The Franchise Was Never Earned

Anyone can compete. This is the pitch of American professional sports and, in a broader sense, the pitch of America itself. Salary caps. Luxury taxes. Revenue sharing. The draft. Every league has its own version of the same promise: the structure exists to keep things fair. Any given Sunday. Thirty-two teams, and every one of them could win.

The pitch does not extend to the thirty-third.

The NFL has not admitted a new team since 2002. The NBA since 2004. Major League Baseball since 1998. Across the four major leagues, 124 teams serve 335 million Americans. One franchise per 2.7 million people. The estimated price for the next NFL expansion: $7 billion. The next NBA franchise: somewhere between $4 billion and $7 billion. These are not entry fees into a competitive market. They are license prices in a cartel that decides how many licenses exist.

In England, 5,300 football clubs compete across 140 leagues and 480 divisions. One club per 10,700 people. Anyone can form a club, register it, and enter the bottom of the pyramid. Win enough games and you go up. Lose enough and you go down. No license required. No expansion fee. No territorial rights. No permission.

The most capitalist country in the world built a closed system with salary controls, revenue redistribution, and no consequences for failure. The countries Americans would call socialist built an open market with no wage floor, no draft, no safety net, and a mechanism that removes you if you are not good enough.

Three people who have seen both systems up close, independently of each other, used the same word to describe the American model.

Socialist.

The cartel

In 1960, the Dallas Cowboys paid $600,000 to join the NFL. In 1995, the Carolina Panthers and Jacksonville Jaguars paid $140 million each. In 2002, the Houston Texans paid $700 million. That was the last time the NFL expanded. Twenty-three years ago.

The pattern holds across every league. The NHL charged $2 million per franchise in 1967. By 2018, the Seattle Kraken paid $650 million. The estimated price for the next NHL expansion is $2 billion. MLS charged $7.5 million per franchise in 2005. By 2023, San Diego paid $500 million.

The price does not reflect the growth of the sport. It reflects the value of scarcity.

Each franchise holds exclusive territorial rights. The NFL grants a 75-mile radius. The NBA grants 75 miles for operations, 150 for marketing. The NHL grants 50. MLB uses county-based boundaries with a 15-mile minimum. No competitor may operate within that territory. When the Nets moved to Brooklyn in 2012, they were exercising a territorial arrangement that dated to 1976, when they paid the Knicks $4.8 million for the right to exist in the same city.

The scarcity produces extraordinary returns. The Ross-Arctos Sports Franchise Index tracks franchise value growth across North American leagues. Over the long term, franchise values grew at roughly 13% annualized, outperforming the S&P 500 at 10.5%, with less than half the volatility.

Brett Johnson owns clubs on both sides of the Atlantic. Ipswich Town in the English Championship. A USL franchise in Rhode Island. Phoenix Rising in the American lower divisions. He described the valuation logic of the closed system in specific terms. LAFC, he said, referring to Los Angeles FC, is "worth well north of a billion dollars right now. And I feel like that is inflated, largely inflated, obviously because there's no relegation risk." The absence of downside is priced into every franchise. Remove the possibility of falling, and the asset only goes up.

The math is simple. The fewer teams you allow, the more each one is worth. Every expansion dilutes every existing owner. This is why expansion stopped.

The leverage flows in one direction. Since 2000, more than $43 billion in public money has been spent on stadiums across North America. The Raiders extracted $750 million from Nevada, a true cost of $1.35 billion with interest. The Rams left St. Louis despite a $400 million public offer. The Athletics got $380 million from Nevada. The SuperSonics moved to Oklahoma City under an ownership group whose leaked emails revealed they had been planning the relocation from the start, despite public promises to keep the team in Seattle.

The threat is always the same. Build us a stadium or we leave. The city cannot call the bluff because there is no replacement. There are 32 licenses for 335 million people. The line of cities that would pay anything to have one is longer than the league will ever accommodate.

Johnson's description of the American model was straightforward. "Sports in the US, as far as I'm concerned, is a real estate play."

When he compared the two systems, the gap was stark. "You can buy two franchises from USL for $32 million. You can build a modular stadium for $5 million." MLS, by contrast, charges a franchise fee north of $500 million. "You can effectively buy your way into the league."

MLS is the purest expression of the closed system. It is not a league of independently owned clubs. It is a single entity. The league owns all player contracts. Franchise operators are investors in the league itself. When Bill Foley was offered the MLS Las Vegas franchise at roughly $300 million, he bought Bournemouth in the English second tier instead. Newcastle United, a Premier League club with 50,000-seat average attendance, sold for less than $500 million.

The open system was cheaper. And it had a ladder.

