Business of Soccer Ep. 3: Mexico's Passion For The Game And Turning It Into Profits

27:16So I think it's time for that. I think it's probably past time for that. And I think it'll be a big boost to the league in terms of media rights revenues, because it is a league that really gets people watching. You know, in both sides of the border, it moves the needle in terms of ratings. And now, more than ever, live sports are the backbone of not just linear, but streaming in terms of what people are willing to turn their TVs or devices on for. It's the only thing that people go to for a specific time to watch, you know, is live sports. So when I the other part of the conversation that you had mentioned, too, about MLS being, you know, coming together as a business sort of at first and Leia MX not necessarily coming together for that exact reason was one of the things that Mikel had also said was that one of the things they're learning from the MLS and the partnership, because the leagues are very close together, is the governing body and governing sense that the MLS has that he would like to bring to Liga MX.

28:17What do you sense, you know, sitting as a co-managing partner of the team, of the governing body, governing source of Liga MX and how everything works? Yeah, I think that it's evolving. I think that it's been a league that has, there are some major clubs, Club America, Chivas, Cruz Azul. There are clubs, Monterey, Tigres, some really big clubs in our league. And I don't know that MLS has the equivalent of like these massive historic clubs in the same way that League MX does. And the people that run those clubs, you know, it's political. And so I'm not saying that that's necessarily a bad thing.

28:57But I think the league is evolving to a place where they understand that, you know, like in the EPL, when you have big clubs like Man United and Man City and Arsenal and Chelsea, and then you have the smaller clubs, when everybody's rowing in the same direction and aligned at a league level, it's helpful to everybody. The big clubs are going to do better when the smaller clubs aren't just cannon fodder or aren't left out in the cold in terms of decision making and processes. So, I think that League MX is evolving in that direction and understanding that, yes, we've got big clubs, yes, we've got smaller clubs, but we need to think about this as a, you know, we compete on the pitch every weekend and every match, but off the pitch, we're thinking of ways to make our league as successful as possible.

29:46And I am seeing guys like Mikel, you know, understand that more and be and be thinking of ways to do that. So I'm I'm positive and optimistic on the way that the that the league is going and just kind of becoming more open. And I think that that happens by way of more international investment, more us being owners, the group that just bought Corretta Row being owners in the league and coming in and bringing different perspectives and bringing different ideas of what the norm at a league should be. And really thinking about it as a business in a modern sense. Absolutely. And as we talk about that, I obviously have to mention that, you know, and bring up Apollo again, because Apollo last year was meant to invest over a billion dollars and that was supposed to help get the media rights deal really centralized.

30:36Is there anything you can say about if at least this sports capital will help that deal along? Yeah, so obviously a tricky situation for me as an owner in League MX and now working at Apollo Sports Capital. That being said, with just my Nakaksa hat on, I would say that there's still a willingness and a strong relationship between Apollo and League MX and ongoing conversations. I think that where League MX is at the moment is trying to get you interviewed Mikel. So I think you touched on this in that interview. But I think League MX is doing some structuring in its relationship with the Federation of Mexican football and doing some internal governance stuff that the league feels will put them in a better position to enter into an agreement with an Apollo or somebody else.

31:28however, whatever direction that goes in. And I think that, um, I think, I think there's, there's progress going on there. And I think there's a real willingness and an appetite from U S private equity, private credit, whatever you want to call it to engage with league MX and work on that stuff. Because I think they, I think not just Apollo, but others see what the opportunity is that, that we've seen for quite a while. And I think that as league MX gets a couple of these governance things sorted, I think then it will make it easier for them to enter into that agreement that they have on the table with Apollo that I think was quite close.

32:02And, you know, a few things just had to get cleaned up. So I'm as a as a NACOXA owner, I'm cautiously optimistic that something gets done in the near future in that direction in terms of investment from from U.S. private equity. And that's probably the most I can say about that. I appreciate that. And as As much as we're talking about Club Nacoxa, I also want to mention, like you said, about La Equidad and the investment that you have there in Colombia. I'm interested in the idea that these are both, you know, Latin countries and the idea was it the idea to hone in on these Latin countries because the Latinos are so passionate about soccer?

