The Road from Here, Reprise

Discussion in 'MLS: Commissioner - You be The Don' started by triplet1, Oct 1, 2018.

  1. Yup, it was impossible, and in my eyes also unjustifiable to forbid the broadcast of clubmatches behind a paywall. What was forbidden and in line with European rulings (heritage!!) was the total shut out the paywall broadcasters wanted. Extensive highlights Europe wide have to be on the open net. So as a result of my cable I can watch all the highlights in Europe of all the matches. I donot, not even of the EPL, unless I have nothing to do that is.
     
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  2. mschofield

    mschofield Member+

    May 16, 2000
    Berlin
    Club:
    Union Berlin
    Nat'l Team:
    Germany
    The NFL, NBA, NHL and MLB, as well as MLS, all are strong believers in getting their highlights out to the public. It's seen as advertising. MLS is even offering the 20 minute "condensed match" version of most games.
    The problem is it's hard not to see what has happened as step one in a long and steep staircase.
     
  3. A steep staircase indeed and one with missing steps and a bunch standing beside it with sticks keen to push you off to make a nasty fall.
    To make the whole thing work the SL investors have the following possible sources to extract money from:
    1. pay per match view via either internet or cable
    2. paywall package deal with networks for all matches.
    3. paywall package deal with internet giants for all matches
     
  4. Elninho

    Elninho Member+

    Sacramento Republic FC
    United States
    Oct 30, 2000
    Sacramento, CA
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    #429 Elninho, Mar 19, 2019
    Last edited: Mar 19, 2019
    High school football is the dominant religion in Texas.

    I was in Houston the last two years before the Oilers moved to Tennessee. There were a few high school teams in the Houston area that outdrew them. Admittedly it was because the Oilers were both awful and had one foot out the door, but still, don't underestimate the strength of high school football traditions!

    On Fridays and Saturdays during the high school football season, about half of the Houston Chronicle sports section was high school football reporting. (It wasn't in depth, but they had at least a paragraph on each high school game played in an area the size of Belgium, and longer stories on a few games, which took up several pages.)
     
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  5. Matt Hall

    Matt Hall Member+

    Sep 26, 2012
    Club:
    Philadelphia Union
    Love the reprise of this thread. To add my two cents (building off the great insights contained within), I see the road from here as a blend between “more of the same” and “evolution, not revolution”. In fact, I think the trends favor MLS in its current form relative to other leagues.

    Trend 1 (the obvious one): rise of US interest in soccer
    MLS benefits from fertile territory for growth. Growing population, plenty of room to run in terms of soccer affinity, separated geographically east-west (important for live viewing aspect) from major leagues.

    Most importantly, relative local scale equals minimal need to appeal internationally from a viewing perspective to close the competitive gap with elite leagues, which manifests in trend 2

    Trend 2: convergence of player salaries
    La Liga (29%) and EPL (12%) have grown in terms of average player salary from 2014-2018, while Serie A (-2%) and Bundesliga (-2%) have not. MLS average has increased 80% during this same timeframe, and median increased 77%. As of last year, MLS had closed within a factor of 4 on the 4th most highly compensated soccer league in the world.

    Global soccer player compensation is pretty modest, with only 17 players making over $20M per year if you believe Forbes. And the average salaries look pretty stagnant, probably something to do with the heavy losses and unsustainable business models of the global game. That is a source of concern to this thread, especially via trend 3

    Trend 3: move to non-linear video
    Number of cable viewers has been declining, and the number of people with cable descriptions falling as well (well documented on this thread).

    Wouldn’t be too worried that early cord cutters haven’t been monetized as well as existing stock of cable viewers (e.g., ESPN+ @ $5/month vs ESPN cable suite @ $10/month) given the demographics of those who have cut vs those who haven’t, plus the relative (im)maturity of online model.

    This trend is good for soccer – it’s harder to monetize a continuous game via traditional cable given a business model that depends on advertising subsidization. TV contracts have likely been depressed, and a la carte purchasing of games / leagues should yield slightly higher revenues. But it’s potentially bad for teams and leagues depending on how they structure revenue sharing.

