Is MLS’ Deal with Apple TV the Future of Sports?

Three years ago, back in the Before Times, SportsBusiness Journal reported that Major League Soccer had opted to do something rather eyebrow-raising. MLS had told its existing and future teams not to sell local broadcast rights beyond 2022 when its national TV deals were set to expire, in hopes of maximizing the value the league could offer to potential media partners. With both national and local TV revenue falling short of other soccer or American professional sports leagues, this represented a big gamble to try and maximize the league’s media revenue going forward, but Awful Announcing observed that it carried a big risk of backfiring regardless of whether or not it was successful. It would almost assuredly only work if MLS reached a deal with a streaming service, at a time when tech companies had shown little serious interest in American sports and legacy media companies were only just starting to dip their toes in the water of streaming, and most companies would likely balk at taking on both national and local MLS rights; by not being able to sell local rights to the most valuable teams separately those teams’ rights would be undervalued, and with them, potentially local MLS rights as a whole; but on the flip side, if MLS didn’t sell local rights to anyone, all the teams would be stuck with what the state of the local rights market, and of local MLS TV ratings, would be in 2022, for better and worse.

In the end, though, MLS’ gamble paid off brilliantly – and in a way that could forge a path for other leagues going forward. Two weeks ago MLS announced a 10-year agreement with Apple unlike any other in American sports. While Apple is guaranteeing MLS $250 million a year, and will have the rights to show some games for free and on Apple TV+, the core of the deal is a partnership MLS and Apple are entering into to create a new streaming service, accessible through the Apple TV app, with rights to every single MLS game, across the country and around the world, whether in- or out-of-market. MLS will produce coverage of every game with commentary in English and Spanish (and French for Canadian teams) or from each team’s local radio broadcast. MLS still hopes to reach an agreement with a linear TV partner(s), but any such games would be simulcast with Apple, not exclusive, and in a “letter to fans” from Commissioner Don Garber, it’s indicated that any such agreement would only be for the “early years” of the partnership, meaning if streaming of live sports was sufficiently mainstream down the line, MLS could yet abandon linear TV entirely. 

(The letter also indicates that such an agreement would be with a “major broadcast network”, which I originally took to mean that linear cable networks would be off-limits and MLS would just sell a package consisting of MLS Cup and a smattering of regular season games to an outlet like Fox, but the Athletic has reported that ESPN is likely to reach an agreement for 23-25 regular season games on its entire family of networks, so that’s probably just the careless use of “broadcast” as a synonym for “linear”. On the other hand, that ESPN would supposedly alternate MLS Cup with Apple, when Apple would presumably simulcast ESPN-aired MLS Cups anyway and a streaming service and linear TV network would target different audiences, meaning for a significant chunk of the audience MLS Cup would just disappear from linear TV every other year for no good reason, makes little sense to me unless MLS is looking to add more linear inventory with Fox or Turner that would include the remaining MLS Cups.)

The news comes as the regional sports network market that has served as the backbone for distribution of local sports, and for major sports teams’ bottom lines, for over a quarter century finds itself in crisis, and teams, leagues, and networks are scrambling to figure out what the future of local sports distribution will look like. Since Sinclair Broadcast Group acquired the former Fox Sports regional networks, since rebranded as Bally Sports, they’ve been hemorrhaging distributors left and right with the only streaming TV provider left carrying the networks being the relatively minor DirecTV Stream, and many wondered if the Diamond Sports Group that serves as the networks’ holding company is destined for bankruptcy, until Sinclair managed to stop the bleeding by reaching a renewal agreement with Charter in April. Sinclair and Major League Baseball engaged in a minor war of words last year over the degree of rights Sinclair held to launch a direct-to-consumer offering, with MLB demanding an equity stake in any such venture, Commissioner Rob Manfred insisting Sinclair didn’t have enough rights from enough clubs to launch such an offering without MLB’s help, and MLB reportedly looking into launching its own direct-to-consumer service, possibly in partnership with the NBA and NHL, without Sinclair’s help.

