MLS media rights deal falling short of expectations

On a conference call with US soccer media on February 22, MLS Commissioner Don Garber said he hoped the league’s new media rights deal would be finalized by the end of March, 2022.

Now, just days away from that deadline, it doesn’t appear that a Q1 announcement is forthcoming.

Meanwhile, concerns have been raised in the media that the new deal will not be a game-changer for the top-flight American league. At the same time, industry expert Yannick Ramcke contends that the league’s rights are not a must-have for broadcasters. Garber and his fellow executives face some major challenges at a pivotal moment in the league’s history.

World Soccer Talk’s Christopher Harris and Kartik Krishnaiyer delved deeper into the topic on the latest podcast episode. Here’s a transcript of their conversation:

MLS media rights update

Chris: The MLS media rights deal was supposed to be finalized by the end of March. We’re rapidly approaching that deadline, and this would be from 2023 onwards. There was some really revealing information in the story in The Athletic. What are some of the things that jumped out at you from this one?

Kartik: I’ve had some interesting conversations with people at the Soccerex and SPORTEL conferences.

But there is a general view now that MLS has shot for the moon and missed the mark. As The Athletic reports, MLS is missing a key interest from English language partners in the Leagues Cup. They are also seeing a situation where ESPN is interested in acquiring the Spanish rights for the Leagues Cup, right? They don’t see the value, necessarily, on the English language side.

ESPN’s push for Spanish rights complicates matters

Kartik: We know ESPN has made … and this was along the lines of my conversations at SPORTEL and Soccerex … a real effort to drive Spanish language-dominant audiences to their ESPN+ app. That’s part of the strategy behind LaLiga and some of the other properties that they’ve acquired. As the ESPN Deportes linear side becomes less critical in their empire, they’re trying to drive Spanish language audiences to the ESPN+ app and to streaming. And if MLS is not going to provide them that option with Leagues Cup, because I’m sure Univision, Telemundo, and everyone else who broadcasts in Spanish is interested in that property, then maybe their general interest in acquiring the MLS package cools.

We’ve also seen FOX cooling [their interest] on MLS. That seems to be confirmed by what The Athletic is reporting. CBS has minimal interest, which sort of surprises me. Turner is interested but there are complications to Turner’s interest. We’re going to get a little bit into the HBO Max/Discovery thing in a few minutes, right? But that would certainly impact on this.

US Soccer completes deal before MLS

Kartik: Here is the bottom line. We thought in Q3 that MLS was going to be able to settle on a partner as soon as the Premier League rights were decided. And we saw NBC hold the Premier League rights but not without a fight. Turner came pretty strong, right? Put in a huge bid. And CBS, ESPN, FOX also had interest. Then you’ve got Q1 rolls around and you think, ‘Okay, MLS just needs to settle this. What is the U.S. Soccer Federation going to do? Their package, they’re going to have a hard time shopping their package because all the broadcasts will be entrusted in MLS. Does the U.S. Soccer Federation, who doesn’t seem to outwardly have a plan for their broadcast rights … are they going to have to wait until MLS makes their decision, MLS strikes a big deal?’

Well no, actually U.S. Soccer has made a deal with Turner, now almost a month ago. And they’re set with Turner, HBO Max/Discovery+ for the next eight years. They’re good. And MLS still doesn’t have a partner and we’re approaching the end of Q1. So I’m, quite frankly, alarmed by it and disappointed.

Concerns about production costs

Kartik: The other thing I want to point out, which has not been talked about a lot and was in The Athletic article but was kind of an afterthought, and this is really serious from people I talked to. I’ve talked to a half dozen people about this on background. The regional sports networks are going to be out of MLS broadcast effective in 2023, right?

So MLS is going to have to produce those games for whatever streaming partner they sell that package to. Or if it’s part of a larger package. USL does this. USL has invested in a production studio here, not far from me, in Fort Lauderdale. NWSL has done the same. You see USL launching a new media venture, which is going to be based in New York. MLS is going to have to make a similar investment.

Every USL game, they produce and pay for, right? Because USL do it in bulk, it actually saves the teams money over if they produce the matches on their own. But there is a unified consistent feel to every USL match that’s on ESPN+. Same thing this week with the U.S. Open Cup. Every match the presentation was the same. We can complain a little bit about the commentators but the presentation was the same. It was produced with a consistent level.

