fee is typically paid at this stage.
- Training and Preparation The franchisor will provide comprehensive training covering all aspects of running the franchise, from operations to marketing and management. You’ll also begin preparations for opening your franchise, including securing a venue, hiring staff, and purchasing equipment.
- Grand Opening and Start of Operations After completing training and setting up your location, the franchisor will assist with the grand opening, which is often accompanied by marketing support to ensure a successful launch. Once opened, you’ll start day-to-day operations, with ongoing support from the franchisor as you grow your business.
Pros & Cons
Pros
Established Brand: With a foundation dating back to 1996, this franchise offers the stability and recognition of a well-established brand in the sports industry, which can attract a loyal fanbase and sponsors.
High Growth Potential: The sports industry, particularly soccer, is growing in popularity in the U.S., providing a fertile ground for new franchises to thrive, especially in underserved markets.
Strong Community Engagement: The franchise model emphasizes community involvement, which not only helps in building a dedicated local following but also enhances long-term sustainability and profitability.
No Marketing or Royalty Fees: The absence of ongoing marketing and royalty fees allows you to reinvest more of your revenue back into your business, which could enhance profitability.
Cons
High Initial Investment: The required capital investment is substantial, ranging from $7.68M to $11.42M, which could be a significant barrier for many potential investors.
Significant Ongoing Costs: While there are no marketing or royalty fees, other ongoing costs such as player salaries, venue leasing, and event operations can be high and must be carefully managed.
Uncertain Profitability: Without specific median gross sales data, it’s difficult to gauge the exact profitability of this franchise, making financial forecasting challenging.
Limited Locations: With only 12 franchised units in the U.S., the market may be selective, potentially limiting opportunities for rapid expansion or entry into certain regions.