The factories

On 29 June 1895, a foreman named Dave Taylor organized a football club at the Thames Ironworks and Shipbuilding Company. The factory sat at Bow Creek, where the River Lea meets the Thames. A major shipyard. It had produced HMS Warrior, the world's first iron-hulled armoured warship, thirty-five years earlier. Arnold Hills, the managing director, approved the club and funded it. His motive was practical. He wanted to "wipe away the bitterness left by the recent strike."

The club was a labor relations tool. It became West Ham United. The crossed hammers on the crest represent the shipbuilding tools used to close rivets. The hammerheads still carry the letters TIW. The nickname "The Hammers" comes from the factory floor, not from a branding exercise.

Nine years earlier, something smaller happened. In October 1886, David Danskin and fifteen munitions workers at the Royal Arsenal in Woolwich formed a football club. They named it Dial Square, after a workshop in the factory. Each of the fifteen founders paid sixpence. Danskin added three shillings of his own to buy a ball. They wore old Nottingham Forest red, a kit donated by a Forest player who had moved south for work. The club changed its name three times before becoming Arsenal.

These were the pattern, not the exceptions.

Everton came from St. Domingo's Methodist Chapel around 1878. Manchester City from St. Mark's Church of England in West Gorton in 1880. Aston Villa from Villa Cross Wesleyan Chapel in 1874. Southampton from St. Mary's Church Young Men's Association in 1885, still called "The Saints," still playing at St. Mary's Stadium. In Glasgow, Brother Walfrid founded Celtic in 1887 to raise funds for Irish immigrants in the city's East End.

Sunderland was founded in October 1879 by James Allan, a Scottish schoolmaster. The club opened beyond teachers within a year. The community connection runs through the city's industrial identity: coal mining, shipbuilding, glass-making. The Stadium of Light sits on the site of the former Monkwearmouth Colliery, one of the deepest coal mines in Europe, closed in 1993. The badge carries a pit wheel.

Factories, churches, neighborhoods, collieries. Every one of these clubs began as a community institution that acquired sporting purpose, not a sporting business that adopted community language.

When a club can be promoted or relegated, when it can rise from the ninth tier or collapse from the first, the community around it is the constant. The structure changes. The badge does not.

No American professional franchise has this origin. There are founding myths. The Bears played at Wrigley Field. The Packers were organized at a shipping company. But the relationship runs the other direction. The franchise was placed in the city by the league. The community formed around the franchise after it arrived. The community did not produce the franchise. The franchise produced the community.

And the franchise can leave.

The ladder

On 30 May 2002, a group of fans gathered in a pub in south London. Their football club, Wimbledon F.C., had just been granted permission to relocate to Milton Keynes, seventy miles away. The decision was unprecedented. English football clubs do not move. They are where they are because that is where they were founded.

The fans formed a new club. AFC Wimbledon. They held open tryouts on Wimbledon Common. They entered the Combined Counties League, the ninth tier, seven divisions below the Football League, where players earn nothing and volunteers line the pitch.

They started at the ninth tier. By 2025, they were in League One, the third tier, having climbed six tiers through the pyramid. The club that started with tryouts on a common now sits three divisions from the Premier League.

This is impossible in North America. If the NFL relocated your team, you could not form a new one, enter a minor league, and earn your way to the same level. The mechanism does not exist. There is no ladder.

The ladder is the most American concept in professional sport. Earn your place. Prove yourself. Rise on merit. The system that performs this function, promotion and relegation, exists in virtually every football nation on earth. Johnson, who operates clubs in both systems, called it "one of the most American concepts, if you will. The Darwinian nature of win and go up, lose and go down. And yet it's not adopted in America."

In November 2020, Rob McElhenney bought Wrexham AFC for roughly $2.5 million. The club was in the National League, the fifth tier, where it had been stuck for fifteen years. McElhenney was, by his own account, "anti-football." Then he watched Sunderland 'Til I Die during the COVID lockdown. It "blew his mind" because "it showed the relationships we have in the UK with our football teams."

Three consecutive promotions followed. National League to League Two. League Two to League One. League One to the Championship. No team in English football history has achieved four consecutive promotions to reach the Premier League. Wrexham, currently sixth in the Championship, is attempting it. Bloomberg valued the club at $475 million in June 2025.

In 2021, Peter McCormack bought a football club in the tenth tier. Real Bedford. Average attendance: forty people. Three consecutive league titles followed. Attendance passed 360. Winklevoss Capital invested £3.6 million. The club holds its treasury in Bitcoin, with a balance sheet over £6 million growing faster than capital deployment. McCormack's roadmap calls for nine more promotions to reach the Premier League.

He was laughed at. Three years in, a third of the way through.

When asked what a football club is for, McCormack did not talk about returns. "The point of football isn't to win leagues," he said. "It's to build up your town."

Luton Town won the Conference, the fifth tier, in 2014. Nine years later, they were in the Premier League. Four promotions in nine seasons. A club that had been in non-league football, playing in the most-watched domestic league on earth.

