MLS to delay debuts of three expansion franchises due to COVID-19
- The global pandemic and shutdown of the international economy has forced MLS to delay the arrival of three of its four newly planned franchises until 2022 and 2023
- Teams new to MLS, Inter Miami CF and Nashville SC, have been forced to play their opening games behind closed doors due to health risks posed by stadium sized gatherings
- Delaying the introduction of new franchises is hoped to provide the right circumstances in which the new teams can fully capitalise
Front of shirt sponsorship value continuing to grow for MLS sides owing to league’s increased popularity
- MLS sides have seen their commercial value rise consistently since the league’s inception in 1996, demonstrated by their growing revenue from shirt sponsorship
- MLS continues to predominantly partner with domestic brands, though new franchises could open doors to more international partnerships
- Steady increases in stadium attendances see a comparable average attendance to France’s Ligue 1, but still lagging behind Europe’s other major soccer leagues
MLS targeting major rights deal for 2022 as primary driver behind future investment in infrastructure and expansion plans
- MLS hoping for another significant increase in the value of its rights sales by its next cycle in 2022 following growth of deals with ESPN, Fox and Univision in 2015
- The league has identified media rights as its principal growth driver, and will not allow teams to complete regional deals extending beyond 2022
- MLS hoping that league expansions and return of live sport during the global pandemic will provide bounce back after disappointing 2019 viewing figures
Major League Soccer (MLS) is the top-flight professional soccer league in the United States and Canada, and was founded in 1996 after the U.S. hosted the 1994 Fifa World Cup. MLS kicked off its 25th season on February 29, 2020.
The league competes with other marquee sporting properties in the United States, including the ‘big four’ major leagues – MLB, NBA, NFL and NHL – for attendances, television viewers, sponsorship dollars and overall popularity. Since its inception 25 years ago, MLS has experienced steady growth in popularity, sponsorship revenue and media rights value, leading to the 2019 season attracting the highest total attendance, with 8.68 million fans visiting MLS matches.
Since 2011, the MLS regular season starts in late February or early March and runs through to mid-October, during which each club plays 34 games. The postseason, known as the MLS Playoffs, follow directly after, culminating in the MLS Cup, the annual championship game, which is held in November or December. With the league operating its regular season between spring and autumn, the competition does not follow the standard format that is typical in European soccer competitions which run from August to May. The league's calendar has been set up in this way for two reasons: firstly to help aid play in parts of the country which can be subject to extreme weather climates, and secondly to avoid potential event clashes with other sports, so as not to compete with the NFL (September to February) and the NBA and NHL (October-June).
The 2020 season was to see more games than ever before as MLS expanded to 26 clubs with the debuts of Inter Miami CF and Nashville SC. As well as more games, 2020 was also to see the most expansive network television coverage in the league's history. However, due to the COVID-19 pandemic, MLS had to suspend the season on March 12. MLS became the first North American professional men’s league to return to action since the pandemic disrupted the sports calendar, resuming on July 8 with the all-new “MLS is Back” tournament with regular season points and a spot in 2021 Concacaf Champions League on the line. The Portland Timbers were crowned champions, winning the tournament after defeating Orlando City FC 2-1 in the final, and booking their spot in next year’s Concacaf Champions League season and earning $300,000 in prize money. With the conclusion of the tournament, attention has now shifted to completing a condensed, 18-game regular season.
MLS Expansion Plan
With 26 teams in 2020, and 30 planned for 2022, subsequently pushed back to 2023 due to the COVID-19 pandemic, MLS will have doubled in size since 2009 when there were only 15 teams. New franchises have helped to grow MLS’s audience across the U.S. and Canada, opening up new markets and providing fans with an opportunity to engage with their local team and help to develop rivalries. Moreover, expansion have provided MLS with the opportunities to increase media rights revenues by offering more content, in more markets to a greater audience throughout North America.
For example, the arrival of Inter Miami CF gives MLS a presence in the South Florida for the first time since the Miami Fusion folded following the 2001 season. South Florida, with a population of 9.3 million, is considered a soccer hotspot, primarily due to having the third largest Hispanic Designated Market Area (DMA) in the U.S., with 770,180 Hispanic television homes in the Miami-Ft. Lauderdale area alone. Unique among pro-teams in North America’s five major leagues, Inter Miami’s primary logo is in Spanish as homage to the overwhelming Hispanic population of South Florida, and who they hope will provide the league with a new wave of growth.
