"Apple is not paying a straight rights fee for the package of rights." - Sports Business Journal, June 14, 2022 ("MLS goes with Apple in landmark 10-year global media rights deal")
Don Garber goes on to make it a bit more confusing by making a remark that likely had everyone on the zoom call looking around to see if anybody gets it, “This is a partnership. And that partnership's core is a subscription business that we're going to build together, and we're going to get a guarantee against the revenues that will be achieved on the subscription business."
The SBJ piece cites anonymous sources when giving out what everyone wants to hear, the literal money quote: "Apple is paying a minimum guarantee that sources say is worth $250M per year starting in ‘23." The deal is said to be set for 10 years.
Major League Soccer does not mention a money figure in their official release on MLSsoccer.com.
The quotes in blue are likely the key to understanding what this deal is, particularly Garber's quote. Anyone with retail experience might understand what it means, which is that MLS will make money based on a metric - like, hitting store revenue goals or working within a materials budget. This effectively makes Apple a type of regional manager to MLS brick-and-mortar storefronts.
In the streaming universe, that metric is very simple - subscriptions ("subs"). Apple will pay MLS based on sub performance and Garber is confident that he can deliver.
PRODUCTION BUILD
Now, we have to take a step back because MLS has no ability to produce games as they canceled all their local deals leading up to this new partnership with Apple - and, as things stand, Apple does not already have the ability to produce a single soccer match, let alone the near 800 (MLS regular season, playoffs / MLS Next games / Leagues Cup) matches a year that they are now attempting to do.
This is where the $250m per year comes in. It's money to build not just a broadcast service for MLS, but a new sports streaming platform for Apple (we see this in the SBJ release - "The yet-to-be-named streaming service will live within the Apple TV app and will include every game.")
It's a publically stated goal that Apple wants to not just enter the sports media space, but be top of the mountain. That means taking on Disney and even, perhaps, buying ESPN.
In order for Apple to be a major media outlet for sports, they need to get things off the ground. Things might have started a bit with Major League Baseball, but MLS is a complete rebuild. This gives Apple the ability to activate the single thing they are most known for - Innovation. A blank whiteboard with lots of dry erase markers. MLS will become the blank canvas on which the ghost of Steve Jobs will paint (or something).
With a traditional rights fee, NBC will pay for what the Premier League already has in regards to production. If NBC's deal were like the MLS deal it'd be like giving the Prem $350m for rights + whatever it cost to produce and broadcast all 360 games (a large sum).
THE APP
The app cost to fans? We don't know yet, likely because both MLS and Apple don't know the exact cost it'll be to make it. It's worth mentioning that it's not just the TV production side, it's the folks that have to build, care, and feed the application.
Apple says they will offer "a selection" of games to people that are Apple TV+ subscribers ($4.99 a month). But the "as yet to be named" MLS application does not have a figure. NBA's "League Pass" ranges from $6.99 a month to $24.99 a month. The NFL "Sunday Ticket" is something like a whopping $79.99 a month.
It's not hard to imagine Apple's MLS app having a tiered system like the NBA with an entry point below $10 a month for a basic package and a premium package with the expanded highlights/bumper shows/whip around/Leagues Cup being upwards of $40. But, it's all just an educated guess.
Apple will know instantly how well MLS does when they open it up to purchase.
Right now, Apple TV+ has around 25 million subscribers. MLS season ticket holders will get the MLS app for free. That's roughly 100k-ish new subs (some likely already have it). At first, it seems like Apple is giving up a lot here, but if you've ever been on Apple TV+ you know that even though you subscribe, loads of stuff still costs money to watch. Therein lies the value to Apple. while it's impossible to say how many MLS STHs have Apple TV+ or will peruse their selection, it's safe to say they just bought a bucket full (insto-customer acquisition!) that will occasionally buy a movie on the service.
It's here that Garber's quote at the top of this post starts to come into full view, "we're going to build together, and we're going to get a guarantee against the revenues that will be achieved on the subscription business."
SELLING TO NETWORKS
Once MLS is finished with media production and the app, they will (or are) package it up and try to sell games and events to TV networks. It's very clean and tidy, similar to how the Premier League sells its television packages.
As of yet, there are no networks showing MLS games on network TV, broadcast, or pay-TV in 2023 and beyond. I'm sure ESPN and Univision have been approached and that networks like NBC and CBS are sniffing around, but I don't expect them to bite until they see something. And even then...
MLS didn't get a TV deal because their ratings are terrible and networks didn't offer the reported $300-400m per year deal Don Garber wanted. MLS stepping back like this and rebuilding their TV product is smart, but it was really the only option they had. There are reports that ESPN didn't even make a bid.
RISKS
The risk here for MLS is that they become invisible. Apple TV+ has 25 million subscribers. For comparison, cable and live streaming TV together have over 80m subscribers. Netflix has a reported 75m in the United States, with another 200m abroad.
It will take a bit of marketing and promotion to get new subscribers shuffled over to a new app that costs more money beyond what they get on Day 1. Linear TV is likely important to Apple going forward and I'm sure they are confident they can sell it (here and abroad).
IS IT A WIN OR LOSS
This media deal was met with a surprising amount of criticism. Not from social media trolls or influencers, but from major sports business outlets like Forbes (who are usually team MLS) and the SBJ. I find myself agreeing with those folks on many points, particularly Joe Pompliano's thoughts here.
Right now, it's a win for MLS because without Apple going in with them they would really be in a tight spot, but without a traditional partner like CBS, ABC, FOX, NBC... MLS will struggle to stay relevant as it is important to remember that for people like me (and likely you reading this), high-quality broadband internet seems like something everyone has, but they don't. While the number is getting smaller, it's estimated that there are more homes in the US without high-speed internet (27m) as there are Apple TV+ subscribers (25m) in the United States.
121m households in this country have a TV. 80 million pay for additional channels like ESPN, CBS Sports, USA, TUDN, FS1, and others that show MLS's competitors. MLS might have lost the fight in that space, but it did give them relevance and made them accessible to everyone with a TV. That is gone, for now.
FINAL THOUGHT
In my opinion, MLS always sort of saw themselves as a young, up-and-coming starlet of domestic sports. 27 years of operation and not being able to secure a TV deal proves that not really be the case. Apple is fully capable of reworking the league and making it fresh and polished, but it's really tough to see it happening without the changes that Garber and legacy investors are unwilling to make.
Looking down the road, MLS will probably be forced to innovate further. Not just because their current product was denied by network TV (ie. it's bad), but because I don't see subs continuing to grow past a relatively small group of die-hard fans.
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THE MLS BLACK BOX
Like everything else MLS does there is a bit of mystery as to how much money is actually coming in and where it is going. A "minimum guarantee" sounds more like a type of financing or reverse mortgage to me, but like their kit deal with Adidas, actual player salaries, how much (and simply how) new investors pay franchise fees... it's something we'll never truly know. Also, notably, something the MLSPA will never know, but should.
MLS is a black box and will stay a black box. Want proof? MLS took Columbus to court over moving the Crew. With the future home of the team in the balance, MLS was asked by the judge to open their books to prove the financial losses they claimed were the reason for the move to Austin. MLS declined and the team stayed in town. The actions MLS took with Columbus did and do have an impact on how networks view the league. You can't jerk around a city and think that everyone will forget. I know the networks didn't. I know the media won't.
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