It was one of those midnight calls that no one wants. No … no one died. But the call rousting Don Garber from bed in the middle of an August night caused him to fret for the health of his 10-year-old soccer league.
The MLS commissioner was informed this night last summer that his dog in the fight for the U.S. English-language rights to televise the next two World Cups had lost. FIFA’s finance committee had chosen the combined bid of NBC and its corporate sibling Telemundo to televise the 2010 and 2014 tournaments over incumbent rights holders Soccer United Marketing, the league’s television arm, and Univision’s independent bid for Spanish-language rights.
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| FIFA executive committee member Chuck Blazer (left) and President Sepp Blatter (center, with Franz Beckenbauer) took part in the process that resulted in deals for ABC/ESPN and Univision. |
Garber’s concern was clear. He felt the decision not only threatened six years of a carefully crafted strategy, but it took a serious chunk out of the central element in the league’s continuing effort to brand soccer in the United States.
“This issue was deep and league-threatening,” he said last month.
This is the story of how those closest to soccer in the U.S. reversed a decision worth hundreds of millions of dollars. It involves FIFA, major television brands, industry leaders such as Univision’s Chairman Jerry Perenchio and AEG’s Phil Anschutz, and the promotion of John Skipper at ESPN. Of course, it involves Major League Soccer and commissioner Garber, who said, it’s a story that “ultimately resulted in a win for the sport in this country.”
NBC Universal makes its pitch
This story really starts in 1999, the beginning of Garber’s tenure as commissioner. He instituted a risky, but promising, strategy of promoting soccer “from the bottom up” and creating interest in the league as an intended consequence. He said, “We’re not just in the MLS business; we’re in the business of creating a soccer nation.”
Mark Noonan, who worked for the league for several years before becoming president of FocalSport, a paid MLS consultant, called it a key moment. “We need to represent soccer and cultivate it,” he said.
Winning the English-language rights for the 2002 and 2006 World Cup, which kicks off later this week, and creating SUM in 2001, was at the heart of Garber’s strategy. SUM then bought the time for the games on ABC and ESPN and sold the advertising.
“People watch the World Cup but soccer still doesn’t have traction in the United States,” Pilson Communications President Neal Pilson said. “Garber recognizes that and successfully linked the league to world’s biggest sporting event.”
For Garber, maintaining this connection was vital to soccer’s growth. So last spring he traveled to Zurich with AEG’s Anschutz, who owns four MLS teams, and Tim Leiweke. They wanted to pitch a plan to grow soccer in the United States and to lay the groundwork for SUM’s renewal.
That was already an uphill battle for two reasons: First, FIFA’s director of marketing and television, Jerome Valcke, was looking to deal directly with broadcasters this time; and second, SUM’s success had driven the value of the rights to a point that it might have priced itself out of the market.
In 2001, MLS had no competitors when it bid $40 million for the U.S. English-language rights to the 2002 and 2006 World Cups. But the market for the English-language rights for the 2010 and 2014 men’s tournament and other global soccer events, including the women’s World Cup, were easily double that.
While the trio from MLS was in Zurich, NBC Universal was laying plans for a joint NBC Sports-Telemundo bid for the combined Spanish- and English-language rights. The idea was to prop up Telemundo, whose prime-time ratings lagged behind Univision’s by nearly a 4-1 ratio.
NBC Universal’s bid of $350 million has been described by many, including NBC’s Mike McCarley, as a “pre-emptive” strike to wrest the rights from SUM and Univision.
FIFA President Sepp Blatter endorsed the NBC bid and his selection was quickly ratified by FIFA’s finance committee.
So when Garber was informed of the deal on that late August night, he was surprised. He said he had been told that SUM was “in the driver’s seat.”
He saw the finance committee’s decision as a blow to MLS because NBC’s plan focused almost exclusively on televising the World Cup; it contained little promotion of the sport itself, and likely none for MLS, which was partners with ABC/ESPN. Garber said, it was a “top-down approach, and that’s bad for soccer in America.”
