- The MLS is celebrating its 25th year, as the regular season is set to begin Saturday.
- MLS commissioner Don Garber said Wednesday the league will need a better media rights package after its current deal, which expires in 2022, to continue its growth.
Major League Soccer commissioner Don Garber made it clear: The league's 25th season is not an anniversary. Instead, Garber called it a celebration of all that MLS has accomplished as it moves forward into the next decade.
At a kickoff event for the season Wednesday in New York, Garber outlined the league's vision for its future, which includes expanding the number of teams from last season's 24 to 30 by 2022. Two teams are debuting this season: Inter Miami CF, which is owned by international soccer legend David Beckham, and Nashville Soccer Club.
Garber said the MLS is also preparing for seven new soccer stadiums, better technology infrastructure and continued investment in youth academies in an effort to develop homegrown talent to enhance the quality of play on the field.
The key to making those areas of focus a reality over the next 25 years depends on the money. The plan to increase revenue is simple: Secure multiple and lucrative media deals. The MLS believes the revenue from future rights packages will help sustain its growth as it aims to become a significant player in the U.S. pro sports market.
"The need for revenue will be able to satisfy all the things that all of our critics and all of our supporters want," Garber said. "More investment in players, more investment in infrastructure, more investment in marketing and content, and fan development. The last piece of that for us is media."
The current rights package with ESPN and FOX, valued at $600 million for eight years, and Univision, $120 million, generates roughly $90 million per season for the MLS and runs through 2022.
The MLS' package is "upside down compared to all the other leagues," Garber said. The National Football League sees roughly $7 billion generated from rights packages and the National Basketball Association $2.6 billion.
The question is: Will MLS have the leverage to attract lucrative media packages for 2022 and beyond?
In discussions with media executives about the MLS rights, the thinking is the league is appealing to rights holders, though its TV ratings still lag when compared with other top pro leagues. Experts suggest the challenge for MLS will be developing a national audience, instead of focusing on local markets.
Tony Ponturo, the CEO of Ponturo Management Group, a sports marketing consulting firm, said the MLS should have no problem seeking a decent rights package as there will be plenty of platforms that are looking for content.
"The issue is how do you increase the broadcast rights?"said Ponturo. "The only way that is going to happen is if rights holders see an increase in audience."
And it's here — audience growth — where the MLS will need to improve, starting with better promotion and marketing of its players, Ponturo said.
"The challenge of sports is to somehow make people want to see Atlanta play Seattle on a Sunday afternoon, and they live in St. Louis, or they live in Nashville, or they live in New York," Ponturo said. "We [watch other sports] because we have equity built up, and we do that because we want to watch LeBron James play or Tom Brady play. So, it's about selling a national appeal which is more than likely going to be driven by [players]."
To help grow its audience, the MLS is banking on expansion. In addition to this season's debuts of the Miami and Nashville clubs, the 2021 season will include a new franchise in Austin and the recently announced Charlotte franchise purchased by hedge-fund billionaire and Carolina Panthers owner David Tepper, who paid a hefty fee for the team's 2021 entry.
In 2022, two more teams will join the league: Sacramento and St. Louis. The St. Louis franchise is owned by Carolyn Kindle Betz, the granddaughter of Enterprise Rent-A-Car founder Jack Taylor. According to Forbes, the value for MLS teams has doubled over the last five years, with clubs going for more than $300 million.
Though Garber has mentioned the possibility of 32 teams in the past, he said Wednesday that MLS has no plans to expand beyond 30 teams, hoping to increase the value of the league's media rights thanks to new audiences that come with each expansion team.
MLS says its popularity is rising, and it will continue to rely on its younger audience. Garber said media outlets will "need" the MLS, as live sports content continues to be a demand for traditional linear media partners and new outlets that focus on streaming.
"I do believe in the new world, the new streaming over-the-top world, media companies are going to need Major League Soccer as sports content, more in the future than they even have in the past," Garber said. "Secondly, we have an audience that delivers something that most other properties don't — it's very young, very diverse. And therefore, I think our media partners will need us more tomorrow than they have in the past."
Larry Berg, the lead managing owner of the Los Angeles Football Club, agreed with Garber, adding the MLS also needs more revenue to be competitive as one of the top soccer leagues in the world. Additional media revenue will also allow the MLS to attract top players from other leagues, because transfer fees are costly. More funds could also help struggling clubs finally turn a real profit. Only seven teams were profitable for the 2018 season, with the Arthur Blank-owned Atlanta United, which had an operating income of just $7 million, ranking first, according to Forbes.
"We're very much behind in our media rights deal," said Berg, who also serves as a senior partner at Apollo Global Management. "I think we now have far more teams than we used to. We know we have far more passionate fans. We still have a ways to go on our ratings, but we're growing, and we're doing better every year."
Garber said the league is feeling "bullish" and "ambitious" about the future valuation of its package. However, the MLS will still need to address issues over the next few years, including the need for better education about the MLS and the sport for non-soccer followers it hopes to convert into fans.
Ponturo advised the MLS to stay the course, avoiding mistakes other failed leagues have made in attempting to gain NFL-like revenues overnight.
"It's like any business or any brand," Ponturo said. "Keep the fundamentals strong; keep doing things that are exciting. It sounds sort of simple, but I think [MLS needs to] stay the course and keep promoting players."