    MLS is quite well suited to benefit collectively from the future market for at-home viewing, given common ownership and their recent move to centralize local contracts. Plus, their lower dependence on national contracts makes the adjustment period that much more sustainable.

    Trends that don’t matter as much
    1) Concentration of eyeballs on top leagues – TV made this possible a few decades ago, and in the US it has run its course. Digital will have an effect for some countries with poor TV infrastructure, but if you want to watch EPL in Dallas you can and have been able to for some time. This is a stock vs flow issue.

    2) Potential creation of a super league – I think it’s crazy and would be tantamount to elite teams biting the hands that feed it, but if it occurred then this creates even more of an opportunity for MLS to rise relative to other leagues that would be scavenged. The value proposition of MLS (local, live in prime time, high enough quality be pleasurable) is unaffected, and competitiveness gets a boost.

    3) Digital advertising – It’s now over ½ of US advertising share, and its over 1/3 share internationally (and growing). Once TV is majority on-demand, this share will increase further. Totally upends some markets (newspapers), but hasn’t changed the “amount” of advertising done. Advertising has been a constant share of GDP in the US for the past 5 years, even growing a little bit, from 0.5% to 0.7%. Plus soccer sells less advertising in-game than most other leagues.

    Formula for success
    I continue to think the future is bright for the league as it is currently arranged. A 28-30 team league with balanced payrolls (inter-team, not necessarily intra-team) that can further converge average salaries with the big leagues, playing in the summer in prime time in an enormous market that is also the world’s richest, and with a superior business model, is going to be must-see TV for American soccer fans and for many others.

    The important thing for me is that MLS continue to close the gap on payrolls, and that they continue to shift the composition of their high contracts towards buying performance rather than marketing. There will always be the Rooneys of the world coming to the US, but they need to keep shrinking as a share of the big dollar contracts. Relatedly, they will need to retain their commitment to share money across teams. Easy enough when salaries are low relative to operating costs (like a stadium), potentially harder when salaries are 3X what they are now.

    Also important is that the American player doesn’t become an afterthought. Lower share of minutes is ok to some extent, since minutes are increasing with expansion. But this is a core part of the value proposition IMO, so the league should keep a close eye on further deterioration of American minutes.
     
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  6. mschofield

    mschofield Member+

    May 16, 2000
    Berlin
    Club:
    Union Berlin
    Nat'l Team:
    Germany
    Really good post. The highlighted portion is good to keep in mind while we discuss this. Sports built around stopping for ads might be at a disadvantage when stream viewers move into the majority (not unlike stream viewers don't like to wait a week or three to watch the next episode of a series, once real choice exists they may not be willing to spend 4 hours to watch a 60 minute game).
    On the Superleague point, if we put Europe to one side and focus on NA, we are hearing quite a bit from LigaMX about working with MLS, to the point that I think it's a safe bet that something will happen, or at the least that a merger of some sort is a pretty common conversation point between the leagues.
    On the final point, yeah, i'd think it is vital for MLS to keep up their current trajectory, so that means continue to pay more to attract better talent to improve the quality of the play.
     
  7. Elninho

    Elninho Member+

    Sacramento Republic FC
    United States
    Oct 30, 2000
    Sacramento, CA
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    That's an interesting statistic that I hadn't seen before. What it means is: although the salary scale within a MLS team is very unequal, it's not actually any more unequal than before despite vastly increased amounts of money being poured into the top 5 roster spots.

    I suspected this would be true, though, since with the last CBA the league minimum salary almost doubled immediately and then continued rising. The minimum salary is now about 5 times what it was ten years ago.
     
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  8. Just read an article about a subject related to the discussion here. The ratio cable/streaming services.
    https://www.ad.nl/tech/streamingdiensten-halen-voor-het-eerst-wereldwijd-kabel-tv-in~ad71f426/
    It states that for the first time more people have a subscription to a streaming service than with a cable company, 613.3 million vs 556 million.
    However the revenues are completely different, 35 billion vs 100 billion.
    However, if I understand it correctly, sport isnot included in the streaming services, but are part of the cable numbers.
     