MLS is going to have to make a similar investment. Maybe they go to the same people as USL has and NWSL has. But that is an expenditure I don’t think they thought about. If you’re talking about a package that’s going to get you $200 million a year, you’re probably throwing $15-20 million, ballpark, back into that production given the size of MLS, given that I think the production levels would have to be higher than they are for USL or for the U.S. Open Cup.

It’s something maybe they didn’t think through very thoroughly and that’s another hangup because ESPN+ is not going to pay for the production. HBO Max is not going to pay for the production. It’s just like everything else, a studio produces it and they air your programs. The exception to this is Netflix, right? Because Netflix isn’t tied to a major studio, so they’ve had to invest in their own stuff and create their own content. But it’s like anything else in sports, and in arts, and in entertainment. And MLS is coming up short, so I am very concerned. I hope for the best but I’m not surprised by the tact of The Athletic article. That kind of confirms what I’ve been hearing snippets of.

Timing of deal hurts MLS

Chris: This feels like MLS has really screwed this process up. If you look back to the fall, I was very positive. I was thinking at that time that this is a good chance for MLS to really cash in and get a lot of rights’ fees.

So currently, they’re getting $60 million a year for their rights. For example, the Premier League under their current deal, the new deal that’s going to start next season, they’re getting roughly about $450 million dollars a year. A huge difference. So now with this deal back in the fall, we were looking at ESPN+, we were looking at Paramount+, we were looking at HBO Max, Apple TV+, fuboTV, Discovery+, and probably a whole bunch of other streaming services that I’m forgetting to mention. There would have been a lot of interest at that time.

But then if you look back in 2021, even preceding some of the deals you mentioned, you had the LaLiga deal. So ESPN+, ESPN put in a ton of money to get LaLiga. NBC renewing its deal with the Premier League, putting a ton of extra money into getting that. And then you’ve got the U.S. Soccer signing a deal with WarnerMedia, which is Turner Sports, for the rights to the US men’s national team and the US women’s national team starting next year.

Now where we’re at, it’s a mess because if the USMNT and USWNT deals had been linked still with Major League Soccer, I think we’d be talking big money. We’d be talking, “Okay, how big is this deal?” But because they’ve been de-linked from the USSF deal, I don’t know.

Interest levels among English-language broadcasters

Chris: On the English language side, NBC has no interest at all. They used to have MLS coverage in the past. They did a really good job. But I think MLS really burnt their bridges with NBC at that time asking for more money and NBC saying, “The proof’s in the pudding. The numbers are not what it is and you’re asking for too much. We’re out.” There were other things involved in that deal ending too, but NBC is out.

FOX surprisingly, to me, is not that interested in this. They still might come in and bid, and get something. But people like Rob Stone, Alexi Lalas, John Strong and Stu Holden are so intertwined with MLS that it’s hard to imagine those guys not having MLS games to cover. But business-wise it doesn’t make a lot of sense [to get MLS rights] if FOX is putting most of their money into the World Cup and these other big competitions.

ESPN, I’m surprised that they are interested but perhaps maybe they see an opportunity, like you said Kartik, in getting both the Spanish language and the English language rights. And then CBS, they’ve got so much coverage already. Maybe they look at the TV ratings, and see that the league is not really going to generate a lot of new signups for Paramount+.

So on the English language side, MLS is in a situation where instead of this new deal, which is what? Leagues Cup, you get the MLS rights, you get the local rights, and you get MLS Next Pro. You get a whole bunch of stuff that they’ve thrown together into this big huge package.

Maybe they would have been better off just keeping the things the same the way they were before, which would have been just national rights and then selling off the local rights, and streaming rights. Because all the changes that they’ve made, it doesn’t seem to be that it’s going to be generating tons and tons more money. And it does have issues, such as the production side of things.

MLS is in a tough position

Kartik: The regional sports networks, as an entity, seem to be dying off, which I think may have been part of this thought process. And they want to get ahead of the curve on buying back their rights and putting it entirely on a streaming package. But maybe this wasn’t really well thought out.

Here’s the other thing I want to mention, ESPN because they’ve cooled on MLS in general … And yeah, it is sort of surprising they’re still interested, given some of the things we had heard in the last couple of years about ESPN’s dissatisfaction with the ratings and the numbers, and the consistency of ratings. Right?

But there are one-off MLS matches that have eye-popping numbers and then it reverts back to form, more consistently than not. But I think they have a lot of leverage, in terms of the Spanish language rights. They could effectively tell MLS, “We’re walking away if we don’t get a piece or all of the Spanish language side.” Now, what does MLS do in that circumstance?

