The Adidas Deal: Inside the Numbers

The big business story in American soccer over the last 24 hours was the announcement that league sponsor adidas has significantly increased its committment to MLS with a new 8 year, $200 million that runs through 2018.  The deal replaces the previously signed 10 year, $150 million deal signed between the parties in 2004.  With four years remaining on the original deal, adidas has increased its annual committment to Major League Soccer by $10 million per year.

In addition to supplying the clubs and league with merchandise and balls, adidas will remain the the official supplier of uniforms and equipment to MLS youth academies and will increase its advertising presence during MLS broadcasts.  The increase in MLS youth academy presence in affluent and urban areas gives Adidas significant opportunities to reach younger players and familes with an entire line of merchandise.  Moreover, the 8 year deal allows MLS to develop and plan its strategies with the knowledge that these funds are coming through 2018.

According to the Sports Business Journal, adidas’ decision to extend the deal,is based, in part, on the 600% increase (over the last five years) in annual MLS merchandise sales to $300 million per year.

With its FSC contract up this year, the Adidas deal may provide a background for further broadcast negotiations.  With promises from adidas to become a greater presence in television advertising, FSC, and potentially Versus,  may have more reasons to consider signing with MLS.  ESPN may also recognize greater return on its long term investment in the league.

This is obviously a great moment for the league, as it ensures a significant commitment from one of the great merchandise and marketing powers in the world of sports.  At the same time, adidas is shrewdly increasing its participation in MLS at a time when the league is devoting increasing resources to youth development.  We

We’ll let Don Garber have the last word:  “One of the major reasons Major League Soccer has become one of the top soccer leagues in the world is due to the support and commitment of adidas. “They have a clear vision for the sport in North America, and they see MLS as a cornerstone of that vision. Our extension with adidas is a major statement by an internationally respected brand that MLS is increasing in value and that our commitments to stadium construction, strategic expansion, player development and improvement in the overall quality of play are playing dividends.”

The Monday After

Full slate of games in MLS this weekend including a scoreless draw north of the border between RSL and TFC.  We have talked on multiple occasions about the value of CONCACAF Champions League.  However, after a week of extremely frustrating and demoralizing results, the perils of fixture congestion showed at BMO Field.  Both RSL and Toronto were sluggish in playing to a 0-0 draw  With MLS teams in the final third of the season and most clubs in the throes of a playoff chase, teams remain involved in Open Cup, Champions League and Superliga.  Tired legs were evident in Toronto and the big crowd was not treated to an outstanding display of soccer.

In Columbus, the Crew and FC Dallas dedicated their match to the founder of both teams, Lamar Hunt, with a similarly lifeless scoreless draw.  The festivities drew a slightly increased crowd to Crew Stadium (just over 16k), but a tepid match did little to impress the patrons.  The Crew are also one of the clubs heavily involved in other tournaments, with commitments in both Champions League and the Open Cup.  The hope for MLS, is that this is simply a summer doldrum and not an offshoot of its prominent franchises suffering from over extension.

The WPS Regular Season is coming to a close, but attendance in the nascent league has shown an uptick in recent weeks.  More than 3100 were in Washington on Saturday night as the home team held off New Jersey.   In Atlanta, more than 4200 crowded into the league’s only SSS to watch the home team get blitzed by 5 goals.  The attendance numbers are promising, especially in light of recent announcements that WPS is cutting back its league funding 50% and redirecting resources to the teams.   The league has lost two teams in the last year, and the possibility of further losses could shake sponsor committment (despite a signficant increase jersey sponsors and investment).

Promotions, Promotions, Promotions

As we do every once in a while, we thought we would take a look around the league at promotiosn for the upcoming slate of games.  In Columbus, the Crew are hosting a Lamar Hunt “Legacy Day” for their August 28 match against FC Dallas.  The ceremonies will include the unveiling of a statue honoring the former owner of both clubs.  The first 2500 fans under 14 will get a free Crew mini-ball.  The team will also offer buck-a-brat nights, an onsite zoo and a $32 pre-game tailgate that will also include tickets to the game.   The team is also offering tickets for $10 or more for groups of 20 or more.

In Colorado, the Rapids are continuing to promote their “Lads Night Out” for their upcoming match against Houston.  The package includes two tickets, two beers and two beanies for $49.00.  There are no other promotions going on for that match.