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  9. mschofield

    mschofield Member+

    May 16, 2000
    Berlin
    Club:
    Union Berlin
    Nat'l Team:
    Germany
    Which means people are paying just about four times for cable service what they're paying for streaming services (per customer), which makes sense. My total streaming bill, with internet service included (which I would have anyway) is significantly less than my last cable bill.
    As a general rule, I'd think that people prefer paying less. Streaming is a better system for the consumer. I think you are right, that for a long time, a primary streaming weakness was sport, but I suspect that with the advent of things such of DAZN and Eurosport Live offering a wide range of footie, as well as the potential for direct sales, we're close to a tipping over point for the old model.
    I know I've had my last cable subsription.
     
  10. waltlantz

    waltlantz Member

    Jul 6, 2010
    Streaming bill will catch up, just give it time. Lol.

    (At least in N. America)
     
  11. Paul Berry

    Paul Berry Member+

    Notts County and NYCFC
    United States
    Apr 18, 2015
    Nr Kingston NY
    Nat'l Team:
    United States
    Optimum undercut Sling so I migrated back from streaming to cable.
     
  12. mschofield

    mschofield Member+

    May 16, 2000
    Berlin
    Club:
    Union Berlin
    Nat'l Team:
    Germany
    It almost certainly will. But, at least it's a la carte, so you actually want everything that ends up on the plate. For now, it's not just cheaper, it's better
     
  13. ceezmad

    ceezmad Member+

    Mar 4, 2010
    Chicago
    Club:
    Chicago Red Stars
    Nat'l Team:
    United States
    Once I take out what I paid for Internet, my cable bill was about 35-45 bucks, 119-89 (expensive internet, no premium channels) then you add those distribution taxes that cable pays but streaming companies have been getting away with not paying and we are at the perhaps over 40 range.

    The problem is that many companies are building walls around their streaming content.

    If you are not picky and will watch any soccer or any entertainment content, this will work just fine.

    But in the future I can see having to make choices on what to watch and what you give up on watching, otherwise you would have to subscribe to 5-10 different websites for 10-20 dollars a pop to watch all your "favorite" shows.
     
  14. mschofield

    mschofield Member+

    May 16, 2000
    Berlin
    Club:
    Union Berlin
    Nat'l Team:
    Germany
    I was just doing the math in the report above, which I assume to be worldwide. 613m streamers created $35 billion in revenue, while 556million cablers created $100 billion in revenue. Not saying individuals didn't get great deals, just that the general costs are pretty clear from those numbers.
     
  15. Yoshou

    Yoshou Fan of the CCL Champ

    May 12, 2009
    Seattle
    Club:
    Seattle Sounders
    Nat'l Team:
    United States
    There is a lot of free content out there, tho. Particularly if you aren't too bothered by getting your content via grey areas. As an example, I watch primarily Twitch and Youtube. If I wanted to, I wouldn't have to pay a dime to watch those, but you can spend hundreds, if not thousands, if you're the type to get subscriptions, pay via Patreon, or donate funds to the people you watch. I don't even have a Netflix or Hulu account, but if you're into such things that can start to pile up and it is only going to get worse as companies like Disney start to pull their content from Netflix/Hulu in order to start their own streaming services.

    You're absolutely right that the revenue side of the equation definitely favors chord cutting right now, but part of that is because it is still relatively nascent market and media companies are still working out how to monetize it. Once they figure it out, I would not be shocked to see streaming pass cable in revenue generation.
     
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  16. s1xoburn

    s1xoburn Member

    Aug 25, 2014
    Club:
    Orlando City SC
    I think the music industry is the best way to think about this. It was clear at some point that sales of physical copies of music (tapes/CDs/records) was going to be surpassed by digital sales/streaming, and that happened.

    However, the revenue generated from streaming is still a fraction of what was made with physical disks, and there is really no reason to think streaming will suddenly get more lucrative.

