MLS All Star Update

Here are some scattered business thoughts on the MLS All Star Hub and other items from Major League Soccer’s descent on New York.  The Hub itself is set in a swanky SoHo building decorated with a clubby feel.  Most of the league sponsors are represented through various  themed booths in the Hub that offer an array of interactive events.  There is foosball, video games, a pub and more.  There are also retail sales, product demonstrations and a large number of staff attirred in gear branded with the logos and marks of the league sponsors.

Unfortunately, the Hub wasn’t particularly well attended by the public.  While some folks did wander in and out on their lunch break, most of the exhibits were lightly used.  Because the Hub also serves as the media credentialing center, there were plenty of journalists wandering around as well as MLS Staff.  There was a fair amount of advertising for the All Star Game and Hub in the surrounding neighborhood, including at the nearby Sheraton. The moment that generated the most excitement was the arrival of the MLS team bus, specificall, the arrival of David Beckham.  Attached to the HUB was space reserved for a press conference given by both teams.

As part of the week’s festivities, MLS All-Stars and executives, Manchester United executives and Sir Bobby Charlton will join forces with representatives of various other organizations to construct the Splash House Pavilion in New York.  According to the league press release,  volunteers will spend the day painting, cleaning and raising the pavilion while academy coaches from the New York Red Bulls and the Claudio Reyna Foundation conduct a clinic for approximately 100 local children.

There was a also a penalty kick event in Herald Square, a reception hosted by the Mayor and a training session by the MLS All-Stars.  The MLS All-Star team and hundreds of fans in New York City now hold the world record for the most penalty kicks taken.

Soccer Business Bits: Portland Jersey Sponsor, Dallas Residency

One of the big business stories of the day was the announcement that Alaska Airlines signed a multi-year deal to serve as the jersey sponsor of the Portland Timbers.  The airline will be the first domestic carrier to sponsor an MLS team.   The arrangement includes multi level digital advertising at the renovated PGE Park (likely to be renamed before the season begins) and a role in the Timbers’ youth set-up.  Alaska Airlines employs approximately 2,300  employees in the Portland area.  What remains unknown, is whether the Timbers will wear Alaska Airlines on their jerseys or their affiliated company Horizon.

Elsewhere, there are multiple reports that FC Dallas is close to setting a full academy system at its Pizza Hut Park complex.  The team will partner with a local high school to provide classroom instruction for the residency program. Over the last few months, we have seen teams start consider moving to the residency model and Dallas appears close to setting up a full program.  The local high school is one that already has a relationship with the team as it was involved in the process of funding the fields at PHP.

Finally, it appears that David Beckham is close to completing his return from an achilles injury suffered in the Spring.  Beckham missed the end of the AC Milan season, the World Cup and most of the MLS season.  His return should mean a bump in attendance both home and away and should provide some marquee tv matchups down the stretch for the leagues tv partners.

Soccer Business Bits: Soccer on TV

us-soccerThere are a couple of interesting TV notes surrounding US soccer this week.  The most significant is the announcement that the English rights to the USA/Mexico World Cup qualifier belong to……Telemundo.  According to Mr. Goff, Telemundo will show the game in Spanish on its main channel and in English on “mun2″ a station available in only 30 million households.  Telemundo is owned by NBC.  According to Goff, ESPN attmpted to purchase the game from Telemundo, but the rights were not for sale.  Given the strange start time (4:00 p.m. ET) for the midweek game, the match will likely not be a ratings dynamo.  Yet, the lack of availability in English will dramatically impact the ability of the work crowd to catch the game at a bar and of the college/school crowd to watch the game at home.  This is the biggest World Cup qualifier in years, and Telemundo’s power play will likely deny millions of American sports fans the opportunity to watch the game.

In other TV news, FSC landed the big match (for viewership purposes) of the MLS season to date.  Beckham’s Thursday night match in NY and return to MLS should be a ratings draw in prime time for the soccer network.  FSC has done a good job of promoting the game during the Gold Cup broadcasts.  At the same time, ESPN2 definitely drew the short straw for the week (yet a better game), with a 1:00 ET Saturday Toronto/Houston match.  The Toronto game is probably the better match-up, but the Galaxy contest is the sexier game.  Saturday times were not historically successful for ESPN, and a 10:00 a.m. Pacific start time (even in Toronto) will probably continue that trend.

