Valencia Coming to Town

Multiple sources are announcing that La Liga powerhouse Valencia will be the latest European club team to travel the United States to play MLS teams during the Summer.  While lacking some of the cache of Real Madrid and Barcelona, Valencia is a quality side that will draw significant interest from fans in Philly and potentially DC where the team is set to play.

These matches are part of the summer ritual in MLS.  These teams criss-cross the United States preparing for their season by playing MLS sides and each other. Last year, AC Milan, Real Madrid, Chelsea and Everton were among the European powers crossing the pond to participate in an American Summer.  Not surprisingly, these games are not all about soccer.  The European teams are desperate to spread their brand to an American audience in an effort to collect fans and sell jerseys on these fertile shores.

At the same time, MLS teams can generate a large pay day by selling seats to see the foreign teams play (and these European teams don’t come for free).  MLS squads view these games as an invaluable oportunity to showcase their talents (and very existence) to soccer fans in the States who typically ignore MLS.  Some teams believe so strongly in these opportunities, that they readily shift MLS regular season matches to accomodate the games. Recall that the Galaxy made the AC Milan friendly an important part of their Beckham negotations.  Interestingly, some teams readily participate in these matches (Seattle, Los Angeles), while others show no interest (the Revs have vehemently denied that Valencia will be stopping in Foxboro).

Overall, we think that these games are great for MLS. Every time that a fan of a team like Valencia, Barcelona or Chelsea enjoys their experience at an MLS game, is an opportunity to create a fan who comes back to see the players for their local side.  Moreover, these events typically generate substantial revenue for the MLS Sides.  The touring season starts this weekend in Harrison with Santos

Soccer Business Bits: Red Bull Stadium Update, Philly Sponsor & More

This weekend marks the opening of Red Bull Arena, as New York takes on Brazilian side Santos in a pre-season match-up.  The sell-out will be broadcast on both MSG and FSC.  The planed “soft” opening last weekend was canceled because of the terrible weather in the NY Metro area.   FSC will also broadcast its annual MLS season preview on Friday night at 8:00.

In Philly, the Union have announced a multi-year deal with Horizon Services.  The Delaware based residential HVAC company is also a Phillies sponsor.  Last week the Union officially introduced PPL as its stadium naming partner.  PPL will also get hospitality events and experiences at the stadium, TV and radio advertising, signage boards and sponsorship rights in the youth soccer programs in which the Union have a foothold.   The terms of Horizon’s deal have not yet been revealed.  Soft drink king Coke was also announced as PPL Park’s official soft drink and Dasani as the official water.

Finally, the Sports Business Journal is reporting that “matchups” are the key factor behind ESPN’s return to Thursday night soccer.  2/3 of the ESPN broadcasts will be on Thursday nights compared to less than 30% last year.  We wrongly panned the decison to move away fro a defined night last year.  According to the SBJ, “viewership on ESPN2 rose 12.8 percent through 25 games during the 2009 season with an average of more than 290,000 viewers tuning in, up from an average of 253,000 during the 2008 season.”

MLS Website Changes to be Announced

MLS is getting set to unveil its new website at www.MLSsoccer.com.  According to the Sports Business Journal, “the new site is the centerpiece of a retooled digital strategy that brings the league’s Internet rights and management in-house.” Previously, the MLS website was maintained as part of a deal with MLB Advanced Media.  Now all teams and league sites will be under direct control of MLS with an assist from Rocket Fuel, a New York based consultant.

As part of the new website, MLS will offer an out of network game package for $39.95 for the season. The new package will include DVR functionality and HD quality.  Much of the video content will be free, including archived footage, highlights and more.   MLS has been substantially increasing its online content over the past few years and the new content adds higher quality and better offerings.

Other highlights of the site will include Spanish language content at FutbolMLS.com.  Perhaps most interestingly, each team will have its own editorial independence despite the common platform.  This will change the current practice, where most teams are on the current platform, while others (like the Revs and Rapids) are on their own site.

