The number one item that should be on the agenda for MLS officials should be has to be the preservation of the TV rights contracts.
Why do I believe that TV holds the future of MLS in its grasp? Because it’s already saved the league once. And as of now, it could be argued that the contracts might not even be extended at the current price, or not extended at all(unlikely). In light of the recent debut of La Liga and EPL on ESPN, one has to wonder to what extent ESPN will promote MLS. After all, ESPN is in business and in business, MONEY TALKS. And ESPN’s MLS ratings do not inspire confidence.
If MLS lore is to be believed, the league was saved by televsion money, albeit was the sale of the US television rights to the 2002 and 2006 World Cups by Soccer United Marketing, a creation of Don Garber and other investors when the league was in danger of collapse. But that’s another story.
So where does MLS stand now? The current contracts were signed in 2007 when there were 13 teams. By 2014, the renewal year for ESPN and Univision, the two largest domestic rights contracts, there will be at least 18 teams. According to Forbes, teams received around $800,000 from SUM in 2007. Along the way the teams are going to have to share a pie that will be sliced into smaller pieces.
“Soccer United Marketing, a separate business owned by investors in the league, runs the league’s national television deals ($23 million last season from ESPN, Fox, HDNet and Univision), as well as the commercial rights to a bevy of soccer properties (such as the U.S. rights to the FIFA World Cup). Yet SUM distributed less than $1 million to each team in 2007. That means that to be successful in MLS, a team has to generate a lot of cash from its stadium and local television and sponsorship deals.”
Forbes – September 2008
That’s fine for the larger cities, LA and Toronto do particularly well with their local television deals, but what about the rest of the league? A little bit of math from the Forbes figures reveals that less than $13M of the $23M+ was distributed to the teams.
A sampling of local revenue sources referenced in the Forbes piece.
- “Herbalife agreed to a $4 million-a-year jersey sponsorship deal, twice what any other team commands.”
- “Sponsors like American Express , Delta Air Lines and Valero Energy bring in another $6 million annually for the team.”
- Last I checked, Beckham had sold over 300,000 jerseys at around $75 a pop. $22.5M in jersey sales alone.
- “Toronto also rakes in $4 million in local television and sponsorship revenue.”
In New Jersey …
ESPNsoccernet. The Red Bull extended its TV deal with MSG for another 3 years. Financial terms were not announced.
For LA and MLS, the Beckham effect cannot be denied …