MLS had initially self-imposed a limit on 28 teams in April 2019, but walked back on this considering the potential expansion markets with financial capacity that were available. Charlotte FC had originally planned to join MLS in 2021 alongside Austin FC, with funding coming from the NFL’s Carolina Panthers owner David Tepper a hedge-fund investment billionaire. St Louis City FC and Sacramento Republic FC, who have both had their inaugural season delayed by one year, are financially backed by well-capitalized ownership groups, with the only majority female-led ownership group in MLS, led by Carolyn Kindle Betz, President of the Enterprise Holdings Foundation, backing St Louis, while billionaire investor Ron Burkle purchased a controlling interest in Sacramento.
Part of the expansion plans for MLS also include investment in new stadiums and youth academies in an effort to develop home grown talent to enhance the quality of play on the field. Speaking in February 2020, MLS commissioner Don Garber stated that MLS is preparing seven new stadiums and youth academies to help develop college level soccer players, and is hoping to fund these with lucrative media rights deals, which may be made possible by the introduction of new teams by the start of the next rights cycle in 2022. Whether or not the value of MLS rights will increase as desired depends on whether there is sustained audience growth following the introduction of franchises in Miami, Nashville, Austin, Charlotte, Sacramento and St Louis. While the entry of Charlotte, Sacramento and St Louis has been pushed back by a year, how this affects MLS’s rights value by the time of the next cycle remains to be seen.
MLS Sponsorship Valuation
Teams from the two largest markets have the most lucrative sponsorship valuation
The two New York clubs have been financially assisted through sponsorship by their ownership groups, with New York City FC having a shirt sponsorship deal with Etihad Airways and New York Red Bulls with Red Bull, the Austrian energy drink.
MLS Front of Shirt Sponsors
New club LAFC with most lucrative shirt sponsorship valuation
Los Angeles FC’s shirt sponsorship deal with YouTube TV is the most lucrative in MLS. The deal, first signed with the Google-owned streaming service in 2018, is reportedly worth $6 million per annum. New York Red Bulls’ deal with Red Bull, the Austrian energy drink brand and owner of the club, is the second biggest in the league, at $5.8 million. Unsurprisingly, New York and Los Angeles are the largest markets in the U.S. by population and television homes.
The Bank of Montreal is the only brand to be the shirt sponsor of two MLS teams – Montreal Impact and Toronto FC. The two deals are reportedly worth $5 million and $4 million per annum respectively.
Two new sponsors were confirmed for the 2020 season, with San Jose Earthquakes partnering with Intermedia and Columbus Crew SC partnering with Nationwide Children’s Hospital. Expansion team Inter Miami CF is the only team out of 26 without a shirt sponsor.
MLS sides experiencing growth in value of shirt sponsorship
The majority of MLS teams have seen an increase in shirt sponsorship value since their initial deal. Toronto FC have seen the largest increase in value, with their partnership with Bank of Montreal growing from $1 million in 2007 to $4 million by 2017, representing a 300 per cent rise in shirt sponsorship value.
The increase in value across the board is simple, more people are following the sport, which in turn has resulted in an increasing interest on the part of brands to join soccer in the U.S. and Canada.
In 2016, the MLS Cup set a new record for television viewership when more than 3.5 million viewers in the U.S. and Canada tuned in to the Seattle Sounders’ victory against Toronto FC. In 2017, game attendance hit a record high with an average of 22,106 fans. In 2019, MLS broke its own stadium attendance record when it sold 8.69 million tickets. This is 141 per cent more than in 2009 when 3.61 tickets were sold.
MLS is banking on expansion, which sees the league expand to 30 teams by 2023, to continue the steady growth in attendance, viewers and overall popularity, and ultimately increase revenue via sponsorship, ticket sales and media deals.
MLS teams continue to retain strong domestic presence with shirt sponsors
Inter Miami CF, co-owned by David Beckham, is the only MLS team without a shirt sponsor. However, it has been reported that Miami has signed a $234 million sponsorship deal with Qatar Airways to be the shirt sponsor, as well as acquiring naming rights to Miami’s new stadium when it opens. Beckham has a long relationship with Qatar, dating to back to 2013, when he played for Ligue 1 side Paris Saint-Germain, which is owned by Qatar Sports Investments.
