Pro/Rel: Why $4 billion offer to MLS was non-starter

The debate over MLS and pro/rel resurfaced on Monday with a Sports Business Journal report that international media company MP & Silva (whose founding partner is Miami FC owner Riccardo Silva) offered $4 billion for MLS's global media rights on the condition that MLS institute a system of promotion and relegation.

Why is MP & Silva deal a non-starter? MLS currently has an eight-year agreement for domestic media rights with ESPN, Fox Sports and Univision Deportes that extends through the 2022 season.

1. Even if MLS wanted to consider the MP & Silva deal -- which covers domestic and international rights -- it would have to wait until any form of right of first refusal or right to negotiate that ESPN, Fox Sports and Univision Deportes have expired. That would not be for several years.

2. MLS currently only sells its commercial rights through SUM (domestic media rights) and MLS Business Ventures (international media rights), both "in-house" entities. (SUM recently bought back the 25 percent interest it sold to Providence Equity Partners in 2012.). It doesn't use a third-party intermediary as the selling agent.

Who is MP & Silva? MP & Silva is an international sports agency that distributes TV and media rights for sports federations, leagues, clubs and rights holders.

Its Italian founders started out buying the international media rights to Serie A clubs and expanded from there. MP & Silva's majority owner is now Chinese firm Everbright Securities and Beijing Baofeng Technology, which paid $1 billion for a 65 percent interest in 2016.

MP & Silva and MLS aren't strangers. MP & Silva sold international media rights until MLS went in-house with MLS Business Ventures in 2014.

What's Riccardo Silva's interest in pro/rel? Silva launched Miami FC in 2016. The club is the most successful club in the NASL, but its path from here is uncertain without promotion and relegation.



Coached by former Italian star Alessandro Nesta, Miami FC won the 2017 NASL spring championship going away and is in the quarterfinals of the U.S. Open Cup (where it will play FC Cincinnati in a makeup game on Aug. 2). It averaged more than 6,000 fans a game at FIU's football stadium -- renamed Riccardo Silva Stadium in April -- an increase of 15 percent from 2016.

1. In its backyard, Miami FC likely faces competition from David Beckham's Miami Beckham United group, which (finally) has moved closer toward securing a stadium deal necessary for MLS to sign off on it as the league's 24th team.

2. The NASL only has eight teams and likely needs to field 12 in 2018 if it is to maintain its Division 2 recognition from U.S. Soccer. It has already announced plans to field teams in Orange County and San Diego in 2018, but the future of its current eight teams is not entirely certain.

One problem team has been Jacksonville, which the NASL operated for the first part of 2017 until Central Florida businessman Robert Palmer agreed to take over as Armada owner.

Of the 11 Division 2 teams averaging more than 5,000 fans a game in 2017, nine are in the USL and only two -- Indy Eleven and Miami FC -- in the NASL. Of the seven returning NASL teams, four are averaging less than their final 2016 average. And the eighth team, the expansion San Francisco Deltas, is last in the NASL with average attendance of less than 2,500 a game.


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19 comments about "Pro/Rel: Why $4 billion offer to MLS was non-starter".
  1. Kenneth Barr, July 25, 2017 at 8:12 a.m.

    Finally, someone who gets it. The US and Canadian sports business model, regrettably, does not and will not support pro/rel. I wish it did, but it does not. Now can we move on?

  2. Kate Phillips replied, July 25, 2017 at 8:33 a.m.

    Exactly.

  3. Kate Phillips , July 25, 2017 at 8:23 a.m.

    This dead horse has been beaten into powder! Unless you want to see the USL or NASL champs opt not to promote up because they can't afford it (or bankrupt themselves for a season or two with the big boys), or see an MLS team threaten to fold if they get relegated ("I paid X,000,000 for my team; so what if we went 2-28-2? I signed up to play the Red Bulls and NYCFC, not the freakin' Cosmos! Screw this, I'm outta here!"), pro/rel is a moot point, and should be a non- issue. The only way I see this working is if there was another level (similar to the Football League's Championship League or what used to be NCAA 1-AA) created between MLS and NASL/USL, where cities who up to now have been left out of MLS, who have people with MLS-level $$$, and have pro-rel between MLS and the new division, which would also allow NASL and USL teams to shore up their finances, stadiums, etc., for a potential move up to the new division, and then to MLS. The new division's teams would join with the understanding that after a certain period of time (5-7 years, to let the new division get settled and somewhat stable), they could face relegation to the lower division if their record dictates it. This would allow everybody to get used to pro/rel, and the drop from MLS to a lower division wouldn't be so drastic.