Finally, the semi-finals of SuperLiga are upon us, with a two match doubleheader at Gillette on Wednesday night.  The game promises to be lightly attended (although the Revs are including this in their season ticket package).   All SuperLiga games are televised on Telefutura, yet the semi-finals have also been picked up by English language TV in New England on Comcast SportsNet.  The game will be shown in Mass, Conn. and Rhode Island using the Revs usually play-by-play man Brad Feldman.  superliga

Soccer Business Bits: Deals Deals Deals

crew-jerseyAs part of our ongoing efforts to discuss MLS marketing efforts, we present a number of deals circulating the League.  In Columbus, the Crew are preparing for the return of David Beckham with the Crew Flex 5 Bonus Pack.  The deal offers tickets to 5 MLS games including Becks’ return to Columbus “free”.  Purchasers can choose from a number of other games to make up the 5.  The package is going for as little as $95 per ticket.

In Colorado, the Rapids have announced a “Festival of Women” prior to their June 20 match at Dick’s Sporting Goods Park.  The event features an eclectic mix of speakers, bands, pampering and other female oriented events.  There will be book signings and medical care and family entertainment.  Admission to the event (starting 4 hours before the Rapids take the field) is only $15 and includes a ticket to the Rapids game.

Go to Chivas USA’s home page and face a large banner ad “Bye Bye Blanco”  Chivas is actively promoting the return of the Mexican superstar for the May 28 game at the Home Depot Center.  Tickets for the game start at $15.

Finally, the Houston Dynamo are offering a number of deals on their website.  These include a giveaway of 7,500 “car flags” for their upcoming match against the Earthquakes.  At the same time, the Dynamo are offering a Mcdonald’s 4 pack which includes 4 tickets, 2 Happy Meals and 2 Southwest Chicken meals for $55.  The Dynamo continue to offer promotions for every game, and the match against their  San Jose replacements should be well attended. houston-dynamo

We will be out of town in Dallas for a couple of days.  We will report back on efforts to market FC Dallas in the local area.

Soccer Business Bits: Beckham is Back and More

galaxyIt’s been a while since we’ve discussed David Beckham in this space, but with the recent statement from MLS Commissioner Don Garber, Goldenballs is back in the news.  According to the Commissioner, MLS will receive $10 million from AC Milan and Beckham to extend the loan deal into July.  As we have previously discussed, there were a number of components to the Beckham deal.  These included extension of the loan, an AC Milan Friendly and the payment of a fee by Beckham.  As we have also discussed, Beckham’s contract has an out clause at the end of the MLS season.  However, with Becks riding the pine in Italy and MLS attendance struggling, one wonders if the League will find a way to hold on to its marquee attraction.

There is an interesting post about the business of MLS by Jeffrey Marcus at the New York Times.  Mr. Marcus discusses a point that we have previously raised, i.e. how to make MLS appeal to the legions of U.S. based soccer fans.  If 10,000,000 people watched the U.S. play Mexico, and pubs are over flowing with people watching Liverpool play Aresenal on Sunday morning, how does the League capture those fans.  In the post, Mr. Marcus quotes Commissioner Garber discussing the way to increase the League’s appeal by bringing more stars to the States.  Mr. Garber recognizes that the League needs to increase the quality of play (or at least create the impression that the quality has improved). The early years of of MLS unfortunately drove a large numbers of soccer fans away from MLS because of low quality.  The quality has improved over the years, but these fans have not come back.  The various promotional campagins we have discussed this season are largely targeting these fans and the League is making progress.  The League hopes that the economy won’t get in the way.