I think they need to still carve out a national Spanish language package for Univision or Telemundo. More probably Univision given its ownership, now that Televisa is the majority owner. And for TUDN purposes and then also just for keeping political relationships as they are with the biggest broadcaster in Mexico. But maybe they carve out 40 matches or something from the package, give that to Univision and to TUDN. And the rest end up on streaming in Spanish on ESPN+. I think that’s one potential solution to this and that keeps ESPN interested in the English language side as well.

But it’s a hard place to be because FOX has been a really good partner for MLS but they’re moving in a different direction. I think their acquisition of the Euros was maybe surprisingly. Maybe FOX didn’t expect to acquire the Euros? But FOX nows have the Euros, World Cup, Copa America and Women’s World Cup. They’ve got just about every summer covered for the foreseeable future, right? So MLS becomes less of a need for them. They have Major League Baseball, which runs along the same calendar as Major League Soccer. They have a growing presence in college football and college basketball, which intersects with MLS at critical times.

Losing FOX would be a tough blow for MLS

Chris: I think MLS needs FOX more than FOX needs MLS.

Kartik: I agree because FOX is more committed to the way they broadcast MLS than ESPN is, right? And in promoting it and being very preachy about MLS, whereas ESPN covers MLS like they cover any other property, which is why I personally love ESPN so much. It’s because they may be the rights holders but that doesn’t mean they’re in the tank for the property, whereas I would argue some other broadcasters tend to be more partial to giving corporate propaganda for the rights they hold.

Chris: Well the other thing about this is that if you look at what FOX has done to help MLS, they’ve had a lot of games over-the-air television and they’ve had a lot of games that have been double-headers.

So MLS not having FOX in this next deal means lower ratings because there’s fewer over-the-air big games on a Saturday afternoon. Look at this season alone. The first couple of weeks of the MLS season has had games live, in primetime, on over-the-air television. And that’s something that maybe an ABC couldn’t provide, so you lose FOX and you lose a huge amount in the TV ratings.

Why MLS is facing a tough time in this rights deal

Chris: At the heart of it though, what’s your take? Why is there so little interest on the English language side for MLS? What is the reason?

Kartik: I think it’s the cost. You’re not seeing the return on investment.

We want the product to succeed. I think it’s critically important MLS do well for U.S. Soccer. Although, I think with some of the recent moves USL has made they may occupy some of that space.

But, the point remains we are only judging MLS by what we understand based on multiple years of cultivating sources and reporting they have promised to broadcast partners that they have currently. MLS had promised broadcast partners that they had negotiated with, including NBC since you mentioned NBC’s MLS relationship, in the past. We are judging them by the numbers and the projected growth they internally talked about. And they are not there in 2022 where they promised they’d be in 2022 privately to FOX, ESPN, to NBC when they were renegotiating in 2014 and NBC pulled out, and that ended kind of acrimoniously. They are not there.

Now is that the fault of MLS? I don’t know. Is it all the excuses we get always from people, “Oh it’s because of the time slots. Oh it’s because of the Euro snobs. Oh it’s because of this, that.” Maybe all of that is true. Maybe it’s correct. Maybe ESPN puts much more into promoting college sports and promoting LaLiga when they got it than they do into MLS. Maybe there is some grand conspiracy. But the bottom line remains they are not at the level, in terms of television viewership and general intensity of interest.

A core of casual MLS fans

Kartik: I think there are casually more MLS fans in this country than a lot of soccer people give them credit for. I think casually there are more MLS fans than Premier League fans. I know you and I disagree on that. But the Premier League will consistently get higher ratings because the intensity and commitment of the Premier League fan base is much higher in this country. MLS lacks that intensity and commitment, and they haven’t met their own internal projections and goals for that. And the broadcasters know that.

You can have one debate on Twitter where there are a lot of angry people who are MLS fans, who think we’re being unfair, but you can’t pull the wool over the eyes of big media companies who have been talked to for years with certain goals and have done certain market research, and have also other properties that are performing better. So that’s the reason.

And, again, like you I am surprised ESPN seems to be going to the wire and probably will retain the property. I thought they were going to opt out too because I know they’re not that pleased with the numbers that they’ve seen. But that’s why I think they have the leverage to go to MLS and say, “Hey, give us at least a piece of the Spanish language rights and then we’re good for another seven years,” or however long the package is.

MLS faces too much competition

Chris: If the viewing numbers for Major League Soccer were that good, we wouldn’t be having this conversation because the broadcasters would look at the numbers and go, “Okay, hey there’s a ton of people watching Major League Soccer.” But that’s not the case.