  4. R2 Dad replied, July 25, 2017 at 3:15 p.m.

    Kate, you see the organizational structure of leagues and teams as inert and unchanging but players and investors respond to opportunity. If an owner says, "I'm outta here", MLS buys back the franchise e.g. Chivas and resells. In open leagues the owners sell to new buyers or finds minority owners to fund new initiatives--it's not static. Regarding your proposed middle-league solution, MLS is closed as is USL (mini-MLS), so there wouldn't be and migration between either of those closed leagues and any other league. Likewise, there can be no combination between USL and NASL since they have different models.

  5. Kate Phillips , July 25, 2017 at 8:45 a.m.

    Why can't Silva and Beckham join forces, and infuse enough $$$ into Miami FC, so that they could make the move to MLS, similar to what Montreal, Portland, Seattle, and Vancouver did? FIU Stadium is plenty big to serve as a temporary home until a new stadium can be built, or permanent if the new stadium idea fell through. Sure, it's probably easier said than done, but it seems to me that it would solve two problems at once, with Miami FC becoming an MLS franchise, playing in a new stadium courtesy of David Beckham. Just a thought.

  6. Paul Berry, July 25, 2017 at 9:12 a.m.

    We're all agreed that pro-rel won't work using the MLS business model. However that doesn't mean pro-rel can't work outside of MLS. So Mr Silva, get 12 owners to invest a couple of hundred million to meet D1 standards and introduce pro-rel in that league.

  7. Bob Ashpole replied, July 25, 2017 at 10:52 a.m.

    It isn't just the business plan. Pro/rel is a solution for a mature marketplace where top level soccer clubs have saturated the market. Soccer in the US is still a growth industry.

  8. Bob Ashpole replied, July 25, 2017 at 10:55 a.m.

    To illustrate the saturation I am talking about, London has 13 professional soccer clubs.

  9. Paul Berry replied, July 25, 2017 at 11:03 p.m.

    The Football League was 2 seasons old when it implemented pro-rel.

  10. Fire Paul Gardner Now replied, July 26, 2017 at 10:33 a.m.

    Paul, are we really comparing 1889 to 2017? I think pro/rel can work in the US eventually but that comparison doesn't make sense.

  11. Kris Spyrka, July 25, 2017 at 11:26 a.m.

    And this is why we can't have nice things. MLS business model, or not. If we don't evolve to pro/rel then the migration path of aspiring pro players will be to euro clubs that are harvesting here with affiliate programs. The migration path of the fan will be to the couch. Adapt or die.

    As much as we discuss the development of our players in this country, what about the development of our pro leagues. You shouldn't put valuable furniture in a tent, you would build a solid dwelling first.

  12. Tyler Dennis, July 25, 2017 at 12:34 p.m.

    I love how people that "love" soccer have such a limited view and then complain that our U.S. team sucks or there is not investment. Do you think the tech sector would have flourished if the FTC only allowed the incumbents to compete in the marketplace. Sorry, you can have a business, but your website can only aspire to serve your town. The need for Pro/Rel, aka free markets, is so that the ecosystem for soccer is open. So there is a path for our youth players to climb and aspire. If clubs are rewarded in a free market, the market of better clubs, better development, smarter/innovate coaches we will see coaches rise with opportunity and players. Too few opportunities because there is no incentive, there are no solidarity payments, so there is little incentive to develop players that may be technically solid, but need time to mature. For youth development to work, clubs need a reason to wait for that maturity. Pro/rel will minimize pay to play over the long term. As of now, youth teams need to win to market to parents. MLS academies can only service so many players. Late bloomers have know where to play to climb the ranks. MLS makes a stink as if they don't make $$$, however, you need to consider the $$$ they make from their SUM holdings which is a lot more than the teams. They have done well, these owners aren't idiots and they are bamboozling fans to make it look this way. US Soccer needs to mandate pro/rel the development of the game - which is their mandate. Much like the mandate by FIFA charter that leagues have pro/rel.