USA brands account for vast majority of MLS partners
USA-based brands currently dominate MLS’s sponsorship portfolio, accounting for 74 per cent of its deals. In spite of the presence of three Canadian teams in MLS, no Canadian brands make up the current MLS portfolio. However, as part of the Kellogg Company’s deal with MLS, Kellogg Canada offer a range of activations, including visibility of Kellogg’s brands during MLS broadcasts on Canadian networks. International deals with brands from Germany, UK, the Netherlands and Argentina make up the remainder of MLS’s portfolio.
The Food sector has the most active deals in the league, with the Kellogg Company and its brands - Pringles, Cheez-It and Eggo - all serving as official snacks to MLS. The Beverages and Retail sectors are also highly prominent, with five and four active deals respectively. Of the 28 current active deals, 12 different sectors are accounted for, highlighting the diverse appeal of the league to brands.
Clothing & Accessories sector remains most valuable owing to lucrative Adidas deal
MLS’s sponsorship revenue stream is dominated by its apparel partnership with kit supplier Adidas, by far and away the biggest sponsorship deal in MLS history. The deal sees the German brand provide kit for all MLS teams, as well as being the league’s ball supplier. Consequently, the Clothing sector accounts for half of MLS’s annual sponsorship revenue for 2020.
The Beverages sector and the Food sector account for 13 per cent and 7 per cent of the league’s sponsorship revenue respectively, owing to the fact that these sectors both have numerous MLS deals. Both the Automotive and Telecommunications sectors accounted for 6 per cent of MLS’s sponsorship revenue. Automotive spend can be attributed to German car manufacturer Audi being the title sponsor of the MLS Cup play-offs, as well as providing statistical analysis of each game in a deal estimated to be worth $10 million annually. While telecoms provider AT&T has partnered with the US men’s and women’s national teams in a deal reported to be worth $14 million.
MLS experiencing steady increase in sponsorship value
MLS experienced significant growth in its overall sponsorship revenue at the start of the 2019 season, thanks to a massive new extension with apparel sponsor Adidas. The sportswear manufacturer extended its long-running association with MLS until 2024. The new six-year deal came into effect in 2019, and was reported to be worth $700 million. The $117 million per year is a nearly five-fold increase over the $25 million per year that Adidas was reportedly paying under its previous agreement that ran to the end of the 2018 season.
Currently confirmed sponsorship from active deals for 2021 stands at $183 million. Globally, the COVID-19 pandemic has seen new sponsorship agreements being put on hold, existing agreements being ended as a result of companies implementing major cost-cutting measures or going bust, along with sports sponsorship rights fees predicted to fall, MLS could experience a significant reduction in annual sponsorship value for the 2021 season.
Average attendance declines two season in a row
MLS’s regular season average attendance declined for the second consecutive year in 2019. An average of 21,310 fans attended MLS games in 2019, down 2.6 per cent from an average crowd of 21,873 fans in 2018. Game attendance had hit a record high in 2017 with an average of 22,106 fans.
The decline was partially attributable to venue changes, such as Minnesota United’s move to a new stadium with less seating capacity, as well as weather that impacted start times. While average attendance declined, the league posted more games of over 25,000 attendees than it did in 2018, as well as increased ticket revenue due to slightly higher ticket prices.
Atlanta United FC led the league with total home attendance of 892,663, averaging 52,510 fans per game. Seattle Sounders FC finished second (average attendance of 40,247) followed by expansion team FC Cincinnati (27,336).
MLS returned mid-August from the COVID-19 shutdown. However, with the majority of the matches being played without fans in attendance, the 2020 regular season average attendance will be significantly impacted.
MLS attracts largest total regular-season attendance
MLS logged a sixth straight regular-season attendance record in 2019, making it the sixth–ranked soccer league in the world by attendance.
Despite a decline in average attendance, total attendance rose slightly to 8,694,584 from 408 matches, due in part to the debut of the expansion team FC Cincinnati.
The record attendance supports MLS’s strategy of banking on expansion to help grow its audience. Growing as large a national footprint as possible makes sense in a sport where labour costs are relatively low and regional rivalry drives fan engagement.
