USL Trying to Alter U.S. Soccer Landscape with Global Promotion-Relegation System

USL Trying to Alter U.S. Soccer Landscape with Global Promotion-Relegation System

The United Soccer League (USL) announced it is moving to a fully integrated three-tier professional system back in mid-March. Beginning in 2028, successful clubs will be able to earn promotion to a higher division –Division One will be at the top of the league pyramid– and those at the bottom of its top two tables will be relegated to lower divisions the following year.

While the USL is the first American pro sports property to adopt a promotion-relegation (or pro-rel) system, the pivot puts it in line with how the rest of the futbol world operates. The hope is that makes the league more interesting to stateside soccer supporters.

“We’ve looked at the status quo, and that’s not good enough. There’s not enough drama, not enough games of consequence, not enough relevance, and ultimately, not enough revenue,” Paul McDonough (president and chief soccer officer, United Soccer League) said. “By introducing pro-rel, we’re adding a level of jeopardy to the league, creating more matches that matter, and transforming the landscape for fans, clubs, and investors.”

FWIW, a trio of consulting firms have suggested the move could boost revenues 15-25%.

Time will tell if it alters the broader U.S. soccer landscape too.

The USL was founded in 1986 as a minor league to the Major Indoor Soccer League. It’s gone through several iterations, rebrands, and ownership changes since.

NuRock Soccer and Alec Papadakis, the league’s current owners, purchased the property from Nike in 2009. 

"The league was at a crossroads, facing significant challenges both internally and externally...There were also talks of some clubs potentially breaking away to form a competing league, which only added to the pressure," McDonough said. But "the Papadakis family saw an opportunity to bring stability and a vision for growth to the league.”

Today the USL has an interconnected presence in 42 states, 200 communities, and presides over 4,500+ events/year (including associated club academy and youth efforts).

And yet, until the mid-March announcement, –the biggest media day in league history– few mainstream sports fans or industry insiders paid attention to the property.

Now all eyes are on whether the league can turn that newfound interest into lifelong fandom–or at least, increased engagement.

“One club shared that a partner’s investment grew by 4x after the news,” McDonough said.

The belief is three-tiered pro-rel system will make the USL more interesting to existing fans of the product and casual supporters of the global game. But it should positively impact club P&Ls too. 

Remember, the league is heavily reliant on ‘four wall’ revenues. 30-40% of the average team’s income comes from ticket sales. Sponsorships, including stadium naming rights deals, represent another 30-40%. And merchandise (~10%) and concessions (~5%) play a meaningful role too. 

The balance of club revenues come from their academy/youth businesses, non-USL related events, and transfer fees.

The USL Championship currently serves as the USL’s top league. It has 24 clubs and loose plans exist to add a half dozen more. The fee to bring an expansion team into the division is $25mm.

Top earning Championship division clubs generate low eight-figures revenues and operate in the black. Those teams own their building (or have a favorable lease with the local municipality) and have all invested in their local market and the in-stadium fan experience.

USL League One is the division below the Championship. The fast-growing league features teams from smaller cities (think: Omaha, Richmond, Spokane), that play more intimate venues (think: 5,000-8,000 seats).

League One debuted in 2019 and currently has 14 clubs. There are plans to add five or six more next year. The USL is asking $10mm for an expansion franchise in what will soon become its third division.

P&Ls across League One vary widely. Teams with new stadiums and passionate fan bases generate revenues on par with Championship division teams. Others generate far less and operate in the red each year.

Player costs are reasonable, so teams across the league pyramid can make money. But the venue situation is key. USL studies show that owning or having a favorable lease on a new building can lift revenues 3-4x.

Come 2027-2028, Division One will become the USL’s new top division.

“For us, launching a [D1] league is about expanding opportunity—for clubs, for players, and for fans in communities that are ready for top-tier soccer,” McDonough said. “We’ve spent years building a strong foundation, and we have teams with the ambition, infrastructure, and local support to take that next step.

The league also needs an expanded presence in larger markets to create more attractive assets for it to sell.

So, how much are established USL clubs worth?

One owner, that bought a team for six figures seven years ago, is rumored to be selling it, along with the team’s venue, for nine in a change of control sale in the months ahead. 

Minority capital is being invested into clubs at even greater multiples.

"The premium multiples being attributed to USL franchises are driven by three key factors," McDonough said. "First, rapid league expansion into high-potential markets. Second, a proven track record of fan engagement and community integration, with strong local ownership groups investing in stadiums, community, and their brand. [And] third, our commitment to innovation both on and off the pitch."

It remains to be seen how the move to a pro-rel system impacts club valuations. Much still needs to be determined (think: teams/divisions, prize pools). 

However, the expectation is they should rise.

But the league is likely going to struggle to sell Championship franchises over the next year or two. Why buy in for $25mm when you can purchase a League One team for $10mm and allocate the balance of those dollars to building it up and get promoted.

It’s premature to call the USL’s radical move to soccer’s global model landscape shifting. But it’s not hard to envision the league continuing to gain ground on MLS in the years ahead.

An April match between Phoenix Rising FC and San Antonio FC on CBS drew an average audience of 444,000 viewers (viewership peaked at 760,000). Those figures are roughly in line with what MLS regular season games on Fox attracted before the league made its move to Apple TV.

There are markets where the in-stadium atmosphere is better (think: more intimate venues, engaged fans), and it’s not as if the quality play is meaningfully different. The USL’s top clubs have beaten MLS teams in U.S. Open competition. 

The problem the league is going to run into, as MLS has found out, is that U.S. sports fans are generally uninterested in watching anything less than the best. So, the league must find a way to make young Americans, who like soccer, care about their local team beyond the initial novelty of pro-rel.

The USL believes it is going down the right path.

"You [get fans to become invested] by giving them something real—something that feels like theirs," McDonough said. "These clubs aren’t just based in their communities; they belong to them. They’re built by people who live there, who know the area, who are invested in seeing it grow.”

It's hard to imagine two successful top-tier men’s soccer leagues in America. Particularly, if the European leagues are going to start playing meaningful games stateside.

The USL and MLS will operate alongside each other in a relatively small pond for the next few years. But once the USL has a D1 league on par with MLS’ product, it’s not difficult to envision conversations around a potential merger picking up.

The same could be said with the USL Super League and NWSL. The former debuted on NBC/Peacock in August ’24 with eight clubs and intends to quickly expand over the next two years.

In fact, the odds are probably greater that a deal eventually gets done on the women’s side. The USL Super League is staking claim to market exclusivity in desirable DMAs, and it’s selling expansion franchises faster and at a far lower price point (think: $12mm versus $110mm).

Of course, a merger is not the USL’s goal.

“We’re trying to create something unique for American soccer–an open system where clubs can dream big, invest in their communities, and rise based on merit,” McDonough said.

If its vision plays out, the rest will take care of itself.

Top 5 Sports Business Headlines
Click here to subscribe to Sport & Story Daily and never miss a story.

• College Sports a Key Driver of Disney/ESPN’s Advertising, Viewing Strategy

• MLS Sponsorships Spike as U.S. Soccer Gains Popularity

• Saudi Arabia's PIF Nearing $5 Billion in Spending on LIV Golf League

• UFL Approves Labor Pact With Players

• New SBJ Vertical to Focus On Women’s Sports