SBJ/May 12-18, 2014/Media

MLS’s big play

With new media deals, league heads into future with big revenue increase, consistent schedule

A watershed moment in Major League Soccer’s 18-year history will occur this week, as the league is poised to announce new media rights deals that will bring in far more revenue and lead to a consistent, streamlined television schedule.

The eight-year deals with ESPN, Fox and Univision are priced five times higher than the average annual value of the league’s current media deals.

MLS Cup, which ESPN broadcast in 2013, will alternate between ESPN and Fox Sports.
Photo by: KYLE EVANS / ESPN IMAGES

ESPN and Fox will share the English-language rights to MLS and U.S. Soccer matches over the next eight years.
  
The two networks are paying a combined $75 million per year on average for those rights. MLS also signed a Spanish-language deal with Univision for an average of $15 million per year.

The combined average rights fee of $90 million per year represents a stark increase from the $18 million annual average the league receives in

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Media writer John Ourand on MLS getting five times what it previously made from TV rights and the unique relationship between ESPN and Fox as they worked to shut out NBC

its current deals with ESPN, NBC and Univision. Those contracts expire after this season. (The networks this year are paying around $23 million under terms of the deals because of staggered annual price increases that are part of the contracts.)

The new deals include the rights to U.S. men’s national team matches and call for consistent days and times in the national programming of MLS match telecasts, something the league has never had before. Univision will have exclusive MLS broadcasts on Fridays, while ESPN and Fox Sports 1 will present games back-to-back on Sundays.

“This is the most comprehensive media rights partnership in the history of soccer in our country,” said MLS Commissioner Don Garber. “That’s something we’re very proud of. It’s a statement about where the soccer market is and where Major League Soccer and U.S. Soccer fit into the paradigm.”

The deals were signed May 1, ending an eight-month negotiating timeline that all executives involved described as the most protracted process they’ve encountered in their careers. PR staffs from the networks have been prepared to issue press releases announcing the deal since January. While the larger framework of the deal was hammered out early, negotiations slowed over the past three months as the networks and leagues negotiated everything from highlight rights to out-of-market rights.

MLS was adamant in its early strategy sessions; it was not interested in renewing the same TV packages and schedules it has had since signing deals with ESPN and Univision in 2007. MLS executives saw this deal as pivotal to the league’s future and wanted more.

Informal negotiations started over the summer, as Garber’s longtime friend Gary Stevenson, president and managing director of MLS Business Ventures, and MLS President/Deputy Commissioner Mark Abbott traveled to ESPN’s campus in Bristol, Conn., and NBC’s offices in Stamford, Conn., to outline what the league wanted. The MLS executives purposely made their pitch as simple as possible, using a four-page deck to demonstrate how the league planned to grow.

HIGHLIGHTS OF THE NEW MEDIA CONTRACTS

ESPN NETWORKS


 
Minimum of 34 regular-season games, on an exclusive basis, on Sundays at 5 p.m. ET, primarily on ESPN2.
Distribution of MLS’s out-of-market package via ESPN platforms.
Will share with Fox Sports MLS Cup playoff matches outside of two Univision games.
Will alternate with Fox Sports in airing MLS Cup and the AT&T MLS All-Star Game each year.
Will share with Fox Sports all U.S. Soccer matches.
Digital rights across all platforms and devices for the games it televises.
Opportunity to televise the MLS SuperDraft and other marquee MLS events.
Opportunity for ESPN Radio and ESPN Deportes Radio to air MLS matches.

FOX SPORTS MEDIA GROUP

 Minimum of 34 regular-season games, on an exclusive basis, on Sundays at 7 p.m. ET, primarily on Fox Sports 1.
 Will share with ESPN MLS Cup playoff matches outside of two Univision games.
 Will alternate with ESPN in airing MLS Cup and the AT&T MLS All-Star Game each year.
 Will share with ESPN all U.S. Soccer matches.
 Digital rights across all platforms and devices for the games it televises.
 Opportunity for Fox Sports Radio to broadcast MLS matches.

UNIVISION

 Minimum of 34 regular-season games, on an exclusive basis, on Friday evenings either at 7 p.m. ET or 11 p.m. ET, primarily on UniMás.
 
Two MLS Cup playoff matches a season, on an exclusive basis, during the knockout round.
 
The AT&T MLS All-Star Game and MLS Cup, exclusively in Spanish on Univision.
 
All U.S. Soccer men’s national team matches, and a commitment to televise a minimum of four U.S. women’s national team matches annually.
 
