MLS and US Soccer announced an agreement with ESPN, Fox and Univision that will pay MLS and US Soccer $90M per year over the next 8 years. That sounds pretty good and we'll get into how good. But first some of the basics of the deal.
NBC is out and Fox is in as a joint partner with ESPN for English speaking broadcasts. Univision will continue to broadcast games in Spanish.
MLS is attempting to own the early Sunday evening timeslot. They have developed Sunday night double headers at 5pm EST (ESPN2 mostly) and 7pm EST (Fox Sports 1 mostly).
MLS also wants your Friday night. Univision has the rights to 34 Friday night games each season.
This is a joint deal with US Soccer. ESPN, Fox and Univision also get the rights to broadcast USMNT and USWNT games for the next 8 years.
How good is this deal for MLS and the Union?
Estimates of MLS earning 5x revenues with this deal are dangerously overstated. Here's my best take at what the financial improvement really is. MLS was earning approximately $28M this year from ESPN, NBC and Univision and now that number jumps somewhere near $80M is my guess. Whether or not US Soccer was paid out of that $28M is unclear, but I will assume that is not the case for now.
We need to determine how much of the $90M US Soccer is going to get. Fortunately US Soccer publishes financial statements which helps us whittle down the possibilities. In Note 3 US Soccer tells us they made a little more than $23M in the fiscal year ending March 2013 from sponsorships, licensing, television and royalties. Further they tell us that Nike was approximately $12M of that revenue. That leaves $11 for TV plus additional revenues. Given the growth inherent in the deal its reasonable to guess that US Soccer will receive about $10M from this deal per year for their TV broadcasts. That leaves $80M for MLS. So next year MLS will make $52M more from this deal than they did this year. That's huge.
But that $52M benefit is locked in for 8 years. They can't get more than $52M. Over that span MLS has locked in $416M more than their current deal. If MLS were to grow an incremental $416M over the next 8 years that would equate to a 23% annual revenue growth rate. That is pretty impressive. So basically MLS just locked in 23% growth on their TV revenue for the next 8 years. If you read this article on MLS player salaries it says that the league will need to grow revenues about 16% over the next 8 years in order to compete with the top leagues in the world. The new TV deal is a good head start for achieving Garber's stated goal.
That growth will trickle down to the Union. Next year there will be 21 teams in the league so the Union's incremental cut will be as much as $2.4M. As the league grows to 24 teams their new cut will be reduced to as much as $2.1M.
MLS and the MLS Players Union will need to come up with a new CBA this year and how much of that $2.4M will show up in the salary budget will be interesting to watch. Don't expect the salary budget to grow from $3.1M to $5.5M however. There should be a significant increase but expect MLS to give clubs the choice on where to spend it, likely to bring in more high profile Designated Players. The Union have one DP spot available as of now and should have a good amount of money to offer a big name player. Of course, so will every other team that has an available DP spot.
What's bad about the deal for MLS and fans?
The deals ends in 2022, the same year that the current MLB, NHL and NFL TV deals expire. The MLS will be competing with the big boys in 8 years and there will be big numbers being thrown around. The risk is that MLS gets squeezed during the next TV deal as the other leagues will be looking to increase programming and exposure.
MLS Live is going away and being replaced by ESPN3 and WatchESPN. I'm going to get personal here for a minute because there will probably be others in my boat. I subscribe to DirecTV. Neither DirecTV nor Comcast care about their actual customers and therefore DirecTV customers can not watch Comcast channels in Philadelphia (and other cities). DirecTV and Comcast compete in the world of cable TV so Comcast refuses to offer them their other business - sports content. Both companies are horrible for putting customers in the middle of their greed. But I digress. All of this means that I am dependent on MLS Live to watch Union games. I am eternally grateful to the Union for waiving their right to black out in-market broadcasts. They don't have to do that (other MLS teams do not), but they do. However, the announcement yesterday clearly stated ESPN3 and WatchESPN will be for out-of-market games. Will the Union have the option to let the games air locally? Maybe, maybe not. It would be nice if the Union made an announcement with regards to this issue. If you currently rely on MLS Live to watch the Union games, you may need to explore another option next season.
MLS now has it's own time that fans can set their watch to; Friday nights (come on, Spanish speaking announcers are awesome to listen to) and early Sunday evenings will soon be MLS time in our minds and hearts.
This is no Garber B.S., the MLS got a good deal here. Locking in 20%+ in revenue growth for 8 years is a good day. You have to wonder if MLS really needed to go for 8 full years. Perhaps they could have avoiding clashing with the big boys in 2022.
The Philadelphia cable battle may hurt Union fans next year if ESPN3 is not as flexible as MLS Live.
The Union spend on salaries could grow as much as 50% next year but it will be the same for every team, especially those with extra DP slots available. But another $2M to spend should generate some good buzz.
Now it's time to dream about how the Union should spend that money...