Saturday, October 5, 2013

Handicapping MLS Rights

The MLS is at an interesting crossroads right now. The league is drawing a lot of fans to their stadiums now more than ever and has helped stimulate the construction of multiple soccer-specific stadiums across the country. It's also in the midst of continuing expansion even more by adding other teams in New York with backing from the Yankees/Man City as well as Miami with backing from David Beckham.

But the league's quality of play sucks! A group of MLS all-stars were barely able to compete against a fourth place Italian football team and besides the days of Beckham, most MLS games aren't really exciting. And because of that, TV ratings stink despite the game being more accessible than ever before.

As the league's television contracts expire, who has the most likely chance of renewing? The Seattle Sounders may get more fans to their stadium than the New York Yankees but does that mean that TV networks should increase the fees which they pay the MLS like they have for other sports leagues?

That's the question that'll haunt the MLS for the next couple of months, especially since the NBA and the Big Ten are also looking for big paydays. Here are my rankings from most likely to least likely with some wildcards.

Don't expect a big payday from ESPN because of the fact that they'll want to save money for Big Ten and NBA negotiations. With all that being said though, there's no way ESPN doesn't renew with the MLS. It helps ESPN because they have counter programming on Sundays to the NFL and they keep their brand aligned with soccer since the other major soccer brands are with Fox and NBC.  And it also helps the MLS because ESPN does a great job of promoting the league. 

The power and reach of ESPN still hasn't been shaken despite the increase of competitors and ESPN is able to utilize synergy to the best of it's ability unlike any of the other national sports outlets. ESPN did a better job of covering and promoting Johnny Manziel's rematch vs. Alabama than CBS and CBS was the network broadcasting the game. This just tells you how important ESPN is to the league.

Fox Sports 1 might not be where the money is at either because of the big payday it just gave to the US Open and it's plans to acquire the Big Ten and the NBA. But, it'll still be a major contender in this race because taking the MLS would ensure Fox as the preeminent home for soccer over the next decade. The problem is though, that Fox is already going to have it's summers full with baseball so the demand for the MLS isn't as high as it would've been had FS1 lost it's baseball package to NBCSN. NASCAR and the UFC will also be taking up plenty of room which leaves the MLS empty in terms of trying to garner a big payday. 

NBC just paid the Premier League $250 million so you already know that any increase in fees to the MLS would be relatively small. NBC also doesn't have much to gain from the MLS because despite investing a lot of time and energy into the product, it didn't produce great ratings for the network. It helped the MLS gain more accessibility and helped NBC gain more experience in producing soccer but besides that, this partnership doesn't do much for NBC now that they have a more reliable soccer product under their belt. Many observers believe that unless NBC is able to gain an exclusive contract with the MLS for the same amount of money which it's paying right now, that NBC is on it's way out. I definitely agree with this sentiment but I would still put them on this list as one of the top contenders.


BeIN Sport is relatively unknown in the United States unless your a hardcore La Liga fan who lives to watch Real Madrid and Barcelona. Could the network overpay for the MLS to gain legitimacy? Yes, it's possible but very unlikely. Yahoo Sports recently talked to the deputy manager of the network, Antonio Briceño, who said that he hasn't heard anything out of the network which would suggest that they would even put a bid in. Briceño suggests that they're looking to become more of an international sports network and don't want to focus as much on domestic organizations (look out for them to come out of nowhere with an Olympic bid in the future or possibly a WC22 bid if Fox chooses not to broadcast a WC in the winter).

MY IDEA: If I were BeIN, the only way I would throw a lot of money at the MLS is if they could get me connected with one of their TV partners assuming that the MLS signs a deal with either ESPN, Fox or NBC. I would form a strategic partnership and ask that entity to help me get into more cable households in exchange for a bigger share in TV rights for the MLS. I would also commit to paying a bigger share in MLS rights. I would also simulcast some of the international sports which I have access to on their network if they wanted access to a certain event.

For example, if BeIN were to become strategic partners with ESPN through the MLS and ESPN was able to use their clout to get cable operators to put BeIN on better packages then ESPN could simulcast a Real Madrid-Barca match which was showing on BeIN or it could take exclusive rights to that game but use the game to promote BeIN and maybe even use BeIN's announcers. ESPN could even use BeIN to throw all of it's useless programming it doesn't want there. For example, if ESPN is obligated to show Big 12 chess (just a random example, not even sure that Big 12 chess actually exists) on TV but doesn't have space on any of the ESPN nets, then you can put it on BeIN and simulcast it on ESPN3.

If the MLS can find a way to do that then it helps the MLS because they're getting major dough from a company which has countless money bags in storage, it helps ESPN or whoever the potential partner would be because they still have a domestic soccer product and it helps BeIN because they're in more homes.

The owners of the new New York Cosmos recently started a brand new international sports network centered around the Cosmos. The owners of the Cosmos and this network have a major presence in Asia because they serve as Asia's biggest sports marketing company so typically the network broadcasts soccer, rugby, baseball and cricket which is all based in Asia. The network also has rights to reruns of Arsenal, Chelsea and Bayern Munich games and broadcasts newsmagazines based on those three teams. It has even invested in sports writers for it's website including former ESPNW writer Amanda Rykoff. The main draw for the network though, is the brand new renaissance of the New York Cosmos, who are atop of the standings in the second-tier NASL league which is one level below the MLS. 