For me personally, I’ve grown to appreciate the league more and have watched more of the league in the last five years. It’s a decent league. But the issue is competition. The issue is that it’s not the best soccer league. If you had to rank it in terms of the best soccer leagues in the world [based on the quality of the television product], it is number five or six. At the same time, MLS is competing against college basketball, NBA, NFL and college football. MLS’ season calendar doesn’t do it any favors either.

Interest is lacking on a national level

Chris: On a local level, if you live in Atlanta and you go to Atlanta United games or you live in Seattle, or Portland, and you go to those local games, it’s a great night out. It’s a great entertainment. But if you live in the United States of America and you don’t have a local team near you, what’s the benefit of tuning in to watch LA Galaxy against NYCFC? What’s the attraction? Are there star players? Are there a lot of American stars playing in those games? Is the quality of entertainment and excitement really high? And it’s not really. I mean, it’s okay. It’s decent. But it’s lacking the stars. Most of the major US stars now are playing in Europe. And there’s so many options and viewing options that we have to choose from with leagues that are more accessible.

This past week, Chris Moore wrote a story about which leagues are the most expensive to watch. And he took into consideration how much it would cost to get a streaming package and a cable or a satellite package to subscribe to watch these games. The most expensive league to watch is Liga MX. Yes some of their games are on over-the-air television but a lot of the games, if you want to watch them, you have to get a streaming package such as TUDNXtra, and so on and so forth.

The second most expensive league to watch is Major League Soccer. You need to have ESPN+, you need to have ESPN2, you need to have FOX, you need to have Univision for some of the games, you might have to get TUDN, TUDNXtra. So having all of these rights partners actually makes the experience of being an MLS fan more expensive.

And that’s the thing though, it’s a decent league but MLS can shoot for 300 million dollars a year but there’s no way they’re getting that.

Industry insider offers recommendation for MLS to consider

Kartik: There is someone who is a prominent person in soccer management in this country, who’s worked in MLS, who’s worked in USL, who told me privately the other day MLS should probably just cut ties with all these broadcasters and give Amazon some sort of deal. Take the loss, get everything on Amazon Prime.

His view is that they can then use Amazon’s new facility in Washington to hire talent, in Northern Virginia, and then build back from there.

When he said it to me on the phone I thought, “That’s ridiculous.” But then I realized it makes sense. Given this reality, given that maybe MLS is never going to meet the expectations from a linear broadcaster that’s been set out, go completely streaming. Be on one consolidated streaming package.

Make it an add-on, right? Maybe you pay $69.99 a year to add-on Amazon Prime for MLS, or whatever the number would be, and it makes it cheaper.

And this person’s premise was also partly predicated on the fact that he thinks it’s not in the interest of American soccer and the growth of American soccer for American soccer to be off of linear television completely. But he thinks in light of the fact that U.S. Soccer did do a deal with Turner, yes we know every game will be on HBO Max or Discovery+ and it’s only going to be a limited number of games on cable or maybe half the games on cable, there’s still going to be half the games on cable.

Positives on Spanish-language television

Chris: On the Spanish language side, I’m definitely more positive especially the Leagues Cup angle and having access to watching a lot of these teams from Liga MX probably beating up on the MLS teams. On the Spanish language side, I can imagine Univision, especially with their new app that they have coming out, Vix+, which is going to be a streaming app, as well as their over-the-air coverage. Yes, I can see them getting involved big time on that.

MLS dealing with reality of being on its own

Chris: To me, this is reality slapping MLS in the face right now because this is the reality of MLS in the market trying to sell their own media rights. And it’s not combined with U.S. Soccer and in the past it has been. And when it’s been combined with U.S. Soccer it was an easier pill to swallow. But now this is MLS on their own trying to sell their media rights.

It’ll be interesting to see what MLS does here. If they do delay this rights bidding because Don Garber said this deal would be done and announced by the end of Q1 2022. And like you said we’re a week away from that and I don’t see this being resolved that quickly. So maybe they’ll come up with a new plan or maybe they’ll just delay it. But to me, if I’m MLS, I’m hoping that fuboTV cashes in or HBO Max cashes in, and that all these streaming services get into a bidding war. But it’s a bidding war over a product that is decent but is not going to give you massive ratings, so really MLS has boxed themselves in.

I think in terms of them waiting until this period in time, where they’ve delayed, they’ve made a mistake. They should have been trying to sell those rights last year, not waiting until every single other major soccer league or federation has sold their rights. I think right now, they’re in a tough spot.