  13. Kris Spyrka replied, July 25, 2017 at 4:12 p.m.

    Amen Tyler Dennis! Let's quit fooling ourselves. I've heard enough excuses, like; country is too big, soccer not the big market sport (football, baseball, basketball are) so we don't get the good athletes, blah, blah, blah. You are correct Tyler, the federation has to define and mandate this. But IMO, US Soccer acts like a headless body on these subjects. The systemic issue here is NFL is it's own sovereign entity, MLB, NBA, even NHL, the same. There is a Super Bowl every year, but no World Championship of American Football with international teams every four years, that I'm aware of. None of these sports answer to a higher body like FIFA when considering competition on an international scale. So, in this country, if we aspire to be in that sphere, we need to play ball, and quit trying to do our own thing all the time. And, I know that's a hard concept for independent minded Americans and businessmen here to get on board with. We reinvent the wheel so much that we'll never ride, we'll continually walk.

  14. Wooden Ships replied, July 25, 2017 at 6:43 p.m.

    Sounds good Tyler and Kris. Been around this game (St. Louis and beyond) a long time now. We have had too many exceptions to the rule made in the states, out of either arrogance, profit or ignorance. Pro/rel must be the goal, synthetic turf is sacrilege and so are narrow fields as well as training compensation. USSF has not led, it started selling out long ago. Or, perhaps I'm wrong and eventually the rest of the planet will wake up one day and realize they've been doing it all wrong.

  15. :: SilverRey ::, July 25, 2017 at 1:13 p.m.

    Quick clarification on your Non-Starter Point #1: Silva is offering his contract to start after the current ESPN/Fox contract expires in a few years - not to come in and replace it.

  16. Shawn Ferdinand replied, August 17, 2017 at 1:03 p.m.

    "Silva is offering his contract to start after the current ESPN/Fox contract expires in a few years"

    True. However Silva knows MLS can't take meetings on the next contract until the current one has expired or TV partners have decided they will not renew.

  17. Kris Spyrka, July 26, 2017 at 11:58 a.m.

    Wooden Ships, agree with us always messing with the integrity of the game. One tweak that stuck however, later known as PK's, started as the infamous "shoot outs". Anyone here old enough to remember the offsides lines, and playing in fifteen minute quarters, and not halves in high school?

    When you say St. Louis, I have fond memories of going from Denver to play in the Bush League tournaments, late 70's early 80's. That was always a high light of our club travel team. Back then we thought big things would happen sooner in the sport. A handful of us went on to play for college, I went to Germany and got a real football education.

  18. Rodney Thurow, July 26, 2017 at 3:32 p.m.

    It all comes down to that fact that we live in the United States of Capitalism. It is all about making money & $4B in the sports industry is a drop in the bucket. I know this is just play money for most of these Billionaires but it is still money & these people aren't Billionaires because they have made stupid financial decisions. Let's put some rough but "realish" numbers out there. In Minnesota an investment group just stepped up and put in $250M of there own money down to purchase the franchise, land & build a stadium. The local paper just did a nice article about their probable operating profit of $8.5M this year. They just signed a naming rights deal and the figures aren't out but the Vikings are only getting $8.8M/yr so let's just go with $5.5M/yr. That is about a 17 year investment. I guarantee that Allianz isn't on board if Minnesota United isn't in the MLS. Pro/Rel just isn't going to happen in North America until this initial investment has shaken itself out.

  19. Paul Berry replied, August 14, 2017 at 3:11 p.m.

    The Premier League is also all about making profits. That's why there are so many foreigners buying English teams.

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