32:42Yeah, so these are places, both Mexico and Colombia, where I think the fans over index on passion about football. And it is just it's a way of life. It's the most popular sport, the second most popular sport, and the third most popular sport. In the U.S., we've got the NFL is the most popular sport. And then you've got the NBA. You've got your various soccer, MLS, EPL, League MX. You've got the NHL. You've got college sports. There's so much here. And you talk to some people who are huge baseball fans and some people who are huge basketball fans and some people who are huge soccer fans. And in Mexico and Colombia, everybody's a soccer fan.

33:19You know, everybody's a football fan, football with a U. And so we really like that. That's that's appealing from an investment standpoint. Then I think what some people fail to realize is Mexico has a domestic population of 130 million people. That's bigger than any European country by far. So that's a huge demographic push of just people who can watch and commercially engage with your product. Colombia is about 53 million people. So a massive country that is bigger than many. Colombia has a bigger population than Spain, which I don't think a lot of people would think intuitively. So these are big markets.

33:58These are these are growing markets. These are markets with, you know, with a lot of new businesses being created and a lot of import export. And so what we've liked about them is that they are, we think that their LATAM countries are going directionally in a good place. Obviously, there are some things you've got to work through and figure out being an international investor in a country that you're not native to the language or the culture. But yes, it's all part of a thematic opportunity to go into places where there hasn't been a lot of international investment. and you can find those spots and it's not been picked over and look for opportunities that you think are really exciting.

34:40The two clubs kind of go together in a lot of ways because I mentioned before about what we're trying to accomplish at Nacoxa. And what I think about in the football space and the soccer space is that when you're a team like Nacoxa and you do well, people are going to come by your players. It's just the nature of the beast. And that happens for smaller clubs in the EPL or La Liga or anywhere else. So what we're trying to solve for by adding a Colombian team to our portfolio is to expand our access to young talent by having the first team there, but also having the academy team there and then having a lot of crossover between the two between the two clubs.

35:18the same people oversee the football and the scouting and get that going in the same direction. And it's going to give us when we do have to sell our best player to a bigger club because we can't afford to keep them or the offer is just too enticing to the player. OK, now maybe we've got a couple of guys that can come up and do it. Now that takes a couple of years to get that operation fully synced up. But that was part of it. So I would have made either investment, honestly, in a vacuum because I think both are great buys. But I think together they're much more valuable. Yeah, absolutely. Sharing the talent makes a lot of sense.

35:50Or having the pool, having the talent pool makes a lot of sense. That's right. Lastly, I want to ask, I can't let this whole conversation go by without talking about the World Cup. You know, how big of a landscape that that's going to be for North America next year? And with all the upside you've already seen in soccer, how much bigger do you think it's going to get having the World Cup here next year? Yeah, I think the sky's the limit. I mean, everywhere, people in the community where I live, people who I work with, obviously, know if they know that I'm in soccer, they're like, so what do you think about the World Cup?

36:23What's going on with the World Cup tickets? Where is going to be the best locations to go see matches? Where, you know, if the New York market is going to be crazy, crazy expensive, is there some place where we could, you know, like what you heard about with like the Taylor Swift tour of like, well, you could try to go in Miami or New York. But maybe if you fly for the it might be cheaper to fly to Indiana and go there than it is to fly to the hotels than it is to go see it in your home market. So what I'm seeing is a real fervor just colloquially in my life about getting to matches, tuning in, learning about who's going to be on the team.

36:55So I really think the sky's the limit. And I think that the World Cup 2026 is going to have a massive impact of people who are getting to know the sport for the first time, people who are already into it, getting more into it, a generation of young people really feeling that vibe of how that is. I attended a few club World Cup matches with my kids this summer. I went to some Copa America Cups matches the summer before that. And all I've seen is, you know, the buildup of like anticipation of how exciting this is. So I personally think it's just going to be like massive. I have no, I think I'm like full, fully on the side of like, this is going to be truly huge.