Chivas USA is offering a “kids pack” for their Sunday game against DC United.  The promotion includes a gree ticket for any child under 16 who comes to the match with an adult paying full price.  The deal will be offered for one more game during the year.

The Revs, Sounders, Red Bulls and TFC do not have any ticket promotions for their weekend matches.

Footiebusiness Vault: Interview with Rapids Senior Director of Marketing Kieran Cain

We are on the road, so we thought we would revisit an interview from April, when we caught up with Rapids Senior Director of Marketing and Entertainment Kieran Cain to talk about the Rapids’ marketing efforts, tickets sales and more.  Mr. Cain is a 13 year veteran of the Rapids organization and after a start in ticket sales, he has moved through roles in ticket sales, community relations and game entertainment before coming to his current position.

Thanks to Mr. Cain for answering some questions.  For our recent interview with Union VP of Marketing Cara Joftis, click here.  For our library of 2009 marketing interviews, click here.  How have the Rapids utilized online avenues such as social networking sites  to market the team?  Do you find that these efforts increase interest in the Rapids or impact attendance?

Kieran Cain:  We are very active….over the last three weeks we have had more growth online than any other MLS club in terms of how many friends we have added on face book….we have hired two new full time digital media personnel.  This year we have taken a very proactive approach in to online technology, maximizing it where we can.  Not just for the Rapids, but also for our stadium, for our youth academy teams and our adult leagues.

FB: The Rapids offer a number of benefits to season ticket holders including ticketless entry, “chalk talks”, designated parking and more.  What other advantages do season ticket holders get?  How do you promote these benefits to attract new season ticket holders?

KC: We’ve really ramped it up this year.  Everyone has seen the economy, we really wanted to bend over backwards for our season ticket holders, we’ve got a new set of benefits this season for full season ticket holders.   For instance, for the first time ever they have their own prices on the stadium menu which are significantly less than the average fan would pay.  They have their own parking lots.  We created a custom scarf for each season ticket holder. …In addition, there are several different experiences we offer on game day.

One of the big exciting things is that we really reward full season ticket holders with a kickback card.  For every dollar  they spend in the stadium they get an equal amount of points. They can redeem those for everything  from jerseys to dinner with the coach to a trip to London with the team.  They can turn them in this year, next year or let them build up.

Especially this year, there has been a big jump.  We have upgraded many partials to fulls which has been a big objective.   The only way they can get these is to be a full season ticket holder.

FB: How are your season ticket numbers as compared to prior seasons?

KC: We’re up.  We have surpassed last year.  Tickets are up.  Given the economy, this is good news. We have a long way to go.  We’d like to have a full house of season ticket holders. We are working on it every day.

FB: This is the 4th season in DSG Park and the stadium plays host to many events in addition to the Rapids.  How does DSG Park create opportunities to market the Rapids?  What does the team do to market those attending non-Rapids events at the stadium?

KC: We’ve got the building and facility year round.  We are out there doing handouts at the gates, running scoreboard messages.  There are high school games, rugby games.  The biggest concert in the State of Colorado takes place at DSG.  That is a great event to market.  There are lots of cool marketing opportunities.  Our stuff is everywhere, flyers, booths at the event. I control the scoreboard during the event to let people know what is going on and our street team is out there. In addition, we like to reward our fans because they can buy tickets to these events before the general public.  There is synergy both ways.

FB: Last year the Rapids ran a promotion in August where the first 2,000 kids through the gate got a free soccer ball.  Will the team run similar promotional events this year? How successful are these promotions in bringing fans to the stadium?  How do you balance attracting “hard-core” fans versus families?

KC: They are very successful…but the problem that we have is that they are successful, but only for certain people.  Some come for those promotions rather than focus on the game itself.  We’ve made a concerted effort to do away with the promotions on game day and make the focus on the game itself.  We are doing alot to appeal to the dedicated soccer fan.  You wont see many of those promotions this year.

One of the big things we did this year…the first MLS team to do it,  was to physically construct a family unfriendly section in our stadium.  The whole side of the stadium that we completely retrofitted to appeal to our hard core supporters.  It is something where we are encouraging adult only, drinking beer is allowed, having fun is allowed.  It is something we promote.  If you are a family, you can find where you want to sit.

FB: Although still in its infancy, Seattle is being trumpeted as a “model” franchise for purposes of marketing and fan outreach.  Are their any lessons that an established franchise like Colorado can take from Seattle’s efforts?