These are not miracles. They are what the system is designed to produce. A structure where anyone can enter, where performance determines position, where the distance between the bottom and the top is connected by an unbroken chain of competitions. The ladder exists. It works. It does not exist in the country that would claim to value it most.

Jimbo

In September 2020, Macclesfield Town was wound up by the high court. Debts over £500,000. Mismanaged. Left to rot. Fans described it simply. "Part of our lives had just disappeared."

Rob Smethurst, a local businessman who had made his money in the car industry, saw the club listed on Rightmove. A football club, on a property website. "I've never seen a football club on Rightmove," he said. "I mean, does that happen?" He called Robbie Savage, the former Premier League midfielder, 39 caps for Wales. Savage's advice was clear. "Please don't buy a football club. It's going to be the most ridiculous thing you've ever done in your life."

Smethurst bought it for roughly £500,000. There were no players. No staff. No league place. The new club was placed into the Northwest Counties Premier Division, the ninth tier. They held trials. The budget for player wages was £150,000 a year, somewhere between £50 and £350 a week per player. Smethurst invested £4 million in total. The club hit profit within twelve months.

Then something happened that the balance sheet does not capture.

A BBC documentary followed the club's early years. In it, a fan described what the club meant after his wife died.

"Five years ago me and Harry lost my wife. She died overnight. The club really stepped up. Started to take me son out when I needed respite. Arie's got autism. I needed to shrink away and grow a beard and close me curtains. He needed a massive hole filling and the club filled that hole. Football clubs like Macclesfield to me in a town like this are more than football clubs. They're community hubs."

Jimbo is fifty-nine. Lives alone. Made redundant eight years ago. He volunteers at the club because it gets him out of the house. "It's more about mental health than anything else because it gets me out. I live on me own. I got made redundant eight years ago." Rob Smethurst's response: "Without people like Jimbo, football clubs don't exist. Jimbo symbolizes probably why I bought a football club."

Ken is ninety-three. He has been watching Macclesfield since he was eight. He had the first drink in the new bar. His review: "You're doing a damn good job."

Smethurst, on the economics: "It's a constant constant expense. We have to get the model right and it is a business or again it ends up going bankrupt." And then: "I think to run a football club, you have to be transparent. You have to be honest."

The closed system cannot produce this. You cannot buy an NFL franchise on Rightmove. There are no trials where unknown players show up hoping for £50 a week, no ninth tier to enter, and no Jimbo waiting at a brand-new MLS expansion franchise. The community connection that gives Jimbo a reason to leave his house takes decades to build, and the open system is the only design that permits it to form at all.

The floor

Rangers Football Club holds the world record for domestic league titles. Fifty-five. Founded 1872. Average attendance above 45,000. One of the largest fanbases in world football.

In February 2012, Rangers went into administration. Tax disputes with HMRC exceeded £75 million. The club was liquidated. Not relegated. Not fined. Liquidated. The old company ceased to exist.

A new company bought the assets for £5.5 million. The Scottish Football Association and the Scottish Premier League refused to let the new entity take the old club's place. You are new. Start from the bottom.

Rangers were placed in the Scottish Third Division. The fourth tier. A club with fifty-five league titles, playing against part-time sides in stadiums built for hundreds.

Four seasons later, Rangers were back in the top flight. Third Division champions. League One champions. Championship promotion via playoff. Back in the Scottish Premiership for 2016-17. The system made the fall real. The system made the climb possible.

In 2006, Italian football faced its own reckoning. The Calciopoli scandal revealed systematic match-fixing across Serie A. Juventus, one of the most decorated clubs in the world, was stripped of two league titles and relegated to Serie B. Not fined. Not docked points. Sent to the second division.

Juventus won Serie B in a single season. Then won nine consecutive Serie A titles between 2012 and 2020. The punishment was severe. The recovery was dominant. Both were possible because the system permits movement in both directions.

In North America, the mechanism does not exist.

When the New England Patriots were caught filming opponents' defensive signals in 2007, the punishment was a $500,000 fine for the head coach, a $250,000 fine for the organization, and the loss of a first-round draft pick. When they were caught again in 2015, the quarterback was suspended four games and the team lost two draft picks. In both cases, the team kept its franchise. There was no structural consequence. No demotion. No floor through which a team could fall.

If the Dallas Cowboys were liquidated tomorrow, there would be no mechanism for a new Cowboys to start in a minor league and earn their way back. The franchise would cease to exist, or the league would place a new one in Dallas at a price only a billionaire could pay. There is no ladder to climb because there is no system below.

Johnson described the consequence gap directly. "If you're an American consumer of the beautiful game, you're far more interested in watching the foreign leagues where there are games of consequence." He paused. "Everyone gets a t-shirt every single season and there's no consequence."