37:37And I think it's going to be, I think it's going to be great. You know, the logistics are always going to be a little crazy, but I think that, you know, every match will probably be sold out. I think there's going to be some, some, some just amazing experiences. And we're really excited about it. But, you know, obviously from a business perspective, I think it's good to be in, if you're in the soccer ecosystem here for the World Cup to be here. But just as a fan of the sport, I think it's just going to be awesome to have it on our, you know, home turf for the first time in 30 years. Yeah, I'm pumped.

38:07And, you know, we are both from New Jersey. We live in New Jersey and we have to make sure everybody knows the finals on New York. It's in New Jersey. And everybody needs to know that. So from that landscape, though, like you were saying, from the business side, from the owner's side, how much bigger and more valuable do you think this makes the business of soccer having having that on this on our soil? Well, I think you're going to see people want to invest in the sport more. I think you're going to want to I think you're going to see brands are going to want to do more sponsorship. I think media rights broadcast partners are already pretty all in on soccer, but I think this will actually push that up a little bit.

38:45And I think that, you know, what makes those things make money is the fans. And I think it's just going to create more fans of the sport. And so, you know, I think a little kid goes to a World Cup match or watches one on TV that's in the United States. And I think it's kind of hard not to get hooked on the sport. So I think it's going to create fans, which create sponsors, which create broadcast partners, which create investors. So I think it's going to be a real flywheel that's just going to bring more interest and more dollars and more eyeballs into the space. Absolutely. I know what the 1999 World Cup did for me.

39:20So I'm sure there's going to be some some of that for for everyone else. Hopefully. I think there will be. Sam, thanks so much for joining us. And I really appreciate you coming on the Bloomberg Business of Soccer. Thanks for having me, Vanessa. This was great. I appreciate your time. This is a special edition of the Bloomberg Business of Sports podcast, The Business of Soccer. Up next, we'll hear from Bloomberg News reporter Gonzalo Soto on how Mexico is preparing for the World Cup. I'm Vanessa Perdomo. This is Bloomberg.

39:49You're listening to a special edition of the Bloomberg Business of Sports podcast, The Business of Soccer. I'm Vanessa Perdomo. My next guest is Bloomberg News reporter Gonzalo Soto, who's based in our Mexico City office. So he's plugged into everything going on with Mexican soccer. He gave us a deep dive on the business of Liga MX and why they're so closely following in the MLS's footsteps. And we discussed how Mexico is preparing as a co-host for the World Cup. Let's listen to my conversation with Bloomberg News reporter Gonzalo Soto. So, Gonzalo, I want to use this opportunity to take a deep dive into soccer in Mexico and, you know, how deep it runs in the history, how important it is, you know, not just to the citizens and the fans, but how important it is to the economy and how that's all going to work together as we come together for Mexico to host, you know, co-host the World Cup.

40:35But I want to start off with something simple. In Liga MX, the, you know, the league there, who are historically the most successful teams in Liga MX? Well, thank you, Vanessa. I think soccer is by far the most popular sport here in the country. I mean, baseball has grown, basketball has grown. There is a large football fan base. However, soccer is still king. And, well, the most popular teams remain the historical ones, the ones that have the most championships. And we're talking about Club America. We're talking about Chivas. We talk about both teams from Monterrey, which is in the north part of the country, Club Monterrey, Tigres as well.

41:22And, well, recently we've had a lot of other teams that have been able to win some championships. There are other teams that have lost some of its previous brilliance, like Pumas, which is the team of the National University here in Mexico, which used to draw and still draws younger crowds and younger audiences. and of course Cruz Azul, which was one of the winningest teams in the country. However, in the past few years, they haven't done so well. That's really interesting. So what is it that makes a club so successful or that some of them have dropped off? Is it similar to what we see in the Premier League where the teams who have the most money are consistently at the top or what is it for Liga MX?

42:15Yeah, I think Mexico hasn't been able to escape that tendency in which teams that have the most money are able to win the most championships. That is still a rule here and that applies as well here in Mexico. However, the way our tournament is structured makes it able for other teams, teams that are not as rich as the ones that I mentioned previously, they can compete for a championship. And that's something that makes fans dream a little bit larger. I mean, it's not the same to be a fan in England of Nottingham Forest or Wolverhampton that you do not aspire to win the Premier League. You aspire for maybe European football, being able to compete in European tournaments the next season.

