Thursday, November 03, 2005
The second most important MLS event ... ever.
Watching a sports league grow up is similar to watching a human being grow up. At the age of 10, you're really looking to see if the kid you're raising starts to make firm decisions that will be the foundation of their beliefs going forward.

In the first ten years, we've seen Major League Soccer go from the newborn with whom everyone was infatuated to the ten year old who people tend to forget about. Entering the stage where we go through awkward changes trying to figure out who we are will require formulating the basic structures of what will define us as a league.

One of the main foundations of the structure of the league has been the creation of Soccer Specific Stadiums, something that's absolutely required for the league to reach solvency and maintain an appearance of legitimacy in a marketing culture constantly looking for "the next big thing." D.C. United seems to be the next team to have their own home and it's something that MLS is absolutely correct to be purusing.

The second crux of the foundation of MLS is something that has come out in the last week and I am shocked at how little press it's received:

MLS will be receiving a rights fee for the first time in league history. Stadiums are absolutely important but of all the things I didn't expect to see, this is tops of the list.

Here's why this is important: at the current time, at 4:30 on a Saturday afternoon, when the primary demographic is out playing soccer, with no promotion, MLS games receive approximately a .2 share on ESPN2. That's 200,000 households in the United States that are watching the game live because they care about soccer and want to see what's happening.

And that's with no effort on the part of ESPN/ABC. Now, with ABC/ESPN acquiring the English-language rights to the 2010/2014 World Cup rights, MLS will receive a rights fee from ESPN as part of the package. It's not official yet, but ESPN will be paying MLS money in order to broadcast the games.

Ok, so this isn't the $2B that the NFL gets every year, but let's say it's $10 million a year. First off, the pays for half of the league's player salaries. Secondly, instead of SUM/MLS paying ESPN and taking care of all the broadcast details, ESPN will handle all that.

Why's that important? Now, ESPN is putting forward the money to produce this and the money for the right to broadcast it. SUM's deal previously allowed SUM to garner the advertising revenue (hence the Side by Side advertising this year) but now ESPN is the one making money off advertising. How do you make more money? Higher ratings. How do you get higher ratings? More advertising. If ESPN is on the hook, they're going to be the ones doing the advertising.

And that's the reason why this is so important. The reason you can't escape the NFL in America isn't because the NFL is doing a lot of advertising, it's because Coors and Tostitos and Visa are shoving the NFL down your throat because they've invested a lot of money for the right to do that. It's a compounding effect. The more companies that will take up the banner of something, the higher the ratings accrue and the more companies that sign up.

This is the first step for MLS and I give huge credit to the MLS brass and the Don for their leadership in this matter. Lots of people thought this deal was dead about two months ago and this group brought it back from the flatline.

I cannot overstate how important this is for MLS. The more people MLS sign up to carry the water for the league, and even better if they're willing to pay money to do it, the better the league will be in the future. This is the first step and it's the most important thing that will happen to MLS this year and makes any bad news easier to accept.

Even if Chicago and Colorado are in MLS Cup.

8 Comments:

Blogger Calamity Man said...

ah... an american talking about soccer. that's a drop in the ocean. nice to know though.

10:52 PM  
Anonymous Anonymous said...

There's a beware here as well though. If teams count on the increased income, and bid up their payroll bills as a result, then that's sowing the seeds for trouble in the future.

You may know about what happened to England's second tier (then called the First Division) following the collapse of sponsors ITV Digital. If not read up about it. Some teams are still not out of the woods.

8:30 AM  
Blogger D said...

Yes, true, but how will they format the video package during Season 20 for this as "MLS Moment #2."

And it should stay behind Eddie Pope's goal

9:18 AM  
Blogger maradawga said...

Certainly there's the possibility that league elders could look at this as though we've arrived and they go all Roman Abramovich on us.

If that happens, the league is screwed and we'll be writing about the new soccer league 30 years from now that's trying to learn from past mistakes. Again.

Also, on the DVD this'll be formatted as the point where highlights start showing up on Sportscenter.

10:35 AM  
Blogger cvmacboy said...

Okay, okay. I saw this headline on ESPNews the other day but didn't realize that these were the implications. Maybe I'm missing something. Now I understand that SUM and MLS are the same entity (or really close), but I don't read that ESPN is going to be showing more MLS games, only the World Cup and other FIFA events.

Does this imply that because they're paying for the World Cup that they might as well show MLS?

This is great news, if that's the case. But, I'm just seeking understanding.

1:16 PM  
Blogger maradawga said...

It's not official yet, but ESPN/ABC as part of this agreement will be paying MLS/SUM a rights fee to show MLS games. It will happen soon and is probably something the Don is waiting to announce at Cup next weekend.

So, in addition to paying for the World Cup, they're paying for the weekly game of the week (or more, if they choose to show it).

Basically, it's a revolution in how things are done in the network-league relationship. To build up interest in the World Cup among American soccer fans, ESPN is now paying for the right to show American soccer games and can increase their return by increasing viewership of these games.

ESPN is on the hook for the ratings and the advertising revenue acquired. That's why it's important.

1:26 PM  
Blogger Tim Froh said...

Excellent, excellent blog post. I'll be very interested to see how this plays out in the next year.

10:21 PM  
Blogger cvmacboy said...

Sounds cool.

Thanks for the explanation maradawga.

11:30 AM  

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