Beckham Deal Finalized: Refunds for fans?

galaxyDavid Beckham’s long rumored “extended loan” has finally been announced; the Galaxy midfielder will complete the Serie A season with AC Milan before returning to MLS in the Summer.  Reports also state that Beckham will contribute a substantial amount of his own funds to the deal.  As part of the agreement, AC Milan will play a July friendly against the Galaxy in Los Angeles.  The friendly with AC Milan will necessitate the rescheduling of the Galaxy’s match with New York  from July 19 to July 16 (a Thursday night).

Given ESPN’s new MLS schedule, it makes sense that the League and the Network will bill the NY game as Beckham’s return performance and showcase the match in prime time.  The Beckham games at Giants Stadium have been very well attended, and have provided some of the best soccer of his MLS tenure.  As part of the announcement, the Galaxy also stated that they will be discounting tickets by 10% for the season and refunding 10% to those who have already purchased tickets.

The 10% refund is reflective of the difficulties in building a business model around one player.  A large number of fans bought tickets to see David Beckham, not the Galaxy or their opponent (certainly there has been a huge upside for the League as awareness and exposure is way up over the last three years).  Teams have continued selling 4 game packages and other promotions around Beckham’s visit to their stadium.  However, when he is hurt (as in his first year) or not around (as for most of the 2009 campaign), you get disappointed customers.  At the same time, the “hard core” fan gets turned off by the focused promotion.

Whether you think the Galaxy, MLS or AC Milan won or lost these negotiations (and opinions certainly run the gamut), Beckham’s overall economic impact on the League cannot be disputed.  We discussed that at length here.  For now, the Galaxy have a little extra cap room to utilize because Beckham’s “max” cap number will be pro-rated, and for a few months, the League can focus its attention on the coming expansion announcements and the inagural season in Seattle.milan

Beckham Loan Extended??

Ibecks2n a fairly remarkable twist, the L.A. Times is reporting that the David Beckham saga is finally nearing its end.  According to Grahame L. Jones, MLS has agreed to extend Beckham’s loan through the end of the Serie A season (end of May).  Once the July transfer window opens on July 15, Beckham will rejoin the Galaxy for the rest of the season.  According to Jones, Beckham will then exercise his opt-out clause, paying the Galaxy to release him from contract by the end of 2009.  Remarkably, the deal is supposedly for more than the $10 million AC Milan previously rejected.

From the League’s perspective, Beckham can be trotted out one more time to half of the League’s cities.  Because L.A. has a travel heavy summer, Beckham should still visit New York, New England, D.C., Columbus, Kansas City, Chicago and Houston. These visits will allow the League to pad attendance one more time on Beckham’s back.  Moreover, because Beckham’s salary is pro-rated, the Galaxy can bring in additional talent to improve the squad.

This move certainly seems strange.  AC Milan is seemingly out of the title chase and has little reason (on the field) to keep Beckham for the season.  He will be available in January, 2010 as a total free agent.  From Beckham’s perspective, this deal will cost him money, but he is probably hoping it buys some good will.  He will likely try to couch this as “the best of both worlds” and the last shot he wanted to bring the Galaxy to the promised land.  The fans will decide, but I suspect Beckham will face some harsh words upon his return.galaxy

MLS Contracts: Who owns David Beckham?

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If there is one thing the David Beckham situation has made abundantly clear, it’s that MLS does things differently.  During the negotiations with Milan, I’ve been repeatedly asked to explain the MLS contract system. In the traditional soccer model, players are owned by individual teams and transferred (i.e. sold)  when two clubs (and the subject player) agree.  Not so in MLS.

MLS operates as a “single entity” where teams are controlled by the League.  While the level of central control has lessened over the years, player contracts are still owned by Major League Soccer.  Thus, despite playing for the L.A.  Galaxy, Beckham’s contract is owned by the League.  Thus, to negotiate a transfer, both clubs, the player and MLS need to agree.

This obviously creates some conflicts.  Undoubtedly, David Beckham has enormously increased awareness of MLS worldwide.  Selling him now may not be in the best interest of the League and its owners, but very well might be in the best interest of the Galaxy on the field.  As of this writing, no deal has been done.  Galaxy owners AEG, have taken the party line with AEG President Tim Lewike stating, “I’m not sure they ever quite understood the magnitude of the losses the Galaxy and the league would have had to bear this season. They were very respectful discussions. We’re fine. There’s no issues here.”