KC: Sure.  All the teams in the league have heard that success story.  There are certain elements to their success.  They set their club up right from the get go.  They are very involved in their supporters group.  They also have some of the benefits that we may not be directly benefiting from like a stadium directly downtown.  They have bars that you can walk to which is something we would kill for. I think we talk regularly with those guys.  We trade off going to each others games.  There are lessons to be learned, but on the other hand they ask us for advice as well.  It’s a two way street.  Everybody is still learning.

FB: Finally, with the season about to being, are there any other marketing/branding efforts (either inside or outside the stadium) that Rapids’ fans should be on the lookout for?

KC: Our objective this year is that it is the year of the soccer fan. If you are living in Denver, we are your gateway to the World’s most passionate activity, whether you are a youth player, an adult player…we are going to be a conduit to that. We’ve already done a few things leading up to the season, some grassroots marketing events….I think we are the first team to have our games over the air and in HD all season.  It is definitely trying to appeal to that soccer fan, if the club was appealing to the families in past years, they are going to see a difference this year.

Thanks to Mr. Cain for answering some questions.

Business Blogging: A Look Around the Web

Today we thought we would take a quick peek at some popular soccer websites to see what kind of business news is making headlines. It is the era of the DP in MLS with signings coming fast and furious.  MLSRumors is reporting on an apparent continuation of that trend.  Tim Leiweke, president and CEO of the ownership group gave indications at a recent press conference that Houston will be aggressive in the DP market in 2011.

At MatchFit, Jason Davis offers his thoughts on the debut of FSC’s new show “Soccer Talk Live”.  The show features former MLS midfielder and ESPN broadcaster Kyle Martino.  After two weeks, reviews have not been positive and Davis echoes those thoughts.  We admittedly not seen the show, but the MatchFit review is fairly comprehensive and is definitely worth a read.

duNord does what it always does so well with a round-up of soccer news from around the country.  He includes a number of interesting business stories including some about travel to Central America for Champions League matches.  There are also good stories about stadiums and ticket sales.

SoccerAmerica provides an update on the status of attendance in MLS.  The league is showing a 2% increase in average attendance with 16, 350 as the season average.

Soccer Business Bits: Jersey Sales, Another Friendly & More

Multiple sources are reporting that Thierry Henry’s Red Bulls jersey is expected to become MLS’  best seller this year.  According to reports, more than 50k Henry jerseys will be sold this year.  Assuming $75 per jersey, that works out to almost $4million in jersey sales gross.  By way of comparison, 300,000 Beckham jerseys were sold in the first year after he joined the league.  Nevertheless, 50k is a big number in jersey sales (Beckham’s 300k was far ahead of all other American sports stars), and is an impressive haul for the the Red Bulls and MLS in the less than two months since his signing.  According to SBJ, adidas MLS merchandise sales are up almost 20% this year thanks to Henry, Marquez and Donovan sales.  According to the article, novelty sales (e.g. pins, cards, etc…) have seen significant increases this year.

In Seattle, the Sounders have announced a foreign friendly against Chivas in October.  As we have said many times on this blog, friendlies against club teams from other nations serve a valuable purpose for MLS and the visiting squads.  However, we question the wisdom of this match. Coming in the middle of the playoff stretch drive and on the heels of matches in CONCACAF Champions League and the Open Cup, it seems like the Sounders are over extending themselves.  This is especially so, because the Sounders are not hurting for support and don’t need the match to generate interest.

Finally, the Philadelphia Biz Journal is reporting on the Union’s youth soccer initiatives as part of the $2o million Pepsi Refresh project.  The campaign is part of a bigger effort that includes a significant amount of participation from MLS.

The Monday After

Busy weekend in Major League Soccer and WPS.  In Connecticut, an impressive crowd of more than 4,000 saw the Boston Breakers host a league game.  Veteran’s Stadium in New Britain has been host to US Men’s National Team matches, Revolution US Open Cup matches and other soccer matches.  The 4,000 is a solid figure for WPS and approximates (and beats) some Open Cup crowds.  Taking their game on the road is a smart move by the Breakers and the match attracted a large crowd of local soccer teams and parents who had an opportunity to experience WPS without making a trip to Boston.

