An estimated $90 million dollars a year is what the deal will be worth according to reports out this morning, that is a huge bump from the current $18-20 million a year and could be just the game changer that MLS needs to become one of the top leagues in the world, or is it?
Here are the details as provided by SBJ/SBD:
Now I have been more than a little critical of the level of commitment over the past decade by both ESPN and Fox, and you only have to look at the fact that not a single MLS match has been shown on ESPN/2 yet this year to know why. The new plan calls for both to broadcast 34 matches a year, yes that is one each week (or equivalent of), and another one each week on Univision and now you have almost 100 matches being carried on a national level. Now before you get too excited that actually isn’t a big move forward, this year NBC/S will have 40 MLS matches on, there are 48 on UniMas and/or Univision Dep. and 14 more on ESPN/2. The big new will be the regular time spots, Univision on Friday nights, and both Fox and ESPN on Sundays, fans have asked for a regular time slot and they will now have it. For me the big upside is that now national matches aren’t trying to compete with all the matches that are played on Saturdays, which I think will help ratings out a lot.
Still when compared to the $5.5 billion a year the EPL gets in rights for UK broadcasting it isn’t a huge deal, heck NBC Sports is paying about that much for the US rights to the EPL, so will it level the talent gap between the top leagues of Europe and MLS, nope not even going to make a dent in it. Consider that the bottom team in the Deloitte top 20 money teams (Atletico de Madrid) gets about $72 million dollars a year in broadcast revenue, the top team on that list (Real Madrid) gets over $250 million a year in broadcast revenue. Broadcasting accounts for about 25-35% of the revenue for most clubs on the list, with Juventus being a real outlier at 61% on the high end and Hamvurger SV being the outlier on the low end at 18%. So closing the gap with the top leagues and teams in Europe just isn’t going to happen with this TV deal, now what it might do is close the gap a bit with the Mexican league and some of the smaller leagues in Europe, depending on how the money is spent.
What we still don’t know is how that money will be split up, see the deal includes all the rights to US Soccer matches played in the US, which is the cherry that I believe most of the networks were chasing. Still that is a small number of matches so I am not sure how big of a chunk they will get, but let’s guess (and this is just a guess) 20%, which will come out of the ESPN/Fox portion, so the deal drops down to $75 million a year. That is still a very nice increase over what we have today, and if 33% of that is allocated to the salary cap, that would be a million dollar boost for each team, which would really help teams build depth. I expect that the players union will be pushing very hard to get as much of that new TV money into the pockets of the players, and given that the league has also raised about $250 million from expansion fees in the last few years they may make the point that the players are way overdue for a larger piece of the pie.
For me the biggest area of concern may end up being the best thing in the deal for fans, that is the digital rights. I love my MLS Live, and with ESPN taking over all out of market rights (yes that means both Direct Kick and MLS Live) there are a lot of questions about how this will be handled. Currently ESPN3 is the option being talked about, but to get that you must have an Internet provider that pays ESPN for the rights to give that to their customers (all customers not just the ones who want it), there is also the watchESPN option, which is online access given to people who subscribe to a TV provider that pays ESPN to offer it to their clients. Or we could see some other option like ESPN Full Court or Game Pass, which allow out of market access to college basketball or football. It could explain why we have seen little in the way of upgrades to the current offerings this year, why invest in what is going away? The reality is that almost any option that ESPN chooses is likely to get the digital version of matches in more hands than the current solution does, and that should be a good thing as Nielsen begins to include streaming stats with TV stats.
So that is a lot to think about, but for a lot of us we have been thinking about this for a long time, and while I still am taking a wait and see attitude towards both ESPN and Fox given their past histories with MLS, I do think that this is by far the best deal that could be got at this time. I do still think it is silly to commit to anything for 8 years when it comes to how your product is distributed, 8 years is a very long time given how technology has changed and will continue to change. There were no Roku boxes 8 years ago, there were no iPads or other tablets that allowed you to watch matches anywhere, and we have no idea what will happen in the future but more and more people have started cutting the cord when it comes to TV, eliminating relationships with cable and satellite providers in favor of online tools like Netflix, Hulu, and others.
MLS is making a grab for a chunk of change that is probably more than they should be entitled to today, but clearly what they are giving up is probably more than what they should given the uncertainty of the future. I do think the big names coming back to MLS in recent years have pushed the numbers higher but it remains very unclear if we will ever see that type of spending going beyond a handful of team to something a majority of teams do. I do think we are more likely to see the gap between high spenders and low spenders continue to develop, but with the current roster and league structure that impact hasn’t been as dramatic on the pitch as it could be, but will this new revenue stream change that? I know it will change the conversation in the current CBA talks, but beyond that there are still more questions than answers for me, and as often the case time will tell.
If you want to know more check out the following links from SBD/SBJ:
That’s How I See It (for now)