Galaxy Strike New TV Deal

According to a story that broke in the Los Angeles Times on Tuesday evening, the Galaxy are set to announce a 10 year, $55 million deal with two new Time Warner Regional Sports networks to televise Galaxy games.  The new networks (one in Spanish and the other in English) are fighting for content in the crowded LA Sports market and this deal guarantees live programming from March to October.  According to the Times’ story, the deal will be officially announced on Friday.

The size of the deal is staggering.  NBC recently paid $30 million for 3 years of Major League Soccer on a national level and now Time Warner is offering $5.5 million per year for a team that never topped 16k viewers over the last year.  The deal is especially extraordinary because Major League Soccer’s national television partners will certainly demand that the league’s showcase franchise regularly appear on their broadcasts.  How many games will the new networks get as part of their package.  Moreover, the same story suggests that the network is also chasing the rights to the Los Angeles Dodgers.  Given the overlap between baseball and soccer, will Galaxy fans be subject to tape delay as part of the new arrangement?  The Lakers recently signed on with the same network on a 20 year deal worth a reported $20 billion.

From a business perspective, it is hard to find something to dislike about this agreement. A major television partner believes that the league is a worthy long term investment.  At the same time, the deal allows the Galaxy, the league’s most aggressive franchise in pursuing star players, to fill its coffers from a local television deal at a time when some franchises are receiving no money for their rights.  Will this deal tilt the competitive balance in the team’s favor?

 

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13 Responses

  1. Good news, and if nothing else, it will drive up the “comparables” when it comes time to value the 2014 MLS deal.

  2. The Lakers deal is 20 years and 3 billion. Not 20 years for a billion a year as posted.
    This deal is MASSIVE for the Galaxy and the MLS. Galaxy weren’t profitable this year but I believe have been in the past. Now they have an extra five million dollars a year to play around with. This means that L.A. could potentially attract a big star who is in his prime or just go crazy on scouting and youth development. This puts all other teams as an even bigger competitive disadvantage. Not even the Red Bulls can hang with the Galaxy now.

  3. i wonder why Sea isnt doing a regional deal?

  4. Vic, the Sounders have a modified regional deal. The games are first shown live on either of Seattle’s two NBC affiliates, ostensibly to reach the non-cable audience, and then repeated a few times on regional sports net ROOT Sports Northwest. I believe the Portland Timbers, who are also covered by ROOT NW, do the same thing, terrestrial then cable.

    There is another regional net, Comcast Sports NW, but they concentrate on the U. of Oregon and the NBA Portland Trail Blazers. I don’t recall seeing soccer there save the occasional college game.

    Why the teams don’t use different cable networks, I don’t know.

  5. I’m certain that the Time Warner/Galaxy deal will have to follow the rules the same as any other sport property. National deals get first choice no matter how much was paid for the local deal. I don’t even understand why this has been a talking point regarding this deal on other, less reputable, sites.

    Aren’t we all making a giant leap that the Galaxy gets to keep all of its local TV revenue? The league is single entity and I would think that at least a percentage of that local TV deal is going to end up in the general league coffers instead of with the Galaxy.

  6. Merwin: My understanding is that local tv revenue is one of the areas where the teams get to keep 100% of whatever fees they earn

  7. sweet Ben! I believe revenues from regional TV deals should stay w/local team since its heavily dependent on that team’s marketing and popularity. Why should a San Jose or a Dallas get any of that Galaxy money? Instead of their owners asking for a handout from a Galaxy or a Seattle, they should be questioned on why they represent 6-7mil markets yet are a just a blimp on the sports radar.

  8. The size of that deal is pretty incredible relative to historical standards for this league. From a raw numbers standpoint, that basically pays LA’s payroll

    I believe that as recently as 2006 MLS was still buying time on ESPN2 for national broadcasts. Locally, I wouldn’t be surprised if that was still the case.

    These local deals (such as Philadelphia getting matches on the radio) aren’t nearly as attention-grabbing as national deals and ratings, but in many ways they may actually prove more critical to long-term growth and stability.

  9. My understanding is that the Sounders are live on KING/KONG in the Seattle area and ROOT everywhere else (the Sonics had a similar deal for a while, but were ROOT-only when, well, you know). The Timbers, near as I can tell, are live on ROOT everywhere.

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