LAFC: Building a Legacy in SoCal’s Competitive Sports Market
From Start-Up to Powerhouse: LAFC’s Journey in a Crowded LA Market
February 15, 2025 — Launching a sports franchise in the saturated and competitive market of Los Angeles presents many obstacles. With an established MLS team in the LA Galaxy and iconic franchises such as the Lakers, Dodgers, and Rams, LAFC had to carve out its own identity and build a loyal fan base from the ground up. The cost of real estate in LA made securing a stadium location a significant hurdle, in addition to the difficulty of capturing casual sports fans in a place that offers ample entertainment options. However, by strategically positioning itself as a club that embraces the city’s diversity and engages with local communities, LAFC created a distinct brand and successfully established itself in LA.
The LAFC entered a market with an established MLS franchise. The LA Galaxy was one of the league’s premier organizations, possessing a new soccer-specific stadium in 2003 (only the second in MLS at the time) and attracting high-profile players from around the globe. The Galaxy was controlled by ownership group AEG, which owns the LA Kings, Crypto.Com Arena, and numerous franchises and venues worldwide. LAFC faced challenges in gaining media coverage in LA. MLS’s struggle for consistent media attention forced the club to rely on digital engagement and grassroots marketing to appeal to many US soccer fans, prioritizing European and Liga MX teams over their local MLS clubs.
LA became the first host of two MLS franchises when Chivas USA was introduced in 2005. However, the club, which never had its own stadium, had a troubling history of racial discrimination, wrongful termination lawsuits, and identity crises and focused on the Latino community at the expense of the broader LA market; this ultimately led to operations ceasing in 2014. Soon thereafter, MLS awarded a new team. LAFC was founded with “the promise to construct a state-of-the-art stadium in the heart of LA” (LAFC).
Tom Penn, who co-founded LAFC and served as president and co-owner before stepping down, emphasized the importance of strong ownership and the experience that the range of former CEOs, entrepreneurs, athletes, and celebrities would bring. Despite the excitement, Penn acknowledged LAFC’s challenges, particularly the three-plus-year gap before their first game: “We had no team…no games. no product. We didn’t have anything concrete to offer for at least three years […] But we had to find ways to engage our future fan base” (Dann).
Since its establishment, LAFC has soared, garnering on-field accomplishments and showcasing innovative community engagement. As of early 2025, America’s two most valuable men’s and women’s soccer clubs have joined forces, creating unprecedented soccer visibility and opportunities in the US. LAFC, now worth north of $1B, has acquired a stake in NWSL’s Angel City FC (valued at $250M). Together, they share a home stadium and look for continued growth beyond the pitch (MLS Multiplex). LAFC’s involvement provides expertise and a management model that has already proven successful, assisting Angel City in solving issues regarding raising competition on the field and positioning itself as a benchmark franchise in women’s soccer, fortifying the sport of soccer in LA. The clubs have a chance to create a meaningful connection between men’s and women’s soccer beyond the pitch, sharing events, marketing campaigns, and brand partnerships to attract crossover fan bases that few cities can offer.
Building a Club for the People: LAFC’s Key Grassroots Strategies for Fan Development
We were fortunate to speak with an anonymous LAFC director and owner, who credited the franchise’s sources of pride, community engagement, and fan experience as leading factors for success. They noted that LAFC’s strategic building of Banc of California Stadium in downtown LA ensured accessibility for fans and made it a true LA team rather than the Carson-based Galaxy. Recognizing the city’s large Hispanic population, LAFC actively engaged local neighborhoods and supporters through events and outreach, solidifying a passionate fanbase early and demonstrating they authentically care and connect. They mentioned that the ownership group deliberately tried to engage Hispanic fans, recognizing that many were previously misidentified as Chivas USA supporters despite their strong allegiance to Club América. With locals preparing to rally behind LA’s new team, an infectious passion for the club’s fresh start and deep community roots drew much attention. During their transition, fans were encouraged to submit potential LAFC logos to the community design challenge, which offered hands-on connection (and cost no money until the design was finalized). The club opted to approach merchandising uniquely, focusing on hats as the pillar in an attempt to rival iconic local symbols like the Dodgers and Yankees hats. They wanted a timeless look that could be worn by fans and non-fans alike and set a record for the largest one-day merch launch in MLS history in 2016 (Sportico).