The owners of the New York Cosmos have a major goal of turning the team into an international brand again and the rights to the MLS would probably help this network get on sports packs across all the major cable operators. If the network is available on sports packs across the USA, then sports fans flipping through would have access to the New York Cosmos' weeknight games and might be inclined to become fans of theirs if the team performs well.

The fandom, (which might be similar to the Cubs and Braves having fans from around the nation who watched their games on WGN and TBS respectively) could lead the MLS to entertain the idea of a third team in New York (or replacing the Red Bull with the Cosmos if the Red Bull continue their steep decline). The MLS would be helped by this partnership as well because there would be nothing in it's way of taking as many slots of programming, during the weekend, as it wanted to because they would be the #1 property on the network (unlike the others who are preoccupied with college sports).

MY IDEA: The likelihood of this happening is slim to none because World Sport Group (owners of the Cosmos/One World Sports) has never been active or shown interest in major sports television rights in the past. But if I were them, I would do this for the reasons mentioned above. And if I didn't have enough money to make it happen, then I would make the MLS a minority partner in the network. 

The MLS recently started a new production agency, MLS+, which is supposed to do to the MLS what NBC does with the Olympics. Tell stories. MLS needs a television hub to put all that programming on and it's always dreamed of being on par with the other leagues who already have their own networks. This is the easiest way to do it. 

There's no way a half-MLS owned network, which already has carraige deals with other operators such as Dish Network, and has MLS games/USMNT games doesn't at the very least get placed on the sports package all across America (or at best the digital basic package).

My reasoning for this possibility is simple. The MLS already has a successful partnership with YouTube in launching one of the top sports channels on the page, KickTV. Why not make history and become the first major domestic professional sports organization to place a portion of it's rights online? The biggest domestic organization to place some of it's rights on YouTube: the NBA D-League.

Why does MLS need a big payday now? Because we're in the midst of a sports bubble. Sports programming is the most valuable programming out there because it's live and not as easy to watch on demand as your typical drama or comedy would be. With the plethora of sports TV networks available nowadays, spending is at an all time high. All of the major pro leagues and college sports conferences have seen major increases in their fees. MLS could use any assistance it can get from TV rights money so that it can grow the quality of the sport and eventually compete for bigger stars.

Will the MLS see an increase in fees? Probably. Whenever ESPN, NBC and FOX are at the same table everything is at a premium and the prices are sure to rise. I also think the Spanish language rights will be very competitive between Univision and Telemundo. MundoFox, ESPN Deportes, Gol TV or TyC Sports could also come in with surprise bids and to be honest, it might be more likely that BeIN bids for Spanish rights than English language rights. Another thing which I wouldn't be shocked by is if the price for Spanish language rights exceeds English language rights. 

But will the increase in English language MLS rights be anywhere near the increase in money that the NFL or MLB got? Hell no! The quality of play and the ratings are not good enough to suffice a major increase in rights fees. Although, never say never. If Fox wants to drive spending from ESPN so that they can take away ESPN's chances at getting Big Ten and NBA rights or vice versa then who knows.

So how does MLS make their money? Regional sports networks' rights are the key. So many teams in the baseball and basketball world continue to venture out on their own and create competing RSNs. In most markets nowadays, you end up with 1 RSN which broadcasts baseball in the summer and college football/basketball in the winter while another RSN has nothing to broadcast in the summer while they broadcast hockey and basketball in the winter. A lot of teams are also starting their own new media ventures which are seeking content to broadcast. The Wizards/Capitals are a perfect example with their brand new Monumental Network. 

If the MLS can convince those RSNs who have nothing to broadcast in the summer that soccer is the younger alternative to baseball then no matter what the overall ratings may be, the MLS will be able to get big deals signed for major money. MLS' overall ratings may not be high regionally but it still sparks a major buzz on social media among young people and advertisers definitely don't mind being associated with anything young people like to watch and buzz about. You can even split up rights between TV RSNs and pro sports franchise websites who are also looking for content to broadcast in order to maximize your revenue streams.

Time Warner Cable paid $55 million for the Galaxy because live sports is always better for garnering advertisers than talk shows and because young people love soccer. And at the end of the day, that big investment helps the Galaxy perform better on the field because they have more resources to sign better players and long term wise, a successful, exciting MLS team helps your ratings against baseball, which is a slower paced game (especially if you're in a town where your baseball team is weak).

1 comment:

Maldini said...

Nice article but shame about the sad MLS bashing instead of just sticking to the facts.

Very unfortunate that you bring up the meaningless All Star game and then conveniently ignore all the other teams, including Chelsea, that have lost during that same meaningless All Star game. At least have the common decency to be intellectually honest enough to be consistent.

There is one point you made that is either a typo or just a flat out mistake. There is no way on gods green earth that NBC thinks they can get the entire MLS exclusive package for $10m a year(what they are current paying for just the B english package now) when the three current deals with NBC, ESPN and Univision come in around $28m a year combined.

One other point I either did not see or you did not consider is everyone expects the US Nats rights to be bundled with MLS again. With the Nats ratings continuing to grow on both English and Spanish, that should add another interesting variable to the mix.

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