MLS Needs A New TV Deal If It Wants To Survive

Many applauded MLS for the terms of its most recent TV deal in 2014. At a sum of $90 million per year from Fox, ESPN and Univision, it marked a five-fold increase from its previous annual broadcasting fees. Still, the league has a lot of catching up to do if it wants to compete with other top leagues.

Soccer’s big five leagues in Europe and the four major American sports leagues have all capitalized on growing demand from broadcasters. Sports have proven relatively immune to a shift from live to recorded TV, as well as over-the-top delivery of programming online, and advertisers have responded by funneling a larger percentage of funds to sports programming. 

The following chart shows annual TV revenue generated by each league. Note that the total amount reflects national and international TV deals.

Gone are the days where match day revenue was a driving factor. Leagues now live and die by tv deals. pic.twitter.com/lvzKNC5g6a

— The18 (@the18com) April 11, 2017

Local and regional broadcasting fees are not included in the above. As an example, the LA Galaxy make an additional $5.5 million per year from their local deal, which is at the high end for MLS teams. This pales in comparison to their hometown LA Dodgers, who rake in over $200 million annually from their contract with SportsNet LA.

The difference in local TV deals among U.S. leagues follows a similar trend. MLB generally sits at the top, while NBA and NHL teams make about half as much as their MLB counterparts (which corresponding to the number of games in a season). MLS lags behind, as some contracts are still evolving from paying for production costs. 

A bright spot for MLS has been steady growth in attendance.

A post shared by The18 Soccer (@the18soccer) on Dec 22, 2016 at 2:42pm PST

However, although growing attendance numbers suggest heightened interest among domestic fans, ticket sales continue to decline in importance relative to broadcasting and commercial revenue streams. According to a 2016 report from Deloitte, Match Day revenue for the Big 5 European leagues ranged from 12% of total revenue (France and Italy) to 22% (Germany) during the 2014-2015 season. Some clubs are using the injection of TV money to finance new stadiums or expand seating capacity, but attendance remains a secondary driver of growth and overall revenue.

On a per game basis, MLS slightly outpaces the NBA and NHL in attendance. While EPL match-day revenue is generally at least double that of MLS teams, those figures alone do not explain the large gap in revenue among the different leagues. If MLS wants to eventually compete with the Big 5 soccer leagues or, more importantly, to simply sustain itself financially, it needs to leverage its evolving match-day fan base into more lucrative regional and national TV deals. Here's a look at how overall revenue breaks down across leagues:

The most revenue generated by each sports league isn't too surprising. pic.twitter.com/zxOM4M2Zg2

— The18 (@the18com) April 11, 2017

Note that league revenue data from 2015 does not account for TV deals signed since. Forbes projects that the EPL will generate $6.5 billion in revenue during the current season.