Atlanta United FC led the league with total home attendance of 892,663, followed by Seattle Sounders FC with 684,192 and FC Cincinnati, in their inaugural season, with 464,720.
MLS returned mid-August from the COVID-19 shutdown. However, with the majority of the matches being played without fans in attendance, the 2020 regular season average and total attendance will be significantly impacted.
Media Rights and TV Viewership
Current media rights per year roughly triple what MLS was receiving previously
MLS’s first television deal in 1996 resulted in the league receiving no rights fees but share advertising revenues with the network partners. In 2006, MLS announced its first rights-fee agreement with ESPN and Fox Sports, worth around $12.7 million annually from the 2007 season onwards.
MLS and U.S. Soccer, the sport's national governing body, signed off the current lucrative rights deals with cable sports broadcasters ESPN and Fox Sports and Univision, the Spanish language network, in 2014. The eight-year agreements, running through to the end of 2022, are worth around $90 million annually and cover MLS games and USA men's national team's qualifying matches for the 2018 and 2022 Fifa World Cup cycles. The previous rights deals, which expired at the end of 2014, with ESPN, NBC Sports Group, the Comcast-owned U.S. broadcaster, and Univision were collectively worth around $28 million a year.
ESPN and Fox are equal partners in the current agreement, both showing a minimum of 34 matches throughout the season. They are believed to be paying $75 million a year. The Univision family of networks are paying around $15 million annually. ESPN has broadcast MLS matches since the league’s inception in 1996. Fox Sports returns after previously showing games from 2003 to 2011, after which it was replaced by NBC. Univision’s new agreement with MLS will extend the relationship to 20 seasons.
In Canada, MLS signed a five-year rights deals, beginning in 2017, with TSN, the pay-TV sports broadcaster, and TVA Sports, the Quebecor Media-owned French-language channel, which is covering the league for the first time. TSN's sister network RDS had held the French language rights since 2011. MLS rights in Canada were held by pay-TV's Rogers Sportsnet and CBC, the public-service broadcaster, prior to TSN and RDS coming on board in a six-year deal in 2011.
IMG, the global agency, acquired international distribution rights to MLS. The long-term deal, announced in 2014, covers the 2015 to 2022 period. The deal is reportedly worth $7.0m per year. International broadcasters of the league include DAZN in Germany, Italy and Spain, Sky Sports in the U.K., ESPN in Latin America and Abu Dhabi Media Company in the Middle East and North Africa.
With the current rights deal expiring in 2022, MLS is hoping to secure multiple and lucrative media deals for 2023 and beyond to fund the next wave of growth and investment across the organisation and its clubs.
MLS 2019 regular season average audience falls for first time during current media rights cycle
MLS viewership for the 2019 regular season was down 14 per cent compared to 2018. This was the first fall in average audience under the current media rights cycle with broadcast partners ESPN, Fox and Univision that runs from 2015 through 2022. The 2019 regular season attracted an average audience of 236,000 across all MLS broadcasters combined — ESPN, ESPN2, Fox, Fox Sports 1, Univision, UniMás and TUDN, compared to an average of 275,000 in 2018.
The 2018 regular season benefited from a few men's Fifa World Cup game lead-ins, which generated big audiences. Additionally, there were more matches on Fox, the free-to-air broadcast network, in 2018 compared to 2019. These factors contributed to the combined Fox and Fox Sports 1 viewership being down 24 per cent from 2018, which was Fox/Fox Sports 1's best viewership since Fox Sports re-acquired MLS rights prior to the 2015 season. Yet, in the 2019 regular season Fox recorded its most-watched MLS telecast ever and the most-watched telecast on English-language television since 2004 when 1.6 million viewers tuned in to the MLS match between Atlanta United FC and New York Red Bulls, which kicked off an hour after the conclusion of the Fifa Women's World Cup final that was won by the U.S.
ESPN’s coverage of MLS scored a two per cent increase during the 2019 regular season, while Spanish-language Univision networks dropped 18 per cent in 2019 compared to 2018.