43:07Here in this country, it's kind of different because smaller teams get the chance because we are not, well, Liga MX is not a tournament that is point-based. That means the team that makes the most points in the season win the tournament. Here we have a playoff system in which sometimes there are big upsets, there are surprises, and the black horses that in the end make it possible for many, many teams to actually win a championship. Well, that's good because those are the most exciting times, right? You hate to see the same people keep winning. But I love an underdog is my favorite thing. I mean, we all have an underdog story.

43:53The thing here, Vanessa, is that the level of Mexican soccer, some experts say, has actually dwindled because of this rule. And that is because teams do not really aspire to play well during the whole season. I mean, they don't actually play their best football for 17, 18 weeks of the regular season. But they do play their best during the playoffs. So you have for months not the best kind of soccer, not the best level. And then all of a sudden, once you get to playoffs, you usually get much better games. That's something that has put off many, many soccer fans here in Mexico. Do you know what that is?

44:39Very interesting. And it's very American, actually, it seems like. We have the same problem, right, with the NBA and the MLB. the seasons are long and, you know, people complain about how much people rest and they don't try until really the playoff season. I feel I'm also guilty of getting fatigue throughout the season of watching, you know, not the best until the playoffs, really. So I guess it's very interesting. And it's very interesting that you mentioned the U.S. system because in the past few years, Liga MX and Mexican soccer in general has mostly followed what the MLS, the Major League Soccer in the United States, has been doing.

45:22I think instead of following the European model that remains basically the same, although many changes have occurred, especially in European football. And I mean, the Champions League, for example, the continental tournaments. Liga MX has actually tried to follow with the MLS model and that has bring them a lot of trouble, especially with teams that are in what is called league expansion or the second division. I mean, Liga MX is the top tier in Mexican soccer. Then you have the second division with league expansion. And since the 2019, 2020 season with the excuse of the pandemic or the pretext of the pandemic promotion and relegation was suspended.

46:09So a team that did poorly in the first division in Liga MX was not relegated to the second division as it usually happens in European football. And that led to a lot of financial and business decision to be made. And it also, you know, put Mexican soccer on a path to reply or to copy the MLS model. Right. I'm so glad you brought that up because that is exactly what we're seeing right now. A lot in the MX is the parallel to the MLS. You know, President Mikel Arriola has a really, really close relationship with Commissioner Don Garber of the MLS. They do a lot of things together. They have about three or four competitions throughout the year that they do together.

46:56So I'd love to get your take on how, you know, Mexican fans feel about this close relationship with the U.S. and with the MLS. Well, it is mixed. And it is mixed because if you support a League MX team, you might see that your team gets an extra revenue for playing, for example, in the League's Cup, which is, again, something that was invented to be played in the middle of the summer in the United States, where Mexican teams draw very large crowds. And of course, that becomes, that transforms into a very good revenue for them. Let's remember that MLS teams bring in far more revenue than most of Mexican teams.

47:44So for League MX teams to play in the United States, that means there is an extra source, a very lucrative source of revenue. And that is why League Cup still exists. That is why Michael Riola and the rest of the League MX directives or management have been able to or are willing to follow more closely what the MLS is doing and try to bring the alliance even closer. because it's good for the finances, it's good for the business, but teams don't really engage too much, let's say, in a game where America is playing the Seattle Samuels or Houston playing Guadalajara. So that's still not there. There aren't really true rivalries there that actually draw the attention of Mexican fans.

48:42So you're saying the level of competition isn't necessarily there between the two leagues yet. It's not like, oh, Mexico is coming over to the U.S. and we're rival. Like you were saying, there's not that rivalry that's creating a natural storytelling aspect of it that has the fans excited for something like that. Not yet. The only narrative that I think is actually gaining traction is the one that, I mean, several years ago, Mexican teams, namely clubs or the national team, will usually dominate anywhere in CONCACAF, which is the region where the United States and Mexican football, it's a region where Mexican and U.S.