The fan-centric “The 3252” supporter section was designed based directly on fan input, with safe-standing areas and bolted seats to encourage a rowdy, unified atmosphere. The section is self-governed by supporters, fostering deep community ownership. Fans in The 3252 have to commit to the club to ensure loyal and authentic atmospheres–if tickets are found to be resold for profit, the fan loses their seats for life. They’ve also adopted a policy deemed “snipering” that quickly removes any attendees engaging in offensive or inappropriate behavior. The club sponsors Pride Republic, an LGBTQ+ supporters’ group for LAFC, and partners with The 3252 foundations to subsidize beer for the supporter section ($2 apiece).
They adamantly praised the ownership group’s ability to prioritize players who embody gratitude, community, and engagement with fans to ensure the team is built around culture. He stated that gauging the Hispanic community exceptionally well and completing so much work prior to launch was crucial. He also noted that luck played a role in securing Carlos Vela, a Mexican star who resonated greatly locally, as the team’s first captain. LAFC offers relentless community engagement, sponsoring weekly events at local bars, supporter-organized watch parties, and direct interaction between players and fans at locations beyond BOC Stadium. LAFC also invested in building soccer fields and developing a youth academy in the East, where the core of their fan base lives. LAFC’s diverse and successful board, such as Warriors’ chairman and Dodgers’ co-owner Peter Guber, has allowed the team to replicate and approve best practices from successful franchises in other sports.
LAFC needed an immediate strong impression in the competitive LA market. Rather than commencing play in a temporary venue like some MLS clubs have, the team prioritized launching in its permanent home, emphasizing the importance of a meaningful debut, opting to delay until their stadium was ready (Dann). Unlike many teams, LAFC embraces a family-oriented environment that encourages players’ families into the locker room and on the field, fostering loyalty and support. Lastly, LAFC has adopted innovative parking operations to enhance the fan experience and encourage the LAFC tradition of arriving and celebrating 90 minutes prior to kickoff. The integration allowed fans to reserve parking in advance, access digital passes, and navigate directly to designated areas. LAFC sells hundreds of parking passes each game, leading to increased parking revenue, concession sales, and fan satisfaction (Arrive).
LAFC’s Economic Impact: Driving Growth in LA’s Sports Scene
LAFC has had a positive impact on the sports economy in Los Angeles. BMO Stadium, LAFC’s newly renamed soccer-specific stadium, has a total capacity of 22,000 people, and they have an average attendance of 22,155 fans over the last 5 years. (Case Analysis: LAFC 1). One possible reason for the consistently sold-out seating is the influence of “The 3252.” The 3252 is the club’s supporters union, known for creating an electrifying stadium atmosphere for each home game through loud chants, creating a unique fan experience that has significantly boosted ticket sales. In addition to consistently selling out home games, building the stadium required a substantial workforce. A Project Labor Agreement (PLA) created 3,000 jobs while hiring 40% from the local community (LAFC.com). This has helped to provide a positive economic impact not only in the sports economy but the broader LA economy.
By comparison, LAFC’s local rival, the LA Galaxy’s stadium, is larger than LAFC’s (27,000 stadium capacity). Still, they have a total team value of $950 million, $250 million less than LAFC’s MLS high of $1.2 billion (Forbes). LAFC generated $140 million in revenue in 2024, surpassing Galaxy’s $95 million (Forbes). A significant factor in the financial disparity is the stadium. LA Galaxy’s home stadium, Dignity Health Sports Park, opened in 2003 for $150 million, while Banc of California Stadium opened in 2018 for $350 million (Dignity Health Sports Park and Daily News). Because the stadium is privately owned, LAFC can generate supplemental revenue by hosting events such as concerts and festivals, offering premium seating, and securing sponsorship deals. Because of this, LAFC has generated substantial revenue with a high MLS team value, which has helped bolster the Los Angeles sports economy.