Despite a decline in 2019 viewership, overall MLS television ratings have increased every year since 2012. This can be primarily attributed to match broadcasts being simply available to more people now than ever before. In 2015 there were just eight MLS matches broadcast on ESPN, with 26 games on the less-distributed ESPN2. In 2016 and 2017, though, those numbers flipped, with a large majority of ESPN’s MLS matches now broadcast on its flagship network. In 2016, Fox began showing games on its broadcast network for the first time, with four matches on over-the-air Fox, a trend that has continued ever since. And Univision broadcasted six matches on its over-the-air channel in 2017, when it had only featured games on its cable networks – UniMás and TUDN – in previous seasons.
MLS Cup viewing figures fluctuate
The MLS Cup 2019 between Seattle Sounders FC and Toronto FC averaged a combined 1.27 million viewers across ABC, Univision and TUDN, down 28 per cent from last year’s final on Fox and UniMás (1.76 million), but up 15 per cent from the 2017 final between the same teams in a similar afternoon window on ESPN, UniMás and TUDN (1.11 million).
Seattle’s win averaged 823,000 viewers on ABC alone, down 47 per cent from last year on Fox (1.56 million) but up 2 per cent from 2017 on ESPN (803,000). It was the most-watched MLS Cup on Disney-owned ESPN/ABC since 2014 (three telecasts).
Coverage on Univision/TUDN averaged 447,000, the event’s largest Spanish-language audience since 2016 (601,000).
There are a number of reasons for the fall in U.S. viewing figures. Firstly, the MLS Cup 2018 was broadcast in prime time on Saturday in December, delivering the largest MLS Cup audience on a single network since 1997, while the 2019 game was on Sunday afternoon in November, in competition with numerous NFL games. Secondly, the presence of a Canadian team in the final, resulted in no second local market with a large viewership to boost the national figure.
During the current broadcast deal, the MLS Cup 2016 was the most-watched MLS Cup since 2001.
In Canada, the MLS Cup 2019 drew an average audience of 748,000 on TNS. The two other times a Canadian team has qualified for the MLS Cup – 2016 and 2017 – TNS has attracted average audiences of 1.43 million (first time a Canadian team played in the MLS Cup) and 1.30 million respectively.
Modest reception for return of MLS is Back tournament
MLS became the first North American professional men’s league to return to action since the pandemic disrupted the sports calendar, resuming on July 8 with the all-new “MLS is Back” tournament, with regular season points and a spot in 2021 Concacaf Champions League on the line. With almost every other major sports league in the U.S. returning late July at the earliest this was a chance for MLS to dominate the airwaves.
The average television audience for the MLS is Back tournament was 226,000 viewers across the ESPN family of networks, a figure lower than ESPN’s average television audience for the 2019 season as a whole (246,000). If this was MLS’s big chance to make a mainstream impression, it did not pan out with the tournament receiving a modest reception.
ESPN’s highest audience for the tournament was from the opener between Orlando City SC and Inter Miami CF which pulled in an average audience of 503,000, followed by Seattle Sounders FC v San Jose Earthquakes two nights later (408,000) and the Portland Timbers v Orlando City SC final (394,000).
The tournament’s biggest audience was 639,000 viewers for Atlanta United FC v New York Red Bulls, which aired on Fox’s broadcast network and Univision’s cable channel TUDN.
Matches kicked-off at 9:00, 20:00 and 22:30 ET to avoid playing games in the midday heat and humidity of high summer in Florida. ESPN broadcast all seven matches in the 9:00 window during the group stages, and along with MLS executives, were hoping to ‘own the morning’, similar to what England’s Premier League has been able to do on NBC Sports. However, the morning window was a television flop, with reports stating the largest audience for any of them was 175,000 viewers.
MLS vs U.S. Big Four and European Big Five
Increase in attendances beginning to plateau in line with other properties
Over the last five seasons, the five major leagues have experienced a slight decline in average attendance, though for three leagues – NBA, NHL and MLS – the declines were negligible. The NFL’s average audience fell from 68,216 in 2015 to 66,151 in 2019, representing a decline of 3.0 per cent. MLB experienced the biggest drop in game attendance with average attendance falling from 30,477 in 2015 to 28,317 in 2019, a decline of 7.1 per cent. Over the same period, the NBA and NHL average attendance fell insignificantly by 0.6 per cent, while MLS’s average audience declined by 1.1 per cent. However, MLS’s game attendance hit a record high in 2017 with an average of 22,106 fans.
