ESPN Signs a New Deal

espnOver the last couple of days, one of the big business stories was the announcement that ESPN will be the home of English language broadcasts of Mexican soccer through 2014.   Specifically, the network will have rights to all Mexican National Team home games, including World Cup qualifying matches.  Per, “ESPN gets English-language rights across all platforms, while Univision maintains the rights in Spanish. Both will carry the 2014 World Cup in the respective languages. Games could air on various networks run by ESPN and Univision.”  The package will include 20 games over the next two years.

The deal could have significant ramifications for both ESPN and soccer in America.   The popularity of El Tri in the United States is unquestioned.  Ratings for the Mexican National Team are routinely outstanding and typically outpace USMNT ratings.  When Mexico played the United States in 2011, 9.5 million people tuned into the Univision coverage.  In 2012, when the USMNT traveled to Azteca for a friendly for the first time in almost two decades, more than 8 million people tuned into the game on Univision.  However, Univision is a Spanish language station; what type of ratings will El Tri friendlies draw on ESPN?
From a USMNT perspective, does the ready availability of Mexican soccer run the risk of creating a legion of American fans of the Mexican national team.  Does the United States (by way of the Worldwide Leader) run the risk of creating competition for its own National Team within its own borders?
Regardless, this is yet another sign that the beautiful game is increasing its appeal in this country.  That a foreign national team could have its own television deal , would have been unthinkable 10, 20, 30 years ago.
Here is ESPN’s take on the issue.

Footiebusiness Vault: A Peek Behind the Curtain

portlandWe are on the road on a snowy New England night so we thought we would offer up a post that has been getting a fair amount of hits lately and generated a few e-mail inquires.  We first wrote this post in March, 2009 before Portland was a sure thing. .

Few sports leagues guard their finances more closely than MLS, but efforts to bring a franchise to Portland brought many long hidden numbers to light.  In a report prepared  by HVS, many MLS financial numbers became public for the first time.  The report is here.

The report projects MLS finances from 2011 (when Portland enters the League), until 2015 and aggregates data from past seasons.  Total  MLS stadium revenues for 2011-2015 are projected at $14-15 Million per year.  This includes ticket sales, advertising, naming rights, concessions and more.

The report also addresses season ticket sales for 2007 and 2008 with Toronto the high (16,641 in 2008) and Chivas the low (837 in 2008).  The report does not include Seattle’s 22k for 2009.  Most teams fall in the 3-5k range, but the League did show a 26% increase from 2007 to 2008 (including the addition of San Jose in 2008).

Because the report focused on the viability of a stadium in Portland, many of the numbers focus on seating, concessions, merchandise and other game day items. Around the League, Club prices range from $5,000 (both L.A. teams) to approximately $1,000.  Suites range from $154,000 per year (Galaxy) to $21,000 per year (KC).  Some teams sell suites by the game, while most offer only annual purchases.

Stadium naming rights are also discussed; The Home Depot Center is a $70 million deal for 10 years, while Pizza Hut Park is $25 million over 20 years.  Dick’s Sporting Goods Park is a $40 million two year deal and Rio Tinto is a $1.5-$2 million dollar annual deal (for 15 years)The report also projects annual ticket sales in Portland (well below the mean), ticket prices, revenue from non-soccer events and more.

This is a fascinating picture of the League’s current, past and future finances. Based on these numbers, the City of Portland and presumably investors in Vancouver, Portland, Philly and St. Louis were eager to buy into MLS.  The report makes for fantastic reading (in its entirety) and will definitely make for interesting conversation.

What are your thoughts?  Are their numbers in the report that surprise you?  Impress you?  Let us know.

Monday After

fc tucsonWorld Cup Qualifying is on the horizon, Major League Soccer preseason is in full swing, rostering in the new womens soccer league has been generating headlines and the international transfer market is sizzling.  It is a good time to be a soccer fan in the United States!

We’ll start with the ramp-up into the preseason.  We’ll take a deeper look at Tuscon’s growing role as the focal point of Major League Soccer in January/February.   In short, the Arizona city will host 18 games over 29 days including matches between MLS teams, International squads and others.  A 3,000 seat stadium that includes a press box is set to be completed in October, while FC Tuscon will operate in a smaller venue this season.   The Soccer Fest concludes with the Desert Diamond Cup in February.  For more on the events in Tucson, click here.

We wrote last week about the sale of RSL and the departure of Dave Checketts from the soccer scene.  Soccer America offers up this excellent profile of Checketts and provides some fantastic thoughts on his contributions to soccer in this country.   Under Checketts, RSL built and filled Rio Tinto and landed the first jersey sponsorship deal with Xango.  Perhaps more importantly, Checketts’ long history of success in American sports provided the league with another credible persona to sell the game to corporate and media partners.