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However, Lewike heads the business and not the soccer arm of AEG.  MLS teams are held to a tight salary cap, and head coach Bruce Arena would likely much prefer to dump Beckham and use the funds freed up under the salary cap, and transfer funds, to build a contender.  Instead, he may be left with an unhappy Beckham and another losing team.

Should Beckham Be Released from MLS Contract to Join AC Milan?

david-beckham_1209914c

With David Beckham’s long rumored transfer to AC Milan seemingly imminent , it is worth examining the implications of the move.  First, a little background:  Beckham came to the L.A. Galaxy on a “free” in 2007 after finishing out his contract with Real Madrid.  While the exact terms have always been sketchy, it has long been understood that Beckham signed a five year deal including less than $50 million in guaranteed money, with most of the remaining $200 million wrapped into jersey sales and image rights.  Most importantly (for purposes of the move to AC Milan), there is an “opt out” clause that lets Beckham walk away from Major League Soccer after three years (November, 2009).

After the 2008 season, Beckham (with MLS’ blessing), secured a short term loan deal to AC Milan until March, 2009. His stated reason for taking the loan was to stay in shape for the upcoming world cup qualifying.  He was expected back with L.A. in plenty of time for the season opener at the end of March.  While in Italy, Beckham proved himself capable at playing at the highest level, and soon, AC Milan was banging down MLS’ door for a full transfer.

Given the forces at play, it seems unlikely that MLS will hold onto Beckham.  Selling him for a reasonable sum now would certainly seem to trump letting him walk for free in November.  However, a whole host of sponsorship deals and television contracts were signed with the understanding that the world’s most famous athlete would be wearing Galaxy colors.  Given the economic climate, it is not unreasonable to suspect that some of these companies may come back to the League looking for money.  Herbalife got far more than even they thought, when Galaxy jerseys sporting their logo became the “must have” uniform worldwide.  With Beckham gone, those sales are sure to plummet during the last three years of their (no surprise) five year deal.

beckhamFor MLS, the departure of Beckham is a definite mixed bag.  There is certainly an argument that his two years raised awareness of MLS to new heights both nationally and internationally.  MLS is now part of the worldwide soccer landscape and is part of the U.S. mainstream sportsvernacular.  Attendance increased league wide during his two years, especially during Galaxy away matches.  On the other hand, TV ratings stayed flat and the impression that Beckham is fleeing MLS could be taken as a black eye for the league.  There is a good discussion of both sides of this issue with sportswriter Stefan Fatsis on NPR.

I tend to think now is a good time for Beckham to be moving on.  When he came to MLS, the move was derided as a sunny retirement in L.A. for an aging superstar.  Fans of the European game refused to believe that a talented European would choose to play in the States if he was good enough to play across the pond.  Two years later, teams are clamoring for Beckham’s services, and MLS has become a destination for international talent and launching pad for budding Americans like Jozy Altidore, Clint Dempsey and Michael Parkhurst.

Off the field, I think the benefits of Beckham have peaked.   MLS raked in huge amounts of money with ticket sales, jersey sales and TV deals.  Arguably, the surge in soccer stadium construction is partly attributable to the Beckham effect and the upcoming changes in the Collective Bargaining Agreement will definitely be impacted by the increased interest in MLS.  There is no use keeping a player who wants to leave (and who can do so soon).  MLS will be best served selling Beckham for $15-20 million and perhaps reaping some additional benefits from AC Milan.  They can then turn that case into more players and as a crutch to ride out the economic storm.

UPDATE: According to Soccer By Ives, MLS has given L.A. and AC Milan until Friday to resolve the potential Beckham transfer:  http://www.soccerbyives.net/soccer_by_ives/2009/02/mls-ac-milan-has-friday-deadline-to-buy-beckham.html

With sponsorship deals under negotiation and tickets being sold, it only makes sense for the League to press.  They don’t want to get caught with sponsors claiming some sort of breach.

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