NBC Universal, quite naturally, would not agree that its business plan was bad for the sport, but McCarley said he knew why the commissioner would say that. “SUM had been broadcasting MLS games as part of its package. That business model doesn’t work for us.”
It was a business decision, not encumbered with the emotion of growing a league.
But Garber was driven by emotion. “Getting the call in the middle of the night was the beginning of a three-week dash of sleepless nights and high tension.”
He immediately urged FIFA executive committee member Chuck Blazer, who was in Zurich for an executive board meeting the next day, to intercede on behalf of soccer in the U.S. But Garber would not comment on the events of the next three weeks.
What happened in those weeks was pieced together from interviews with other key players, some on the record and some off.
Was Skipper’s promotion the key?
The day after the finance committee’s decision, Blazer made an impassioned pitch to the executive committee in Zurich, FIFA’s decision-making body with a history of ratifying finance committee recommendations.
Blazer, the only American on the 24-member executive committee, shared Garber’s sentiments that NBC Universal would do little to expand soccer in the United States. He asked for a 30-day reprieve to investigate better opportunities.
Blatter had already taken a position that the United States and China were FIFA’s most important developing markets. So he was persuasive when he made the case that the executive committee must support the young league in the United States.
Blazer declined all requests for interviews but what he said on that August day is part of the FIFA record.
He argued that SUM had succeeded in driving up the value of the U.S. rights as evidenced by the NBC bid, so he made the case that delaying a decision would not only support FIFA’s current U.S. television partner but that it could result in a even larger contract.
Word that NBC Universal had prevailed was starting to seep out, but the executive committee recognized that it had nothing to lose by acceding to Blazer’s request.
A 30-day delay was granted, and parties with an interest in soccer went to work.
First, Fox Soccer Channel saw an opportunity. At the time of the finance committee vote, Fox had not put forth a bid. After the extension, Fox rapidly got a bid together.
Then ESPN was approached about its interest in the rights. The network had partnered with SUM on the 2002 and 2006 World Cups and was a natural ally of MLS.
Sources said that ESPN was played off of Fox, using natural competitiveness to pique ESPN’s interest.
David Sternberg, Fox Soccer Channel’s executive vice president and general manager, said, “I have no idea about that. I dismiss the idea.”
John Skipper, who was at that time replacing Mark Shapiro as ESPN’s executive vice president of content, said, “I’m not aware that anyone played us off of Fox.” He said his interest was sparked by a belief that soccer will grow in the United States and, combined with his “love for the sport,” it was an independent business decision.
The ascension of Skipper was fortuitous for MLS because his reputation as an avid fan of soccer reached to Zurich.
Skipper said, “I’m committed to soccer and committed to this deal” but he said he believes FIFA was “interested in maximizing their revenue and maximizing the growth of the sport.”
But one source close to the talks said, “If all things were equal, the promotion of John Skipper would be the deciding factor.”
“The deciding factor,” Skipper said, “was the assets and resources we bring, the staff and the reputation of ESPN.”
Skipper said he worked closely with George Bodenheimer to craft a multiplatform approach to the World Cup, which included ABC, ESPN, ESPN2, ESPN.com and ESPN The Magazine.
Now there were two new English-language bidders. But to successfully unseat NBC, the English-language and the far more valuable Spanish-language bids had to be collectively viable.
A secret meeting was held between MLS board members and high-level executives of Univision. Neither side will deny the meeting occurred, and both refused to offer details. But one source said that the meeting reignited Univision’s “excitement” and executives came away with a renewed interest in pursuing the rights.
While MLS, ESPN and Univision now saw a clear opportunity, all sides stress that the English-language and Spanish-language bids were independent.
Univision bid a reported $325 million and ABC/ESPN bid a reported $100 million. In the end, Blazer was right. The total of $425 million was the largest rights package in FIFA history and $75 million more than the bid of NBC-Telemundo.
Garber said it wasn’t just about the money. “Their bids connected the dots between all aspects of the varied properties within the U.S. soccer market.”
John Genzale is founding editor of SportsBusiness Journal.