McCormack was shorter. "There's no penalty for failure. You're actually rewarded. If you fail, you're given the best players."

The draft is the clearest expression of this inversion. In every major North American league, the worst team gets the best pick. The incentive runs opposite to promotion and relegation. In the open system, failure is punished with demotion. In the closed system, failure is rewarded with talent. The system that claims to reward competition has built a structure where losing can be the rational strategy.

The convergence

In early 2026, English Premiership Rugby announced it would move to a franchise model. No more promotion. No more relegation. A closed league, modeled on the system rugby had watched work across the Atlantic.

The decision was not ideological. It was economic. Over the previous decade, the open system had destroyed clubs. London Wasps went bankrupt. London Irish folded. Worcester Warriors collapsed. Saracens was the last team to be relegated and promoted, and that was four years earlier. Since COVID, there had been effectively no movement between divisions. The depth of the pyramid that sustains English football did not exist in English rugby.

English football has 5,300 clubs across 140 leagues. English rugby's professional tier sat on a shallow base with insufficient revenue at the lower levels. Same country, same sporting culture, two different sports, one choosing to stay open, the other choosing to close. The decision had nothing to do with national character. It had to do with whether the specific economics of each sport could sustain an open structure.

Football could. Rugby could not.

The revenue structure explains why. DAZN signed the Belgian Pro League at €84 million a year, then tried to break the contract less than a year later. It signed the French league at €400 million, broke it within a year, and left French football with a €240 million shortfall. In the closed system, the cartel negotiates once and the deal holds. In the open system, every league negotiates alone.

Even football's advocates see the pressure. Charlie Methven co-owns Charlton Athletic in the English lower divisions. He watches the Women's Super League spend £10 to £12 million per club while the American NWSL operates under a $2.5 million salary cap. The American league has structure, cost controls, stability. The English league is spending without a floor.

Methven's prescription was explicit. "It needs to be a closed league for a period of time until the industry is successful. There needs to be cost controls." Then he caught the irony. "We're trying so hard in men's football to get rid of all these faults and yet people running women's football come and say oh well these faults are fantastic let's try and have all the same faults."

He sees the same drift in men's football. The Premier League's top eight clubs are, in his description, "effectively a closed league." Championship enterprise values are rising faster than Premier League values. The structure is drifting toward what he calls "EPL 1 and EPL 2," two tiers with bundled television rights and shrinking movement between them. The open system is closing at the top.

And the closed system's logic has already crossed the Atlantic.

In 2005, the Glazer family, owners of the Tampa Bay Buccaneers, bought Manchester United through a leveraged buyout and loaded approximately £525 million in debt onto the club, applying the American private equity model to a 147-year-old community institution.

Since the takeover, Manchester United has paid over £1 billion in interest and financing costs. Dividends have been extracted. Old Trafford, once one of the great stadiums in world football, fell into visible disrepair. In 2012, the club was listed on the New York Stock Exchange with a dual-class share structure that gives the Glazers controlling votes with a minority of economic interest.

The response followed the logic of the open system. In 2005, the year of the takeover, Manchester United fans formed FC United of Manchester. One hundred percent fan-owned. One member, one vote. They entered the tenth tier. They built their own ground. They are in the seventh tier now. They will probably never reach the Premier League. That is not the point. The point is that the system allowed them to exist.

Manchester United was founded by railway workers in Newton Heath in 1878. It became a club that meant something to a Jamaican family who never visited Manchester, whose connection ran through George Best stories told by a father who grew up in Kingston. It is now a financial instrument on an American stock exchange. The debt is American. The badge is not.

Both systems are under pressure to become the other. The open system is closing at the top. The closed system's economics are being applied to open-system institutions. And advocates of the open system, watching finances collapse around them, are asking for the guardrails that the closed system provides.

This is not a verdict on which system is better.

The closed system generates extraordinary returns. The cartel works. English rugby looked at its own collapsing economics and chose it deliberately. The open system produces something else. Jimbo at fifty-nine, volunteering because the club gives him a reason to leave his house. AFC Wimbledon, formed in a pub, climbing seven divisions. Rangers, liquidated and reborn because the ladder runs in both directions.

The paradox is that neither country chose the system that matches its stated values.

America, the country of open markets and creative destruction, built a closed cartel with revenue sharing, salary controls, no entry, no exit, and no consequences for failure. England, the country Americans associate with tradition and inherited position, built an open market with no safety net, no wage floor, and a mechanism that removes you if you are not good enough.

The most American concept in professional sport has never existed in American professional sport.

Both structures were designed. Neither emerged from the culture that hosts them.

McCormack, asked to describe American sports in a single word, did not hesitate.

"Communist."

He was being precise, not provocative.

The franchise was never earned. In the most capitalist country in the world, that was always the design.