Last week MLS signed a ten year deal with Apple TV worth $2.5 Billion dollars, roughly $250M a year. Paul Tenorio of the Athletic has speculated that for Apple to break even they are going to need roughly four million subscribers subscribing to the MLS network within the Apple TV platform.
What really sticks out to me it that it’s really going to be hard to convince casual football (I’ll call soccer football in this case merely because the bulk of the world does so) fan to subscribe to the network. What initiative does Johnny in Cleveland to subscribe to the Network, when the league really lacks star power?
Another sticking point is that MLS will be paying for the production costs and per Sam Stejskal of the Athletic, those production costs will be roughly $60M a year. So without considering the potential payout from ESPN and Univision for the yearly simulcast of games, MLS will be getting at least $190M a year. The big thing for this year, at least, is that on top of that $60M is that the MLS will also be paying for the startup costs.
This deal is significantly better than the previous deal. Of the $90M a year that ESPN, FOX and Univision was paying, only $60M of that was finding it’s way to the MLS, and the other $30M went to the US Soccer Federation. So realistically, the MLS is bringing is more than 3X the previous deal, and that could be as much as 4X once ESPN and Univision strikes it’s deal with the MLS for simulcasted games.
Most fans first taste of MLS on Apple TV is likely going to take place in sports bars. Granted season ticket holders will get Apple TV & MLS Network for free and hardcore fans will just buy it; however, the average consumer is going to want to test network, and see if it is worth investing.
And this is where spending money to make money comes into play. The consumer wants stars; the consumer wants rivalries; the consumer wants storylines; and the story wants a certain level of entertainment value. If this criteria isn’t met; the consumer won’t be investing in the product, and will continue to seek the entertainment value from leagues overseas like the English Premier League or La Liga.
I’m not suggesting the MLS go and get Kylian Mbappe of France or any other top ten player in the world, that’s in their prime. But getting the next tier of players, especially American born, should be in the cards. Getting a Christian Pulisic or players around the Harry Kane level should help provide some of the star power needed to attract casual fans into buying into the product.
Football in general is very much a niche sport in the United States, and the MLS is a niche of that niche. This TV Deal momentarily helps close the gap with foreign leagues, but once we reach the end of this deal, the gap will be much wider than it is today, unless subscriptions meet an unannounced threshold and helps the MLS get a greater payout than it’s currently expecting.
It should be interesting to see how Apple promotes the MLS moving forward. They invested a lot in the product and it’s going to take a lot for them to even break even. Promotion is going to be key for the success of this deal.
joeweasel 