View Full Version : ESPN to pay MLS $200Mil ?
bbsbt
10 Jun 2006, 02:12 AM
The Big Game (http://www.nj.com/business/ledger/index.ssf?/base/business-3/1149831413170600.xml&coll=1&thispage=2)
"MLS is on the verge of inking its first fee-based television rights deal, in which ESPN will pay the league $200 million dur ing the next 10 years to broadcast MLS games. Previous deals re quired MLS to pay for production and sell advertising in exchange for free air time".
I know they are in the final stages of inking a rights deal, but, this is the first time I see specifics about it.
Has anyone else heard about this from different sources?
With 16 teams, it breaks down to about $1.25mil per team/year.
Even though I had hoped ESPN would pay more, this $200mil is still better than I expected. What I find disappointing though is that MLS is locking it at this amount for 10 years. Would have been better to have gone for 4-5 years and then re-negotiate from that point.
Of course, it's possible the author might have his facts wrong.
kenntomasch
10 Jun 2006, 08:58 AM
$20 million a year?
I mean, that's fantastic if it's true. But man, for the life of me, I can't see anyone recouping $20 million a year on men's outdoor professional soccer on television.
Then again, ESPN is known to overspend on stuff.
If these numbers are correct, then that's righteous. Those of you who were looking for a huge-money TV contract like, or even remotely close to, the other sports, may be disappointed, but the evidence seems to support the notion that people are actually spending money to be involved with the league now. And that's a very good thing.
kebzach
10 Jun 2006, 09:08 AM
Yes, the 10 year part of the deal is a bit odd.
Jabinho
10 Jun 2006, 09:11 AM
Yes, the 10 year part of the deal is a bit odd.
If in 7 years or so, if MLS has some big stars and a bigger audience it may end up being a steal and a mistake for MLS to go that long with the deal.. Just a thought and it may not happen but it could...;) Perhaps there is something in the contract that takes increases in ratings into account..
It will be interesting to see if ESPN does more promotion for MLS including during non-soccer events..
kenntomasch
10 Jun 2006, 09:16 AM
Yes, the 10 year part of the deal is a bit odd.
Why not lock it up? Where else you gonna go?
MLS will be 21 and able to drink by the time it's over. It'll last just a touch longer than the adidas deal.
Heck yeah take this deal. No one every paid $ for US men's pro soccer before. MLS needs stability over next 10 years...a series of breakevens + profits...to become 'credible'. Consistent revenue stream. Can pay its bills.
Wow, actually becoming like a real business, and not some flaky internet start-up.
Take the deal...for goodness sakes....take this deal! The longer term numbers work in soccer's favor. Its surviving the near-term that has always been the issue...
MasterShake29
10 Jun 2006, 09:42 AM
If ESPN pays $20 million a year, you'll see some serious promotion I'd think.
Women's league supposedly to (re-)launch in 2008 as well.
kenntomasch
10 Jun 2006, 09:43 AM
Women's league supposedly to (re-)launch in 2008 as well.
No, it's going to re-launch in 2004....er, 2005. No, wait, 2006... ;)
scaryice
10 Jun 2006, 09:57 AM
NHL only got $65 million with 30 teams this year.
Jabinho
10 Jun 2006, 10:08 AM
NHL only got $65 million with 30 teams this year.
For what amount of time?
wufc
10 Jun 2006, 11:07 AM
This could be similar to the Adidas deal where ESPN is paying a huge amount of money as an investment and a push to grow MLS. Then if MLS does become big, they'll be in the league's good graces.
Soccerdude redded
10 Jun 2006, 11:22 AM
I would not settle for 200k no way the game is already too big where Baseball & Football folks are shaking in their boots. Why do you think these new MLS investors are coming for, they know a very good investment otherwise they would stayed away from the game and the league like they did at inception. MLS please don't sell yourself short. ESPN will be making a killing as we speak with the WC deal just wait till the ratings come out and see for yourself. I would ask for twice that amount and ESPN should take it and called it a holiday.Remember Hispanic population is too big and valuable for any network to crab that lottery and run with it.
Bobethy
10 Jun 2006, 11:32 AM
I believe the deal is with SUM (the marketing arm of MLS), not MLS directly and includes rights to future World Cups - someone correct me if I am wrong. It's a bit of semantics and the same people involved. Essentially, ESPN is spending the money for 2010 World Cup rights, and the MLS is a mandatory add on to it.
However, establishing SUM and leveraging MLS with the World Cup rights it is a great business move by Garber & Co. His $2 million a year salary is a steal for what he has done for the league.
joebloe888
10 Jun 2006, 11:40 AM
$20 million a year?
