TV Fees – The Key to MLS’ Future

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 …

  • “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.


    For Toronto:

  • “Toronto also rakes in $4 million in local television and sponsorship revenue.”

    Smaller market teams like Kansas City and Real Salt Lake cannot hope to match those ancillary revenue streams. They will always depend on a share of the national and the
    newly sold overseas rights to MLS (only $10M!). But while ancillary revenues are part of the full picture, they are not the focus of this post.

    According to the Forbes article, “In 2007, the three teams that were in the black–Los Angeles Galaxy, Toronto FC and FC Dallas–had a combined operating profit of $6.7 million.” We’ll see(maybe) if FC Dallas is able to remain profitable with the drastic drop in attendance they are experiencing. If FCD reports a profit for 2009, it raises the question of what constitutes revenues for FCD. For as part owner of Pizza Hut Park, they earn revenues from non FCD events, i.e.; concerts, rodeos, etc. As such FCD could show a profit as a corporate entity while the football operations lose money. Therefore my next question is this;

    If the corporate interests that own MLS franchises can show a profit without running a positive cash flow for football operations, what immediate incentive do they have to significantly raise the salary cap?

    The Bigger Picture

    To put things in perspective, Fox Soccer Channel and Setanta pay $57M for the US broadcast rights of the EPL, nearly triple the $21M that MLS receives for all of its domestic rights(the HDNet agreement ended with the ’08 season). And the ratings appear to both justify the price and demonstrate what MLS can aspire to earn in domestic rights.

    The two largest contracts are with ABCESPN, currently paying $7-8 million per year, and Univision which is paying $9-10 million.

    American fans will recognize that these numbers are dwarfed by NFL, NBA, MLB and even the NHL. Here in the USA, the NFL garners $3.1B, the NBA $930M, MLB gets $400,000,000 from TNT alone. MLB also has contracts with Fox and ESPN.
    and the NHL $930,000,000(includes Canada).

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    7 Comments

    1. Derek September 3, 2009
    2. Mitch Howard September 4, 2009
    3. soccer goals September 4, 2009
    4. T-MaN September 4, 2009
    5. Rex September 4, 2009
    6. Mitch Howard September 5, 2009
    7. Jammer September 5, 2009

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