One final business note from the weekend.  One of the big soccer stories from last week was the “interaction” between Eden Hazard and a Swansea ball boy leading to Hazard’s ejection.  Under the theory that any publicity is good publicity, soccer was certainly in the news over the weekend.

Soccer Business Bits: RSL Ownership Change, HDC Name & More

rsl planeLots of business stories breaking this week, but we will start in Salt Lake City, where RSL owner Dave Checketts has sold off his remaining interest in RSL, along with Rio Tinto Stadium and ESPN 700 to former minority owner Dell Loy Hansen.  A real estate developer/owner, Hansen is well known in the Salt Lake area and is a converted fan to the game.  Checketts is a well respected figure in sports circles and was the driving force behind bringing soccer to Utah.  Prior to his involvement with RSL, Checketts was President of the New York Knicks and Madison Square Garden.  From the Salt Lake Tribune “Hansen said RSL has restructured and consolidated its loans on the $110 million Rio Tinto Stadium, creating a savings of $1.8 million annually. That’s money that could be used to improve the on-field product, the new owner said. The club is still a year away from operating in the black, but Hansen said he believes RSL and Major League Soccer are trending in the right direction. He views the purchase as a “family asset,” something he might pass on to someone else in five years.”

In other news, there are multiple reports that the 10 year, $70 million naming rights deal for the Home Depot Center will not be renewed when it expires in May.  The HDC is one of the premier soccer venues in the United States and the Center includes the Olympic training center and facilities for other sports.

Finally, we wrote yesterday about the newly cemented relationship between USL PRO and MLS.  One team, Chivas USA, elected to opt out of the new agreement.

USL and MLS Join Forces

barterAfter two days of Cascadia themed discussion, it is time to move to a different soccer business topic.  On Wednesday, Major League Soccer and USL PRO, the third tier in American announced a substantial partnership aimed at significantly improving the development of players in American professional soccer.   The new arrangement provides an outlet for competitive matches for players long consigned to the league’s inadequate reserve system.  As part of the new arrangement, four teams, including New England and Kansas City, will establish direct affiliate relationships with a USL squad and abandon their reserve league teams.  The other MLS franchises have agreed to send four players to a USL side.

The player development benefits notwithstanding, there are some clear business benefits to the new relationship.  MLS teams will now have the opportunity to extend their reach into new markets.  By way of example, KC’s new relationship with Orlando will allow the team and league penetrate the elusive Florida market, while DC’s alignment with Richmond will allow DC to shore up its base deeper into the important Virginia market.

Fans identify with players they can follow as they make the leap from lower leagues to the top (minor league baseball being the classic example).  Now fans in non-MLS cities will have a reason to follow the league on television as players they first saw plying their trade in the lower leagues advance.  Because the lower divisions are exceptionally fan friendly, these players will have extra opportunities to connect with the local fan base, further cementing ties.

From the USL perspective, the new relationship adds legitimacy by way of the new affiliations.  A minor league team will be more appealing because of its affiliation with a major league franchise.  From the official release:
“USL PRO has for the past several years been the most sophisticated and competitive professional soccer league under MLS,” USL CEO Alec Papadakis said. “This new partnership with MLS will elevate and strengthen the level of competition for domestic professional soccer while simultaneously creating a more sustainable financial model for team owners. As a result, we expect this partnership will forge a seamless system for the development of players and coaches, and promote the expansion of professional soccer into new North American markets.”

Laidig Speaks: Cascadia

Yesterday, I waded into the the ongoing debate about the propriety of the league’s trademark application filed to secure rights to the Cascadia Cup.  Today, Footiebusiness contributor Dave Laidig offers his reply.  For more of Dave’s excellent work, click the tab at the top of the page, and find some more here.

xboxThe debate surrounding MLS’s trademark application of the Cascadia Cup is intense.  And each side has valid points.  The Supporter Groups that creates the Cascadia Cup nearly a decade ago – when the teams where in a different league – rightly feel that they own the Cup.  The Supporters have managed the ceremonial aspects of the Cup, its award and the subsequent taunting of the other teams, and have not neglected the Cup. For their part, MLS literally owns all of the teams that compete for the Cascadia Cup.  And it’s a common fact of modern day sports that leagues have an obligation to aggressively protect their brands.  To do otherwise may be interpreted as forfeiture of their rights, and may allow third parties to muck up the brand, confuse customers, and ultimately cost money.  In this situation, it’s tough to say who is right, and who is wrong.  