We want to examine several pieces of data to determine if LAFC has positively impacted the local sports economy. Local business reports from hotels, bars, and restaurants surrounding the stadium can help assess a boost in revenue and foot traffic on game day. Additionally, comparing these reports with other LA professional teams, such as their rival, LA Galaxy, NFL teams (Chargers and Rams), MLB teams (Dodgers and Angels) will give us insight into LAFC's impact on its local sports economy relative to other programs. Another essential piece of data is the number of jobs created to maintain the stadium, which directly correlates with economic impact. And finally, seeking local revenue gains on gameday from rideshare apps such as Uber and Lyft, and comparing them to a typical day will help find an immediate economic impact LAFC helps to create. With high attendance, record-breaking valuation and revenue, job creation, sponsorships, and significant stadium investment, LAFC has contributed to the local and broader economy in Los Angeles.
Scoring Goals for the Community: How LAFC Can Boost Local Businesses
Businesses struggled heavily during COVID-19. There are many initiatives LAFC can take to help generate revenue for local businesses, even after the global pandemic. For example, the LA Clippers have partnered with Eleven Sports Media to launch a small to medium business program in the Los Angeles and Inglewood area (NBA.com). Along with directly partnering with local businesses, the Clippers have been using their brand-new stadium, Intuit Dome, to ensure that 30% of the enterprises employed by the Intuit Dome are underserved businesses. The program is expected to generate $260 million in annual economic activity in Inglewood (Inglewood Today). This is a unique way for a professional team to help their local community, which LAFC can also mimic.
LAFC’s stadium, The Banc of California, is in the heart of LA, creating a large fan base where local businesses subside. By supporting these local businesses, LAFC will allow these enterprises to collaborate with a billion-dollar sports franchise, creating a stronger local culture LA residents want to be part of. Another way LAFC could generate revenue for local businesses is by creating an LAFC loyalty card that offers discounts for participating businesses. Another strategy to help local companies generate revenue is partnering with their rival, Galaxy. Before the rivalry matches, the teams host week-long partnerships with local businesses near the two stadiums that give slight discounts (Lecture 10 — Facilities). At the very beginning of the game, the two teams calculate the total revenue generated from partnered businesses; whichever team generates the most gets an award. These awards could be extensive, like discounted tickets to the next game the opposing team must help fund, or more minor, such as designing 1000 shirts for the first 1000 fans who enter the stadium that is also supported by the losing franchise. This would help to increase total revenue for businesses in both areas of LA.
Helping out local businesses, especially after the pandemic, is vital because they are the backbone of the economy. Local businesses help create jobs, provide for families, and create a unique experience you can’t get from large companies. Furthermore, local independent businesses recirculate 48% of total purchases compared to less than 14% at chain stores nationwide (Minnesota University).
Factors for LAFC’s League-High Valuation
As mentioned above, LAFC’s soccer-specific home, BMO Stadium (originally named Banc of California Stadium), is a key aspect of the team’s valuation. The ownership group prioritized creating an atmosphere for soccer lovers. Benny Tran, LAFC’s Senior Vice President for Business Development, stated, “We knew the supporter section would be the most important element of the venue” (Harvard).
Just this year, the Los Angeles Clippers began playing at the Intuit Dome, a brand-new arena that was privately funded by owner Steve Ballmer (Cooper). Comparable to LAFC’s supporter union section, The 3252, the Clippers created “The Wall” (NBA). This section, found behind one of the baskets, is where die-hard Clipper fans can experience the game at a different level in a sea of blue and red. Ballmer emphasized other fan-centric aspects, such as legroom, charging ports, bathrooms, and an enormous halo screen above the court (D’Zurilla). Forbes currently lists the Los Angeles Clippers as the fifth most valuable franchise in the NBA at $5.5 billion, up from $2.2 billion in 2019 (Statista). On July 25 of that year, the Clippers released renderings of their proposed new arena, and we believe that the valuation growth goes hand in hand with the stadium development.