We think this is a great move for MLS.  We have previously discussed how soccer fans and media are extremely reliant on the internet for information and coverage.  Because soccer gets limited exposure in mainstream media and because many fans follow teams overseas, the internet is the key tool for following the beautiful game.  MLS is taking an important step to connect with its fanbase.  Having a top notch website is an important step to keeping its fans involved, but ultimately it comes down to content.  MLS is investing much of its editorial decision making in former Revs broadcaster Greg Lalas.  Technology is great, but ultimately, content drives traffic.

We’re on Twitter!: And Some WPS News

Before we get down to business, we just wanted to let you know that Footiebusiness is on Twitter as….Footiebusiness!  After more than a year of covering the business of American soccer, we thought it was time to make the full leap to twitter.  We hope you will follow us.  If you are on Twitter, drop us a line in the comments section or via e-mail (footiebusiness@gmail.com) and let us know your Twitter Account.

Big news out of WPS.  The Women’s league has announced Citi as an official “founding partner”    joining original founding partner PUMA.  As part of the arrangement, Citi’s logo will be on the back of every WPS jersey. The press release also notes that season ticket sales for the returning teams are up about 17%

It has been an interesting offseason for the league.  WPS signature franchise Los Angeles Sol announced that it will cease operations and not participate in the 2010 season, despite being the only WPS team with a jersey sponsor.  The deal, with Amway International, included the Amway name on the jersey, stadium signage and placement on an array of Sol items.   At the same time, the expansion Atlanta franchise will be the first to play in a soccer specific stadium built for a WPS franchise.  The 8,300 seater is less than 30 miles from downtown Atlanta.   The stadium will cost less than $20 million to construct and will host both the Beat and Kennesaw State University Women’s soccer team.  The stadium is designed to increase to 16k for purposes of concerts and is expected to host NCAA events.  Click here for images of the stadium.

In its second season, WPS has added teams, sponsors, ticket sales and a stadium.  Things are certainly looking up for year two.  We will keep you posted on business developments from WPS as the season gets closer and during the heart of the campaign.

The CBA: Strike on the Horizon?

The big business news in the world of American soccer is the announcement by the Players’ Union that  they have authorized a strike.  Reports indicate that the Union is planning to strike on the eve of “First Kick” if a new deal isn’t reached.  This provides the sides with a two week window to finalize a deal or face the the prospect of losing the nationally televised openers in Seattle and New York and full slate of opening week games.As these are pretty big showcase events for MLS, a strike could do real damage to the new season.

While the league has said that ticket sales haven’t suffered, there have been few announcement of new league partnerships, jerseys sponsors and other similar news in recent weeks.  Fans are wondering aloud about ticket refunds for games missed, journalists are discussing the possibility of players leaving MLS for foreign leagues during a strike and dozens of other questions remain unanswered.   There are no answers at this point; it is up to the parties and the mediator to make a deal.

Some say the players are holding the strike option for the most opportune time, and now we know that time.  Others thought that the players don’t have the votes or the will to strike but that has been disproven.  Others think that the threat of a strike can do real harm to the owners because it will slow the ability of teams to sign sponsors.  Regardless, we are now twp weeks from the season and there is no labor agreement and no labor peace…yet the games go on.  We will keep monitoring the situation, but for now….

MLS: The Value of Exposure Revisited

Back in January, we discussed MLS’ efforts to mesaure the value of its televsion exposure through various local and national broadcasts.  Through the website criticalmention.com, MLS tries to alert media  to the “value” of its presence on various television programs.  Since a couple of months have passed since we last checked in on this metric, we thought providing a snapshot of this “worth” of MLS media exposure.

In Houston, the local Fox affiliate devoted 30 seconds to the Dynamo signing of local product Francisco Navas.   Critical Mention estimates that the broadcast reached 93k households in the Houston area.  The estimated publicity value?  $920.00. The local CBS affiliate did a similar story on the same day but two hours earlier.  The broadcast reached about 30k less people, but the estimated publicity value? $1328.00  While the monetary numbers seem low, more than 150k households saw a story about the local soccer team signing a neighborhood kid.

In Columbus, WBNS (CBS) devoted 45 seconds to the Crew’s 2-2 draw against Toluca in the Champions League as part of its a.m. news. For a tournament that generates limited interest, the people woke up to a stirring comeback and coverage of three goals.   The broadcast (at 5:00 a.m.) reached approximately 70k households for a publicity value of? $2008.00.   Lastly, more than 135k households saw the Denver NBC affiliate provide more than two minutes of coverage of the team’s trip to London   According to critical mention, the spote generated almost $15k in publicity value.