Whilst MLS is attracting larger average audiences than NBA and NHL, this can be somewhat misleading. The capacity of NBA stadiums range from 16,867 and 20,917, and with an average attendance of 17,750 in 2019, most NBA games are either a sell-out or near sell-out. MLS, with an average attendance of 21,310 for the 2019 season, had a stadium utilization of 76 per cent.
Unsurprisingly, the NFL, the marquee property in the U.S., dwarfs the other major leagues in average attendance, owing to the popularity of the sport and the capacity of its stadiums, such as MetLife Stadium, the home of the New York Giants and the New York Jets, which is the largest NFL stadium in the United States with a maximum seat capacity of 82,500 spectators. The NFL’s Atlanta Falcons and Atlanta United FC of MLS both play out of the 71,000-seat Mercedes-Benz Stadium, the Falcons announced an average attendance of 71,601 at their eight regular-season home games, while United announced an average attendance of 52,510 for 17 regular-season home games.
MLS lags behind marquee soccer leagues but competes with Ligue 1
Since joining MLS in 2017, Atlanta United FC have achieved the highest regular season average attendance each year. With an average of 52,510 in 2019, Atlanta United ranks among global elite in average match attendance, pulling in more fans per game than French giant Olympique de Marseille in Ligue 1. Chicago Fire FC had the lowest average attendance in MLS for 2019. However, its average attendance of 12,324 was higher than the lowest attendance in the Premier League, LaLiga, Serie A and Ligue 1.
In terms of average attendances however, MLS is currently not on the same footing with the Bundesliga or Premier League. Although MLS will take comfort from the fact that attendances have steadily increased since its launch in 1996. MLS will be hoping that the arrival of new teams in new cities, with high profile players and stadium investment will lead to a greater product that will pull in more fans into stadiums.
The Premier League had an average attendance of 38,168 for the 2018-19 season – which equates to 97.2 per cent of stadium utilization. MLS, with an average attendance of 21,310 for the 2019 season, had a stadium utilization of 76 per cent. This can in part be attributed to there being fewer soccer-specific stadiums in MLS, with numerous teams using NFL stadiums, which have a seating capacity of at least 60,000 spectators. Because of lower attendance, these stadiums have restricted attendance to artificially reduce capacity. This is something MLS hope to address with teams building soccer-specific stadiums.
MLS growth in broadcast revenue could be impacted by the COVID-19 pandemic
In its 25th season, MLS has made solid progress with the construction of soccer specific stadiums, attraction of big-name European stars and the creation of a distinct culture in the stands, while also enjoying undeniable growth across game-day attendances, sponsorship revenue and in the number of teams in the league. However, national television viewership has not grown at the same rate.
For the 2019 regular season MLS attracted an average audience of 236,000 across all broadcasters combined. This means MLS isn’t the most popular soccer league in the U.S., with Mexico’s Liga MX attracting an average audience of 737,000 on Univision networks for 2019 and England’s Premier League pulling in an average audience of 457,000 across the NBC Sports Group for the 2018-19 season.
MLS has relied on its expansion into new markets to grow its TV audience. With expansion teams Miami and Nashville joining the league this year, and with Austin, Charlotte, Sacramento and St Louis all set to join over the next three years, MLS will be hoping for a significant increase in its television audience.
As part of its policy to pursue growth through increased media value, MLS in 2019 announced that all clubs were no longer allowed to sign local rights agreements beyond 2022. Whilst every local rights deal generates positive revenue for MLS sides, not every club is able to capitalize on such a deal. MLS is therefore hoping that a new wholesale media strategy will lead to a bumper set of deals for the next tender in 2022, once again highlighting the media rights market as the catalyst for continued growth and investment for MLS and its franchises.
However, many believe that the Covid-19 pandemic, and potential recession, will have a severe impact of broadcasters revenue now and into the future, resulting in a downward impact on future television sports rights pricing.
In its favour to secure multiple and lucrative media deals is MLS’s young fan base, the growing U.S. Hispanic population and the increased popularity of youth soccer. Additionally, with USA, Canada and Mexico hosting the 2026 Fifa World Cup, the profile of U.S. and Canadian soccer will get a boost, with MLS franchises and sponsors expected to gain from the tournament, while MLS broadcasters can expect a significant uptick in TV audiences. And that might be the clincher for MLS to increase broadcast revenues for its next rights deals.