But Major League Soccer is wrong – I guess that wasn’t so tough. The league may not be wrong with regards to the law (and really this should not get that far).  They may not be wrong with trying to protect their investment.  The league is wrong because it misjudged its own customers, and pissed off a large swath of fans (and not just those in the Pacific Northwest) by roughly appropriating their creation. It’s tough to stay in business when you screw over your customers.

The Supporter Groups rightly have concerns about MLS ownership of their Cup. The award and caretaking of the Cup is between fan organizations, and represents these groups as much as the teams. By claiming ownership without notifying the groups, the league has indicated that it either (1) is not concerned with the Supporters Groups, or (2) feels it needs to hide its actions from the Supporters Groups.  Regardless of the reason, MLS is foreshadowing that the league may manage the trademark in conflict with the goals of the Supporter Groups.  The league may sell a sponsorship for the event that the Supporter Groups don’t want associated with their name.  Or the creation of a taunting t-shirt by a fan could be shut down as producing counterfeit goods – and one of the best parts about being in a Support Group is the homemade stuff.  Indeed, the league may cut out the Supporters Groups altogether if they wish.  Any of these events offends justice, and the league’s attempt to assure fans rings hollow after their unannounced and unilateral claim to the Cup.

And the fact is that the league already monetizes the event.  With every TV promo, crowd shot, and every ad sale, the league is making money off the creation of the fans.  So far, the Supporter Groups in the spirit of partnership with the league have not filed a claim asking MLS to return their profits. Unfortunately, MLS has not extended the same courtesy to its fans. 

If I could arbitrate a solution to this impasse, I would recognize that the Supporters Groups get to use their creation, and allow the league to police third parties.  The league indicates that it did not wish to infringe upon its fans.  Great, put it writing.  Whichever party ends up with “ownership,” the other party should be granted a license to use the mark.   Give the Supporter Groups some say in whether there will ever be a title sponsor, and recognize that the physical trophy and award will be controlled by supporters.  The league is in a better position to police the mark, and can incorporate the Cascadia Cup into its normal intellectual property protection practices. The league can market the event and supporter atmosphere as they have.  After all, it does make for great TV.  Of course, all of this is just a contractual settlement of an intellectual property dispute, and does not address the underlying relationship with fans. Even in my hypothetical world, I cannot fix that. Portland-Timbers-logo

The Cascadia Debate

vancouverI have been extremely hesitant to cover the “controversy” over the league’s attempt to trademark the Cascadia Cup in Canada.  Yet with Commissioner taking time on Monday to address the issue, I thought it timely to provide some thoughts on the dispute.  By way of background, some supporters groups have reacted with outrage over the league’s alleged usurping of a fan created event for purposes of profit or business.   The Cascadia Cup tracks the matches between Vancouver, Portland and Seattle and crowns an annual winner based on total points in the series.  The Cup was created by supporters’ groups in 2004 and has been a publicized part of the MLS season since 2011.  For more on the background, click here.

In  late 2012, the league, which heavily promotes the Cup through its website and television partners, took steps to trademark the term “Cascadia Cup” in Canada. In the face of complaints from supporters, the league issued multiple statements indicating that the intent behind the trademark application was simply to prevent exploitation from outside groups and retain the intellectual property associated with the event within the league family.  The statement did little to mollify supporters who were concerned the league would take steps to attach a title sponsor to the event (a la the Subaru Rocky Mountain Cup), somehow cheapening the Cup.

There is no dispute that the Cascadia Cup competition was a supporter event.  These supporters are among the league’s most devoted fans and are highly invested in the success of their team and their league.  However, it is that level of devotion that makes the level of outrage curious.  I have frequently written about how American soccer fans are far more interested in the success of their fledgling league than fans of the other major sports.  Thus, even if the league’s plan (which it has not stated, but which is one of the big concerns stated by supporters) is to monetize the Cascadia Cup, these same invested fans should be supportive of such a relatively benign effort to improve the business of the league.  If monetizing the Cup allows the league to generate revenue and utilize that revenue to improve the league, this is a win-win.  Because of the passion of the supporters, the Cascadia Cup is one of the most marketable rivalries the league has.  In a year in which the league is emphasizing rivalries, the Cascadia Cup is especially valuable.  This should be viewed as an opportunity, not a controversy.