    The cost of internet access has gone up significantly over the past 10 years, but now that phone plans are getting cheaper and faster, at some point the wireless carriers and cable carriers will start battling it out for home service, which should keep prices down.

    I wouldn't be surprised if more fiefdoms of content packages appeared (like Disney pulling their stuff from other streaming services and selling it themselves) and eventually bundled packages for $60/month will come out of it containing most major carriers. But I just don't see the adoption being as high as it was before. I mostly watch youtube videos with some netflix, and given the free content offerings on the web I just can't imagine every paying more than $20/month for all the content I consume. Youtube's ad supported free content model seems to work well, and if cable does go away I just can't see late night shows removing their stuff from youtube.

    I think they will figure out how best to monetize content in a post-cable world, but I would really be surprised if inflation adjusted revenues were ever close to what they were at peak cable.

    And while I would love to see MLS thrive, I do think sports are going to see a big hit. When I had cable I would often just leave some game of sportsball or ESPN on when I was doing things around the apartment, so I was aware of teams/players/story lines of what was going on in most sports. Now that I no longer have cable I can try to specifically go and watch a sport, but it basically eliminated my casual viewing and has made me less of a sports fan.
     
  17. I've yet to see a convincing report on the super clubs making more money via the internet super league than they now do being in their leagues with the guaranteed revenues.
    The initiating investors claim to have a bunch of billionaires bundled together that guarantee the first (2, 3?) years of the super leagues expenditures, but very little is being said about how they're going to monitise the matches.
     
  18. Yoshou

    Yoshou Fan of the CCL Champ

    May 12, 2009
    Seattle
    Club:
    Seattle Sounders
    Nat'l Team:
    United States
    Gigantic piles of cash in broadcast rights. You're talking about the biggest clubs in the world playing each other every single week and eliminating games between minnows. Over here in the US, just including one of the top EPL clubs increases viewership from around 300k-400k to 800k-900k. If two of the top EPL clubs are playing, that number jumps up to 1.5m.
     
  19. Yup, that's already known. However the question is how are the investors going to extract more money than those epl clubs already the FA way do via internet streaming the Super League.
    The promise was each super club could add a couple of hundred millions extra on top of what they're now making.
    So Bayern would jump from 700 million €€ to 900? Barcelona from 1.2 billion to 1.4/1.5 billion?
    16 clubs would amount to at least 20 billion the SL has to take out of the market.
    The EPL outside the UK "only" manages to get around 4 billion.
    The other 4 top leagues in total amount to around 8 billion.
    If we're generous the top 5 leagues together grab around 15 billion. World wide.
    Interested where the other at least 5 billion come from, supposing the normal leagues seize to extract money from the market, which is unlikely.
     
  20. Yoshou

    Yoshou Fan of the CCL Champ

    May 12, 2009
    Seattle
    Club:
    Seattle Sounders
    Nat'l Team:
    United States
    That's what I'm saying.. They'll likely be able to get a higher value contract from international broadcast rights than they do now. Higher ratings=higher dollar values.
     
  21. Yoshou

    Yoshou Fan of the CCL Champ

    May 12, 2009
    Seattle
    Club:
    Seattle Sounders
    Nat'l Team:
    United States
    The point is that they don't need any new fans. These teams are already the most popular teams in the world. We're talking about addition by subtraction here. By getting rid of the rest of their national leagues that drag down the average ratings for their league, they'd be able to get higher priced contracts.
     
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  22. s1xoburn

    s1xoburn Member

    Aug 25, 2014
    Club:
    Orlando City SC
    I am not sure College Hockey is really a good comparison since it is really a niche thing.

    The idea that people would rather watch Barcelona play Paris SG, Man U or Juventus rather than Huesca should be relatively uncontroversial. In college football the reason teams play tough out of conference games is because the networks know that Florida playing Michigan is good ratings, whereas florida playing their normal easy early games is not.

    What I would be most curious about with the super league is how it affects transfer values. Would someone like Miguel Almiron want to go play in the EPL so badly if there was a super league?
     
  23. Who's that?
     
  24. Define people.
     

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