Now in its twentieth season, Major League Soccer (MLS) is off to a blazing start in the 2015 campaign – both on the pitch and off of it. Two new clubs to add to the growing roster, new sponsorship partners across the country at the club and league level, a new record domestic TV deal got underway, and the fans have been filling the stadiums to give MLS its best attendance numbers in league history – at least thus far.
So if MLS has everything going for it, why have we not seen the level of results in the financials that the hype would have us believe? There are a lot of areas where MLS has improved on the business end of things, and the growth is promising, but what remains MLS’s largest opportunity is broadcasting revenue. Though the league just entered into the first year of its record deal with FOX and ESPN that will more than double the league’s broadcasting revenue from its previous deal with NBC and bring in an estimated $90 million annually, and we should celebrate this step, MLS still has a long way to go yet.
To put MLS’s new domestic TV deal into perspective, Cardiff City, who were relegated to the English Championship after their poor finish in the Premier League in the 2013/14 season, earned a little more than £62 million ($93m) in 2014, and were last in the league in terms of broadcasting revenue. There are plenty of mathematical reasons why comparing MLS to the Premier League in this way is not statistically sound, however, it does serve to frame up the hill that MLS still has to climb if it is to achieve its overall goal of becoming a top three league in the world by 2022, as stated by Commissioner Don Garber.
The good news is the league has not only focused on the domestic TV market – even though there is still massive opportunity here in the states. According to an article in the International Business Times, MLS will be available in 80% of the global TV markets after going on a 12-month long rights selling spree. Though MLS still can’t compare to the likes of the Premier League, it is comparable to the German top-flight Bundesliga in terms of market coverage and availability, and even broadcast in more countries than Spain’s La Liga, home of giants Real Madrid and FC Barcelona, the first and fourth richest clubs in the world respectively. For perspective, broadcasting revenue for Real Madrid and Barcelona constituted 37% and 38% respectively of their overall club revenue last year.
This global development is encouraging for MLS, but its biggest opportunity is still at home, which also happens to be its biggest battleground. In a recent Yahoo Sports article, MLS TV broadcasting revenue and audiences were compared to the other major sports leagues in the US for 2014, and it was not a pretty picture. It’s no surprise that the NFL is king in the US, and pulls in over $5 billion a year in broadcasting revenue, and averages 20 million viewers per game- that’s more than 50 times what MLS will earn annually on its new record deal with FOX and ESPN, and more than 80 times the viewers (depending on the channel). The NBA draws in the next highest TV earnings at $2.7 billion, followed by MLB at $1.5 billion, and the NHL at $200 million. Even the NHL, the lowest of all the other top professional sports leagues in the US, draws more than 500,000 viewers on average per regular season game, and almost triples that figure during the playoffs.
MLS is transitioning from a fledgling league, to one of stability and growth, but is trying to achieve that “top 3” global status in one of the most, if not the most, competitive and mature sports markets in the world. In Repucom’s latest “World Football” report, we learn that only 9% of the US population says that soccer is one of their favorite sports to watch on TV. It’s worth mentioning that the same stat for the UK, the home of the Premier League, the most popular league in the world, only reached 46%. The fact remains however, that MLS still has its work cut out on the road to making soccer top of the list in the hearts of American sports fans who are watching TV.
The good news for MLS, other than the fantastic growth the league has seen in recent years, and the development of the game overall in the US at the same time, is that while there is still a large hill to climb to reach the level of broadcasting revenue that will bring the league onto respectable terms with its peers, the ways in which the league can generate broadcasting income have never been more plentiful. Broadcasting deals now include multi-channel, multi-device clauses incorporated into the fabric of the contract, driven by the latest trends in second-screen viewing. According to Repucom, 25% of soccer fans use a tablet to watch matches live, and 40% of fans watch via a mobile device (if they multiscreen). Many fans also follow matches via social media outlets if they can’t watch live, or they interact with social communities about the match as they’re watching live. Brazil, where MLS just signed a new broadcasting deal with Globosat, is Facebook’s second largest market in the world. Coincidentally, of Facebooks estimated 1.28 billion users (and growing), 500 million of them are soccer fans – you get the picture.
MLS has a lot more options now than it would have had ten, or even five years ago when it comes to filling the broadcasting revenue void. As broadcasting technologies and channels continue to evolve and change the landscape, there will be plenty of opportunities for MLS to improve upon its current position relative to other professional leagues domestically, and around the world.