Monday After

sporting kansas citLast week we posted and tweeted about Sporting’s jersey sponsorship.  We noted that the timing of the announcement, coming in the middle of the Major League Soccer SuperDraft, was curious, as the team risked lessening the reach and impact of the news.  The deal with Ivy Funds is a significant milestone for the team and we opined that the timing impacted Sporting’s ability to trumpet its new relationship.

Sporting’s Executive Vice President of Communications and Digital, Rob Thomson, reached out to Footiebusiness provide the team’s rationale for timing.  According to Mr.  Thomson, the team hoped to capitalize on the presence of the national soccer media and soccer heavyweights to increase exposure for the big news.  Mr. Thomson also indicated that the draft offered a great introduction to the league for Tom Butch, the President and CEO of Ivy Funds (a reported fan).  Finally, Mr. Thomson indicated that the team hadn’t anticipated a player of Mikey Lopez’s quality falling to them in the draft, and that the team had some expectation of trading the pick in the lead-up to the draft.

Thanks to Mr. Thomson for providing the team’s perspective on Sporting’s decision making process.  He certainly provided a window into how the team approached the announcement and efforts to publicize same.  I certainly welcome the input of Footiebusiness readers.

One final note (I had about 200 words on the “controversy” over the trademarking of Cascadia Cup, but it got lost in the internet ether.  I may address that topic later this week).  There are reports that reality television guru Mark Burnett is producing a new series for CBS titled The Job.  The show will apparently feature Lisa Ling of the View as the host.  The show will apparently involve contestants vying for a job with various companies (one per show) The soccer related part of this involves indications that Major League Soccer will be one of the featured employers.  If true, that would certainly provide great publicity for the league. Presumably, the league wouldn’t agree to participate unless they felt assured that the league would be positively portrayed.

Sporting Lands a Sponsor

ivyThursday was draft day, but arguably the biggest soccer business story was the announcement that Sporting Kansas City has finally landed a jersey sponsor.  Ivy Funds is a prominent mutual fund and investment company based in the Kansas City area.  Ivy Funds is affiliated with Wadell & Reed Financial, a publicly traded company based in Overland, Kansas.  ESPN reported that the five year deal is worth $2.5 million per year, a figure disputed by the team.  If the number is correct, it would put Sporting a bit above the league average.   Ivy Funds had a previous relationship with Sporting, but the asset management firm now moves to the front of the line.

Per the press release, “the multi-faceted and fully integrated corporate sponsorship also provides Ivy Funds with naming rights to the Executive Suite level at Sporting Park, entertainment at the stadium for clients and employees, as well as engagement opportunities with Sporting KC players for charitable efforts and appearances.”

Sporting has been one of the great business success and re-brand stories in American sports.  Just a few years removed from playing before sparse crowds in vacuous Arrowhead Stadium, with a seemingly disengaged ownership group, the team has been a success on the field, at the gate and in the community.   One of the big missing pieces was a primary jersey sponsor and the team has now checked that box.

The timing is certainly interesting, coming just days after the team’s relationship with LiveStrong ended.    Moreover, with the draft the same day, the relationship with Ivy was relegated to the second story on the team’s website.  Yet securing both the revenue stream of a jersey sponsorship and the validation that the uniform front has value is a significant move for the team.  That the sponsor is local company that is a division of a firm listed on the New York Stock Exchange is simply icing on the cake.




Draft Business Bits

celebrationThe MLS SuperDraft is set for a noon kick-off on Thursday so we thought a business bits devoted to the happenings in Indianapolis would be our ode to the draft.   We’ll start with the broadcast, where the first overall pick (now owned by the Revs), will be shown live on SportsCenter.  The rest of the draft will be streamed by ESPN3 and other outlets.

Over the last few days, the league has done a great job creating promotional events to showcase potential draftees in the Indianapolis area.  In a strange Indy themed photo-op, a number of potential draftees went to the Indianapolis Motor Speedway to play soccer with a number of Indy car drivers.  Mini-goals were set up on the track and the players and drivers kicked the ball around in a very Indy event.

Perhaps the biggest soccer related business event in Indy occurred in the lower divisions of American soccer.   The city was awarded the 12th NASL franchise on Wednesday and the new team will be on of three 2014 expansion franchises.   Peter Wilt will be named the president of the club, adding a soccer heavyweight to the leadership team.   The stadium location has not been definitively determined, but the team is in negotiation with Indiana University about using one of their satellite campuses.  A link to a story about the new team is here.

One final note about draft coverage.  Whatever  online streaming options fans choose (or not choose), it seems inevitable that Twitter will be the primary source of draft information for most.   Twitter provides the perfect vehicle for fans to keep track of the draft, interact with  journalists and discuss the beautiful game 140 characters at a time.