49:28teams belong to. And the rivalry, it's more likely to be how Mexican football still remains somehow better than U.S. soccer. However, that has been changing a lot recently, especially in national teams matches where the U.S. has been quite successful taking on the Mexican national team. And that has sort of permeated to Mexican clubs. So journalists, analysts, experts will tell you that Mexican teams are being left behind or are being caught up by MLS teams, especially because MLS has been extremely successful in drawing and bringing in soccer stars that, yes, they might be in the dawn of their careers, but still they're fantastic.

50:25And of course, also they draw huge audiences. I mean, I just have to mention Lionel Messi, for example. I mean, that's the top example. But also, I mean, other players from Germany, from France, you got Huyo Gullery playing in Los Angeles. That's pretty exciting. You got Olivier Giroud also playing there. Thomas Müller, a German legend for Bayern Munich, now playing in Canada, in Vancouver. So that's something that MLS has done terrifically well. And the MLS has had, sorry, and Liga MX has tried somehow to replicate, but it's not there yet. That's really interesting. And I think one of the things that, you know, we're talking about in the parallels there, And it's interesting to me that you're saying, you know, they're kind of being left behind in this way.

51:19But I feel like that's when I was talking to, you know, Mikel Ergola earlier this year, and he was kind of saying that the reason they're so close to the U.S. and one of the things they would love to get from the MLS is the way their governance works and the way they structure their business. Right. To get that revenue, like you were saying, how the U.S. teams still, you know, they have much bigger revenues. But the interesting part there is that League MX is actually more popular in the U.S. than the MLS is. So how do you think they get to that point where it is a true business and they are making that money and they're able to attract, you know, outside players?

51:57Well, you're right when you say the League MX is extremely popular in the United States. I mean, I think last season they averaged half a million viewers across several networks, but mostly in Univision, which is one of the most watched TV stations for Spanish-speaking population in the United States. One thing that I believe it's the reason why Mico de Riola was brought in in 2021 to be the president of Liga MX is that, I mean, when you look at his resume, he was a public servant, mostly working in finance. And that is the aim that the owners assembly, which is the most powerful buddy in Mexican football.

52:46That's why they brought him in, because they needed to check in the finance. They needed to put order in the house, you know, to clean the house financially in terms of administration. And his example was or his model was MLS because he thought and Liga MX has seen in the MLS a model that could be replicated in Mexico successfully, given the fact that a lot of its revenue comes precisely from the United States. Yeah. And now we're seeing more American investors coming into Liga MX. Do you think that it's because of the fact that they see that potential that is there? The assets are undervalued, teams are undervalued right now, but there is so much room to grow because it is such a popular sport in Mexico and in the US.

53:38I mean, I completely agree with the first part that several teams may be undervalued. And of course, buying an MLS franchise is much more expensive than buying a Mexican one. And of course, there is a lot of storytelling there. I mean, just ask Eva Longoria buying Necaxa in a very, very small town called Aguascalientes, which I mean, Necaxa is a very storied team. It used to play in Mexico City. It was largely successful in the 1990s, but then it just kind of disappeared. And now Evan Guter comes in and she gets to create this narrative, you know, sort of what Ryan Reynolds did with Wrexham in Wales.

54:25So there is a lot of opportunity there. And of course, U.S. investors are always looking for opportunities here in the Mexican league. There has been since at least two years the promise of an American fund willing to invest in Mexican soccer in order to make it grow, to create better experiences. That hasn't materialized yet, but it's still something that's in the books and still something that is in the plans. And I think it will bring fruition somewhere after or sometime after the World Cup. Do you think that that will be met with, you know, acceptance by Mexican fans or will it be met by a little bit of friction there with not wanting the league to really be taken over by American money?

55:17I think in the end, the Mexican fan just wants their team to win. And as I said, I mean, like other teams in Europe that, you know, they know exactly which tier they belong to and what they truly aspire to. I mean, here the idea is that they just want to see their team win. I mean, and money, money does buy success in soccer. I mean, just take a look to Manchester City. Just take a look at Manchester City. I mean, 20, 25 years ago, Manchester City was the other team in Manchester, while Manchester United absolutely dominated European and English football. And nowadays, it's a huge powerhouse that has already won the Champions League and other big tournaments, draws large crowds from everywhere in the world.