All MLS and U.S. Soccer matches on the Univision networks will include second audio program (SAP), providing viewers the option of viewing games in English. English audio also will be available for matches televised on Univision’s digital platforms.
 
Univision Deportes Network, Univision’s 24-hour sports network, will feature five to seven consecutive Friday doubleheaders in May and June that will be surrounded by two hours of MLS ancillary programming.
 
UDN will televise a weekly Sunday MLS wrapup program and a condensed MLS match of the week.
 
Univision obtains digital rights across all platforms and mobile devices for the games it televises.
Source: MLS

“We went out with a very simple deck to tell everyone, ‘Here’s what we’re building,’” Stevenson said. “We told the networks, ‘What we’re bringing you is the growth of a soccer nation.’ I don’t think there’s a closer relationship between a league and its national team than we have with U.S. Soccer.”

One page of the deck listed four tenets for the league, labeled as Key Priorities for Our Media Deal: Economics, Schedule, Growth of Our Fan Base, and Brand. Obviously, the money was important to MLS, but Stevenson said he focused more time outlining the league’s plans to increase TV ratings than he did putting a value on the packages.

“We have games this season on six different days with 21 different start times,” Stevenson said. “That needed to change. We also wanted our matches to be on TV when kids who play soccer could watch them.”

Negotiations picked up as soon as the league’s exclusive negotiating windows with ESPN and NBC closed in the fall.
  
ESPN’s 50-day window closed in the middle of October; NBC’s shorter negotiating period ended about then, as well.

At the same time, MLS was working on a deal with Univision.

MLS’s desires squared with what ESPN wanted. ESPN’s senior vice president of programming, Scott Guglielmino, called Stevenson in November to outline those ESPN targets: a game of the week and as many of the U.S. men’s national team games as were available.

ESPN was not, however, interested in claiming the entire package and would be willing to share it with another broadcaster.
  
That’s where Fox Sports came in. Even though Fox wasn’t a current rights holder, ESPN and MLS believed it would be a good partner. Stevenson called Fox Sports’ top brass to see if they would be interested.

The message from David Nathanson, general manager and chief operating officer of Fox Sports 1 and Fox Sports 2, was that Fox was interested. Fox has worked well with ESPN on other packages, including the Big 12, Pac-12 and Big East deals. Nathanson told Stevenson that as long as the Fox MLS package was equal to ESPN’s and included those U.S. men’s national team games, Fox would be in.

Early in the negotiations, ESPN and Fox made it known that they would be willing to pay as much as $75 million per year, a figure that proved to be too rich for NBC. In early January, NBC Sports Group put out a statement announcing that it was pulling out of the bidding process. Stevenson said he continued to engage NBC after that point, but the Comcast-owned network was not a serious threat to retain the rights.

Garber spoke frequently with ESPN President John Skipper and Fox Networks Group President and COO Randy Freer during the process, but they left it to Stevenson, Abbott, Guglielmino and Nathanson to hammer out the details.
  
Most of the meetings took place in Stevenson’s nondescript office at MLS’s Manhattan headquarters. The executives negotiated tens of millions of dollars worth of media deals from a spartan office that had bare walls, modular furniture and a small circular table where the executives sat. A camouflage Fox Sports 1 baseball cap was perched on a cabinet in one corner.

Commissioner Don Garber spoke frequently with his counterparts at ESPN and Fox during the process.
Photo by: GETTY IMAGES

ESPN and Fox executives were comfortable with the high price tag despite MLS’s disappointing TV ratings performance last year relative to 2012 (see chart). Considering the amount of new content the channels will receive in the new deals (ESPN will control the league’s out-of-market package and international rights, and Fox has extensive highlight rights), and factoring in the league’s continuing expansion and growth prospects as well, network executives do not feel as though they are overpaying.

“While national ratings have been something that hasn’t been going in the right direction over the last couple of years, we still believe in MLS,” Guglielmino said.

Nathanson agreed. “It’s definitely a growth proposition,” he said. “The packages are stronger. The way we’re programming it is going to be more impactful.”

In January, the networks’ top executives, including Freer and Skipper, descended on MLS’s office to work through some big issues. Garber and Evolution Media Capital’s Alan Gold also were in these meetings at MLS’s headquarters. The group hammered out enough details for the executives to know that a deal was close and they celebrated over dinner at Wolfgang’s Steakhouse in New York.

While a finalized deal was still four months away, they knew at that time that the deal would be done. There was no turning back on what could end up being a defining agreement for the future of MLS.




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