I mean, that's fantastic if it's true. But man, for the life of me, I can't see anyone recouping $20 million a year on men's outdoor professional soccer on television.
Then again, ESPN is known to overspend on stuff.
If these numbers are correct, then that's righteous. Those of you who were looking for a huge-money TV contract like, or even remotely close to, the other sports, may be disappointed, but the evidence seems to support the notion that people are actually spending money to be involved with the league now. And that's a very good thing.
My financial model, based on some assumptions that even some in the industry would call "aggressive", puts the break-even point at a video rights fee of $2 million a year for just MLS.
For ESPN to pay MLS $20 million a year just for MLS makes no sense unless Skipper, Wildhack, et. al. know something I don't.
--
Simple Financial Model for MLS on a TV channel clearing at least 80 million households
Revenue Projection
Avg # of Males 18-54 per telecast 100000
Rate per targeted viewer per 30-second ad ($25/CPM) $0.025
Number of 30-second ads per hour 10
Number of hours per season 70
Number of 30-second ads per season 700
Total Revenue from 30-second ads $1,750,000
Rate per 5-minute clock logo burn-in ($25/CPM) $0.025
Number of 5-minute blocks per hour 9
Number of hours per season 70
Number of 5-minute logo burn-ins per season 630
Total Revenue from 5-minute logo burn-ins $1,575,000
Total Revenue per season $3,325,000
Cost Estimate
Production/Transmission Cost per hour $15,000
Number of hours per season 70
Production/Transmission Cost per season $1,050,000
Rights Fee $2,000,000
Total Cost $3,050,000
Profit $275,000
I would not settle for 200k no way the game is already too big where Baseball & Football folks are shaking in their boots. Why do you think these new MLS investors are coming for, they know a very good investment otherwise they would stayed away from the game and the league like they did at inception. MLS please don't sell yourself short. ESPN will be making a killing as we speak with the WC deal just wait till the ratings come out and see for yourself. I would ask for twice that amount and ESPN should take it and called it a holiday.Remember Hispanic population is too big and valuable for any network to crab that lottery and run with it.
What planet do you live on? Football and baseball people shake in their boots over MLS' .4 rating share for games. A blank screen draws a higher Nielsen than that!
Meanwhile, as par for the course, the ABC televised World Cup matches are boring, low-scoring affairs.
Guys, let's face facts- many more times than not- the soccer that does make it on TV is a great advertisement NOT to watch the sport.
(thanks for the laugh) "football/baseball shaking in their boots"...
Go on, take the money and RUN!!!!!!!
purojogo
10 Jun 2006, 02:11 PM
NHL only got $65 million with 30 teams this year.
that's quite interesting....
MLS has 12 teams right this second... plus NHL has what a 92 game regular season schedule? (or is that basketball?) So i'd say.... take it.... MLS can take the safe cash for now, then with all the SSS and freedom to schedule at more convenient hours in the future....make a much better "next" deal....
Pathogen
10 Jun 2006, 02:16 PM
Why not lock it up? Where else you gonna go?
MLS will be 21 and able to drink by the time it's over. It'll last just a touch longer than the adidas deal.
Couldn't agree more. Take the money and run. Overall television ratings for this league don't come close to deserving $200 million for ten years. But if it's offered, grab it and don't look back. And if the league exploded in 5-7 years, big deal. You're just positioned to negotiate a better deal at the end of the contract. I doubt this will happen, but one can dream.
Soccerdude redded
10 Jun 2006, 02:52 PM
What planet do you live on? Football and baseball people shake in their boots over MLS' .4 rating share for games. A blank screen draws a higher Nielsen than that!
Meanwhile, as par for the course, the ABC televised World Cup matches are boring, low-scoring affairs.
Guys, let's face facts- many more times than not- the soccer that does make it on TV is a great advertisement NOT to watch the sport.
(thanks for the laugh) "football/baseball shaking in their boots"...
Go on, take the money and RUN!!!!!!!You made sick in the past and still make me sick. Yes I remember that you said a few times to make the goal posts bigger and no offside rules so Americans can enjoy 78-90 score lines and super fries at Mckee Ds. As history will tell you NASL was a major treat to both Baseball and the so called Football. No matter how boring the games are that never stop you from coming back to a soccer site. Just STFU.
210597
10 Jun 2006, 05:48 PM
I think it's a great deal. Just for the league to have financial stability guaranteed at whatever level for the next ten years is a HUGE step up beyond anything that's ever existed before in America. I'd be proud to see MLS sign a deal like that.
HSEUPASSION
10 Jun 2006, 05:56 PM
That's a great deal! $200m can go a long, long way.