Elsewhere, kudos to FSC for doing a solid job of promoting its MLS coverage during its EPL broadcasts.  ESPN has long failed to use its broadcasts of foreign leagues and international matches as a platform to push Major League Soccer.  FSC ran a regular crawl during the games and used other means to push its Saturday telecast of the Dallas game.

In MLS, attendance was a mixed bag, but Houston pulled an impressive number with almost 19k at Robertson Stadium. Crew Stadium pulled over 16k, a solid number for a team that has struggled to draw a crowd equal to its showing on the field.  Dallas topped 10k (barely) continuing its unimpressive show at the gate.   In San Jose, the Earthquakes and their new DP, managed to draw their biggest Buck Shaw crowd at 10,800.  Given the size of the stadium, it remains surprising that the team cannot sell out every game.

MLS Salary Figures Released

We are on the road tonight, so we thought we would quickly touch on the recently released mid-summer salary numbers. The  salary list offers insight into the status of MLS earnings.  Highlights include the new DP salaries, including $300k for the Sounder’s Fernandez and around $500k for N’Kufo and Boscovic.  These deals represent the new breed of “low level” DPs making more than the rest of the roster, but well below the millions earned by Henry, Donovan and Ljunberg.

Totaling the numbers also reveals the remarkable salary discrepancy between teams like New York and Los Angeles (approximately $25 million combined) which is about as much as the 10 lowest teams combined.  Chicago, Seattle and Toronto are the only other teams above $3 million.   Chivas USA is the only team below $2.5 million.

Given the vagaries of MLS finances, it is difficult to fully appreciate the implications of the salary numbers.  Allocations, transfer fees and other monies are hidden from view and thus it is difficult to determine how much teams are actually paying out of funds other than the tyipcal salary pool.

Soccer Business Bits: RSL Makes a Gift, Future in KC & More

The Associated Press is reporting that RSL is contributing significant money to the construction of a soccer complex in the Salt Lake City area.  The project includes 16 soccer fields including a centerpiece field with 2,000 seats. RSL will match $21 million in bond money that has been procured by the municipality.  The proposal faced strong opposition from local environmental groups.   RSL has had a strong relationship with the community during its existence.  Recall its “Cup “tour where RSL is brought the trophy to just about every county in the State of Utah in a great combination of celebration and promotion.

Elsewhere, the Kansas City Star is already taking a look at the Wizard’s in 2011.  With a new stadium lurking and the recent signing of Omar Bravo, the Wizards have some great marketing opportunities for their upcoming season.  It will be interesting to see how the Wizards market their new Mexican star. The process has already started and the team has half a year to figure out their plan.

Finally, the mid-week crowd at Toyota Park was 14k.  Although a good number for a Wednesday in MLS, it is surprising that a match featuring the Fire’s two new DP’s didn’t draw bigger numbers on what was a seemingly nice night in Chicago.

Champions League Thoughts: FSC’s Coverage

After watching FSC’s coverage of the CONCACAF Champions League, we thought we offer few thoughts on thankless job of broadcasting the tournament.  Most recently, FSC televised Toronto’s 2-1 win over Cruz Azul and the coverage was typically low grade.  Camera work was poor and the commentary wanting, but it is difficult to blame FSC.

The network pours significant resources into televising an event that has yet to interest a significant portion of American Soccer Fans.  Games from Honduras, El Salvador and Trinidad & Tobago do not grab the imaginations of fans focused on European soccer and the MLS regular season.  The stands are typically empty for these games (whether in the US or abroad) and field conditions are typically terrible   While ratings are tough to come by, it is almost certain that far less than 100k people (and likely less than 50k) tune in to watch the CONCACAF Champions League matches.

Despite these challenges, FSC has made a devoted and dedicated effort to broadcast these matches from all reaches of the region.  For fans of MLS and soccer in the Americas, FSC’s coverage is more than sufficient and is welcome beacon in the late Winter when the knockout stages of the tournament kick off.  During the Summer, FSC is the lone window into Major League Soccer’s efforts to compete in an event that should gain significance in the coming years.  With bigger than usual crowds expected in Seattle, Toronto and Salt Lake City for the group stage, there is a sense that the tournament has gained appreciation among an increasingly sophisticated fan base.

FSC’s coverage may not be ideal, but it is important.  If the tournament wasn’t televised, it would fade into obscurity and importance.  Improved camera work and commentary are inexpensive enhancements that will come with time.  Until then, celebrate FSC’s broadcasts of the Champions League.