56:07And I think that's the expectation of some fans, to be able to match the amount of expenditure that other teams that are being held by big conglomerates like America or Monterrey or Chivas, you know, the amount of power and money that they have. I want to get a little bit, you know, shift gears a little bit, but I mentioned, you know, kind of the cities that you were just talking about. And I want to talk about the World Cup. and obviously the Mexico's has three cities hosting the world cup that's Mexico City Guadalajara and Monterrey so from what you're saying there it sounds like Monterrey has this big huge you know history in in soccer and they're very successful so is that one of the reasons why they were chosen tell me how these three teams these three cities were chosen and why do you think well basically they're the three largest cities in Mexico, and they all three have a huge soccer story.

57:09Mexico City, of course, will be, and the Azteca Stadium will be the first one to host three World Cups. I mean, nowhere else in the world has this happened. So it is a historic opportunity. It happened in 1970, it happened in 1986, and now 2025. Guadalajara is very, very passionate about soccer. Chivas Guadalajara is perhaps the most popular team after America, both in Mexico and in the United States. And it also has a fairly new stadium that is being refurbished. I mean, Estega Stadium is also being refurbished. It's being adapted for what the FIFA standards require, whereas Monterrey is also a very soccer passionate city.

58:08It divides its passion and its attention with baseball. However, the current governor of Monterrey, Samuel Garcia, he is a huge soccer fan. And therefore, he is really investing big in the state and in the city to make it really stand out in the World Cup. Let's remember something. This will be the best. Sorry. This will be the first World Cup that doesn't have 32, but 48 teams playing. and therefore there will be more games. However, most of the games will be played in the U.S. Mexico City will get only four games, Valada will get three games, and Montoya will get three games. So these three cities are trying to get the best of it and are trying to really stand out in the tournament.

59:00How much economic boom is Mexico and these specific cities expecting from the World Cup? I mean, they're expecting over 5 million visitors just in Mexico City during the World Cup. And that has been reflected in a lot of investment being made in this past few months. Some experts actually believe that the Mexican government, especially here in Mexico City, kind of started a little bit late in the investment for the World Cup, especially in infrastructure around the stadiums. Mexico City or the Azteca Stadium is kind of in the heart of a very popular, densely populated area of the city. So it needs a lot of refurbishment.

59:47It's not really the case with the other two stadiums, although they are still in the city, but they have better connection. They have better infrastructure. So they're really pouring in and they are expecting millions of people coming in, as I said, over 5 million just for Mexico City. And that should reflect a large sum of money coming in. One example of it is Formula One. They are following the example of Formula One. when Formula One returned to Mexico a few years ago, it became a weekend where businesses and hotels have almost full occupation. And that is something that they're expecting again during the World Cup weeks that will be taking place here in Mexico City or in Guadalajara and in Montalve.

1:00:37So before I let you go, Gonzalo, I have to ask, Mexico and U.S. are obviously co-hosts in this World Cup Who do you think is going to go further? Well, oh my God, then you're putting me here In a very, very difficult situation I think, well, Mexico, Mexico national team Hasn't done really well over the past few years And one of the reasons it's linked, as I said To the fact that there is no relegation and no promotion Therefore, many, many sport experts say that that has reflected into a reduction of good soccer talent available for the national team. But to answer your question, I think Mexico will go a little bit further.

1:01:30I think just one stage further than the United States. I think Mexico will reach finally the quarterfinals of the tournament. And I think the United States will stay a round behind. I'm not going to argue with you on it. You know, we'll see. We'll see. Please do not bring this up in a few months when this doesn't happen. But that's my expectation. Well, it's on the record and we might come back to it. You know, you never know. Gonzalo, thanks so much for joining the Bloomberg Business of Soccer. Thank you. Thank you very much for the invitation. I'm very happy. And I hope this is useful for our listeners.

1:02:13That was my conversation with our esteemed colleague, Bloomberg News reporter, Gonzalo Soto out of Mexico City. And that does it for this edition of The Business of Soccer. It's part of a new series we're starting on the Bloomberg Business of Sports as we get ready for the FIFA World Cup in 2026. I'm Vanessa Perdomo. Subscribe now so you never miss an episode. You're listening to the Bloomberg Business of Sports from Bloomberg Radio around the world.