Game changer or disappointment? – Sportico.com

For months, Major League Soccer pondered what it wanted for its next TV deal: play in every home in America, or a bigger check and product behind a paywall. The answer came on Tuesday, when the league announced a 10-year deal for each game to be streamed on a new subscription service from tech giant Apple. According to several people familiar with the agreement, the deal is worth at least $2.5 billion.

“MLS couldn’t keep everything. The only property left to keep everything is the NFL and maybe a handful of others,” Patrick Crakes, a media rights adviser, said in a phone interview. “You’ve had to give up reach, at least in an established sense, and however you slice this, that kind of reach is going down.”

Commissioner Don Garber had been initiating a $400 million-a-year deal in the years leading up to this negotiation, but the current pact will not reach those lofty heights even after additional linear deals are signed. Several MLS insiders have expressed frustration that this wasn’t the deal Garber promised.

But it still represents a jump of at least 400% from the previous deal after you factor out the value of the U.S. soccer component, which made up almost half of the current $90 million-a-year deal and was sold separately in March . Many in the MLS universe see significant benefits in partnering with the world’s most valuable company on its largest esports deal to date, now that the brand has dipped its toes into the sport Friday night baseball this season.

“It’s all about choosing the right partner,” DC United CEO co-owner Jason Levien said in a phone interview. “This is a very long-term decision in how we distribute our product. And if you’re thinking long-term, it’s hard to beat having Apple by your side as a sales and product partner.”

Levien also highlights the impact of a more standardized schedule and start times, with games taking place almost exclusively on Wednesday and Saturday nights, rather than the current Hodgepodge format.

“I think it’s a game changer for the league to partner with Apple and add a partner of their global stature and influence,” Jared Shawlee, president of San Jose Earthquakes, said in an email. “This partnership continues to signal that MLS is at the forefront of innovation in the industry and will continue to drive change in esports around the world.”

MLS follows the trend of recent years of moving football broadcasting rights behind a paywall to appeal to a young, digitally savvy audience. La Liga and Bundesliga are both on ESPN+, while UEFA Champions League, NWSL and Serie A matches are housed on Paramount+. Exceptions are the Premier League and Liga MX. MLS will have a profit-sharing agreement with Apple after certain subscription thresholds.

“If we grow our audience and are successful, we have an opportunity to make more money,” Levien said. “And while the money is important, I think how this deal positions us going forward is far more important.”

MLS is on the hook as part of Apple’s deal for production costs, which is hurting teams’ net earnings. These could account for up to 25% of the annual warranty. The teams also gave up their local broadcasting rights as part of the deal, although those rights were worth little outside of some clubs like the LA Galaxy. Most teams do not receive an annual rights fee and sell ads to cover production costs, with away game broadcasts usually resulting in an overall loss in local media.

MLS team values ​​have increased in recent years, averaging $550 million per franchise last year. The next TV deal played a role in the escalation, but the rising tide is more of a bet that over the next two decades, US fans will start watching the world’s most popular sport more like the rest of the world. The ultimate impact of this deal will likely not be known for another five years or more.

“When I raise capital, I’m selling the vision and the path,” Levien said. “This Apple deal improves on that and even gives it a turbo boost in many ways. I’m not sure the return to a traditional linear airline is that exciting for investors.”

National TV money is only a small part of revenue for most MLS teams. The current deal is worth less than $3 million per team after the US Soccer payout, while total earnings for the typical team this year for the gated league should surpass $50 million. This new TV deal would never bring the financial strength of the NFL or even the NHL to the income statement.

“I think MLS is in a massive uptrend for people who are taking a long-term perspective,” Levien said. “I don’t think it’s a league where you want to start flipping teams.”

“MLS did something different because it anticipates where they fit in the media ecosystem,” Crakes said. “You’re betting on yourself, and while some other sports leagues don’t have to do that, MLS did to add value to it.”

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