Of course, the sprawling market of Los Angeles gives any sports team that calls the city home a firm valuation, but we think that BMO stadium and The 3252 are also important factors to LAFC’s league-high figure. Being a fan-forward soccer venue in downtown Los Angeles gives the team a considerable advantage over the Galaxy’s multi-use complex in Carson. Another vital component is LAFC’s lucrative agreement with NWSL’s Angel City FC, which shares the stadium. According to Sportico, this contract grants LAFC a cut of Angel City’s revenue during home games. Also, it includes the MLS club with the option to eventually own equity in the women’s club (Badenhausen). This partnership could be a crucial aspect in the valuation of LAFC because Angel City FC’s team valuation also leads their respective league, which is listed as double the next most expensive team in the NWSL (Statista).
The franchise was valued at $700M in 2020, a notable stand-alone figure for MLS and a landmark of success for the league (LA Times). As of 2025, the franchise is worth $1.28B (Sportico). Recent bright spots for MLS have been primarily fueled by soccer-specific facilities improving the economics of operations and bolstering fan experience, offering LAFC a path to mirroring success. (Dann). The decisions and tactics discussed in previous sections were crucial to set the groundwork needed to thrive in the MLS. Despite LAFC’s many successes, the club experienced serious controversy with its fans early on.
From Chants to Change: LAFC’s Zero-Tolerance Approach
In LAFC’s inaugural match, a homophobic chant, “Puto,” could be heard throughout the stadium, prompting swift action from the club. LAFC President Tom Penn and other LAFC executives were reportedly disappointed by the chants, with him stating that he was very “bummed and surprised” (Dann 1). The club recognized they needed to address the issue head-on and responded immediately. At the next home game, the team and owners worked to eliminate the chant. The club adopted a zero-tolerance policy to eliminate offensive behavior and language. This included hiring ten extra security guards to remove fans who provoked chants or name-calling. Furthermore, the club wanted to educate the fan base, and they worked directly with community leaders to ensure that the stadium would remain free of discrimination. The club placed flyers on every seat to remind fans of the new zero-tolerance rules and to promote inclusivity.
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The actions taken by LAFC were critical to maintaining the integrity of the club, especially within the competitive sports market of Los Angeles. Los Angeles has a large population of Latinos and LGBTQ fans, and the club wanted to keep its stadium family-friendly and welcoming to all Angelinos. In a saturated market, it was essential for LAFC to differentiate itself from other sports teams. The club aimed to foster a profoundly engaged fanbase and cultivate an environment centered on inclusivity, positioning itself as a leader in promoting diversity and unity within the local sports community. These actions taken by the club helped to formulate The 3532 supporter section and Pride Republic (LGBTQ+), which is the club’s supporters union. They are credited with boosting ticket sales and have consistently sold out home games, as previously discussed in questions 2 and 3. LAFC’s actions helped foster a long-term investment for future viability in their club by creating a safe place for fans –which leads to loyalty and keeps the stadium vibrant. Addressing the incident as quickly as possible, the club sent a strong message that racist/homophobic behavior will not be tolerated. This set an example for the MLS and global football to follow. FIFA sanctioned Mexico in 2019 and 2021 for fans using the chant “Puto” (Bushnell).
The consequences of ignoring intolerance are high. Discrimination creates a large rift between large sections of fans. In turn, this leads to decreased attendance, sponsorships, and revenue. The repercussions of intolerance, as seen in the case of Donald Sterling, are not only damaging at a human level, but they can also be financially detrimental. In 2014, Donald Sterling had an audio recording of him making racist remarks about African American players. This created a fallout between Sterling and his fans and financial partners. Companies like State Farm and CarMax ended their sponsorships with the Clippers (Clippers Lose Sponsorship 1). The NBA was forced to act, and Sterling was banned from the NBA and forced to sell the team. This shows that intolerance can harm a franchise’s reputation and financial viability.
This paper was written as an assignment for the University of Oregon. Work completed by Rex Kaplan, Connor Homrighausen, Connor Michael, and Carter Novak.
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