As we said in January, these numbers are both interesting and informative and provide some tangible basis for comparison when looking at the value of exposure in the broadcast media.  This analysis is especially important when sponsors see their names splashed across jersey fronts during highlights or signboards show their brands for prolonged periods of time.  Moreover, given that many of these broadcasts are local, references to franchises (to a partially captive audience) stress the presence of the team to the community and may remind a viewer of the intention to buy a ticket or watch a game.

Champions League: Does it Matter?

Tuesday night marked the opening of the CONCACAF Champions League quarterfinal version for the 2009/2010 season.  What was once 24 teams is now 8, as the top regional sides competing for the right to represent CONCACAF in the Club World Cup.  This is the second season for the competition in its current iteration.  The play-in portion of the tournament started in RFK in July  before a paltry crowd typical of the tournament. The quarters opened up before friends and family in Columbus on a termperate night in Ohio.

In Europe, the Champions League competition is the most prominent of club events. Even during the broadcast of the Crew match, FSC was actively promoting its upcoming HD broadcasts of future Champions League games.   Club teams throughout the continent claw for the money, exposure and glamor of a spot in Europe.  In CONCACAF, the tournament barely registers a blip on the radar screen of the region’s soccer fans, especially in the US.  Teams must invest time, money and energy to compete in the event without the substantial rewards offered in the European version of the event.  The teams face extensive travel and generate limited revenue from ticket sales.  So from a business perspective, is it worth it?

We say yes.  As the tournament gains traction (especially in some of the newer markets), the exposure to international competition creates an enormous opportunity for exporting the League to the rest of the region. This will get a great test this year as US Open Cup Champ Seattle dips a toe into international play.  At the same time,  the elusive American soccer fan who watches only European football gets a chance to see more MLS on FSC in a tournament that makes perfect sense to them.

At the same time, players within MLS have the opportunity to show their wares to an array of potential suitors.  Ultimately, this creates transfer opportunities which can generate revenue for the teams and the League.  Similarly, front offices in MLS have an opportunity to evaluate talent from around the region, as they watch potential transfer targets play against MLS competition.

This process will take time, and likely will be a money loser for some time.  Yet the Champions League is an important business opportunity for Major League Soccer.  Ticket sales will come, as will television revenue and popularity over time.  Of course, it would help of MLS teams show well in the event.

Soccer Business Bits: The Art of World Cup Sponsorship, MLS All-Star Revenue & More

Tier-One FIFA World Cup sponsors pay almost $125 million for the right to reach 30 billion sets of TV eyeballs and almost 3 million stadium attendees.  Add in the enormous investment necessary to leverage the FIFA relationship (through ad materials, hospitality events, commercials, etc…) and only a serious company can join the elite group of six tier-one partnerships offered by FIFA.  It was therefore surprising when it was announced that little known Chinese renewable energy company, Yingli Green Energy,  had joined titans such as McDonalds and Budweiser in the upper echelon of sports sponsorship.  The deal entitles Yingli to stadium advertising, the use of the FIFA mark, prime real estate in fan zones and much more.

Few events offer the worldwide reach of the World Cup and Yingli is taking an enormous gamble that sports fans will bring market share.  According to the Sports Business Journal, “Yingli signed its World Cup sponsorship because it believed soccer’s popularity would help the company raise brand awareness in key markets such as Germany, Italy and Spain, and potential markets such as Brazil and Africa.”  In addition, Yingli is hoping to develop relationships with other business and business leaders to increase brand awareness and sales.   Yingli develops, manufactures and sells photovoltaic modules and trades on the NYSE.  The company joins new MLS sponsor Continental Tire (a lower level World Cup sponsor) under the FIFA umbrella.

Multiple news outlets are reporting on the competition to host MLS Cup.  Cities such as Philly, Toronto and Los Angeles are vying to host the 2010 championship.  Most interesting to us, is the information contained in this article from the Toronto Star, about the value of hosting special soccer events.  According to the article, the MLS All-Star game generated $28 million (Canadian) over three days in tourism dollars while Real Madrid’s Canadian visit generated $10 million. These are the types of arguments typically raised to bring in big sports events, check out our interview with Simon Kuper, the author of Soccernomics for the other side of the argument.

Finally, Kyle McCarthy talks through the recent MLS announcement that all matches will be produced in HD for 2010.  According to the article, “MLS officials decided to make the move to HD production in an effort to compete with the high-quality broadcasts of English Premier League matches and supply fans with a better local television product that reflects the improving quality of play on the field…”  For those interested in the business of broadcasting soccer, we recommend reading this piece.

The CBA: What it Means to Mediate

At the end of last week it was announced that the MLS Players’ Union and MLS had submitted their ongoing CBA negotiations to mediation before George H. Cohen, the Director of the Federal Mediation and Conciliation Service.  The announcement left fans scrambling as they wondered about the ramifications of mediation and the possibility of a resolution.  We thought we would provide some quick thoughts on the process and the mediator.

Most importantly, mediation is a non-binding process. Though often confused with arbitration, mediation is typically much less formal and more importantly, is not binding.  The parties simply engage the services of a non-party neutral (Mr. Cohen) and ask for his assistance in reaching a resolution.  Typically, the parties offer their positions either in written or oral form to the mediator in advance of the sessions to set the baseline for negotiations.

Once the parties stake out their position and address any issues that the mediator needs to be resolved with the entire group , the mediator will  typically engage in “shuttle diplomacy”  by separating the parties and moving from group to group trying to advance towards a resolution. Once this process starts, the parties typically no longer talk to each other, but address concerns and solutions through the mediator who has the power to determine the pitch and mechanism of the delivery.   Ideally, proposals and counter proposals go back and forth through the neutral until all issues resolved.  At the end of the process, none of the proposals are binding unless the parties have reached an agreement.  There is a truism about mediation that a successful mediation means that neither party is totally happy. The process forces compromise and seems like a perfect route for the stalled labor negotiations.

Mr. Cohen’s is an experienced and well thought of labor negotiatior, who spent much of his career as an attorney on the side of labor unions.  He has a high level of expertise in labor law and collective bargaining and will likely lend a fair amount of credibility to the process. Despite his pro-labor leanings, the non-binding nature of the process and the high level personnel involved in the negotiations should obviate any potential bias.   Before receiving a nomination from President Obama  to his current role, he was also an adjunct professor at Georgetown School of Law teaching “The Art of Collective Bargaining.  For more on Attorney Cohen, click here.

Like all fans of MLS and American soccer, we are hopeful that the mediation process is successful and believe that the parties have chosen a good path to follow to bring this matter resolution.

Soccer Business Bits: Big Crowd for Mexico, Manchester St. Louis & More

On a day of international friendlies for teams preparing for the World Cup, probably no team performed before more fans than Mexico in its victory over New Zealand.  The performance was remarkable, not for the result, but because it is a remarkable circumstance where a national team playing at a neutral site against an unremarkable team can draw more than 90,000 fans.  Only Mexico playing in the United States could draw such a crowd for a non-competitive event.  Perhaps most amazingly, if the US had been playing at the same time in the same city, the crowd likely would have been 20k.

In other business news, MLS has made it clear that it has an interest in foreign investment dollars.  According to this article, Don Garber recently met with representatives of Manchester City to discuss the possibility of investing in MLS.  Garber’s quotes suggest that MLS is looking to foreign teams to invest in expansion franchises.  Given the amount of interest from local investors, it is surprising that the league actually has an interest in associating with foreign teams. This is especially so in light of how poorly the Chivas branding worked out.

Finally, the USSF has announced that it will team with First Lady Michelle Obama for a free clinic as part of her recent anti-obesity initiative.  “During the event, the U.S. Soccer Foundation will announce a new and ambitious partnership with the National Alliance for Hispanic Health that brings together the U.S. Soccer Foundation’s Passback Tour and the Alliance’s ¡Vive tu Vida! Get Up! Get Moving!™ the nation’s largest Hispanic family health lifestyle event series with over 15,000 participants annually.”