In short, everyone’s known that the time to find the next local sports distribution paradigm has to come sooner rather than later. The idea of bundling local sports with a larger streaming service, based on the paradigm of the existing regional sports networks, seems to be a non-starter; Comcast reportedly looked into the prospect of streaming their regional sports networks on Peacock a year ago, but scrapped it in part because they’d have to offer the service at different price points in markets with and without NBC Sports regional networks, risking consumer confusion and leading to speculation they might sell the RSNs at some point. The idea of direct-to-consumer offerings from regional sports networks seems to have the most momentum, with Sinclair boxing MLB out of including other leagues in their offering by reaching far-reaching streaming agreements with the NBA and NHL; last month they announced that they would soft-launch their Bally Sports+ service this month (ultimately this Thursday) in five markets where they’ve already reached agreements with the local MLB teams (with the remaining ten hopefully coming later), at a price point of $19.99 a month or $189.99 a year, with a full launch coming in September ahead of the NBA and NHL seasons. NESN managed to beat Bally Sports to market with its NESN 360 app, which charges a 50% premium over Bally Sports+ with a $29.99/month or $329.99/year price point, owing to the substantial popularity of NESN’s teams, the Red Sox and Bruins, in the New England region.

MLS was always somewhat orthogonal to the wider discussion of regional sports networks, as most teams pretty much took whatever deal was available to them without much power to drive networks’ subscription fees or collect much in the way of any money; of the league’s 25 US-based teams, only 11 have deals with RSNs at all, with the remainder (as well as many of the teams with RSN presences) having their games on local broadcast stations, and no team has a local broadcast deal worth more than $6 million a year, paling in comparison even to most NHL teams (and even on RSNs many teams were already producing their own broadcasts). Several MLS teams had experimented with streaming deals with the likes of YouTube TV and Fubo, but to my knowledge the only such deal remaining is the Sounders’ deal with Amazon for streaming rights within the team’s territory but outside the Seattle market. Thus, MLS had both precedent for exploring an entirely new distribution paradigm, and little to lose given how little RSNs seemed to value their local rights.

Ultimately, MLS’ approach is a modified version of if MLB had opted to go it alone with their own app – essentially, if MLB had decided to bundle in-market as well as out-of-market games with their MLB.tv service. MLB.tv charged $130 for a full season before the season started and $140 afterwards, with a $20 discount for a single-team package. Despite some sources referring to it among the “five major sports leagues” even though it’s not even clear it’s ahead of the WNBA (and frankly might not be that far ahead of the Premier Lacrosse League), MLS is far enough behind the NHL that based on my reckoning, it’d likely have to charge close to $250 a year to have any chance of making money beyond Apple’s guarantees, and that’s not getting into any further expenses. MLS fans may be relatively well-off, but that sounds like a tall ask. What further limits the applicability of this deal to the future of the true major sports is that those sports are constantly worried about the popularity of the big-name, big-market teams – the Yankees and Red Sox in MLB, the Lakers and Celtics in the NBA, the Original Six in the NHL – overshadowing small-market ones, and while they may have backed into a situation where for cord-cutters, it’s easier to follow a far-away club than the local one, explicitly setting the barrier to entry to follow a popular team the same as following the local one is likely to be a non-starter. Whatever the future of local sports distribution looks like, the major leagues are going to want it to incentivize, in some way, following a local team rather than latching on to a big-name one.

Nonetheless, I believe this deal will do more than anything else we’ve seen to set the course of the future of sports video distribution. At a time when the major sports leagues and college conferences send fans running from one network to another to catch all their favorite teams’ games, MLS is establishing one place for everyone, all over the world, to follow all of their league, or any single team’s games, creating the simplest, most fan-friendly distribution system we’ve seen from any sport in the digital age. MLS is coming as close as could be expected to eliminating the middleman: MLS-produced games distributed primarily through an MLS-branded streaming service serving as a hub for the whole league, with selected games on linear television to expose the league to casual audiences and alleviate the pressure the most popular games might impose on servers and networks. Apple’s role is really more of a funder and marketer than a broadcaster in the traditional sense. There’s no scrambling from one network or streaming service to another depending on which one arbitrarily has the rights to tonight’s game, no jumping through different hoops depending on where you live, no weird differences in availability from place to place that shouldn’t exist on the global internet, no swings in production quality from team to team or game to game. If you were designing a distribution system for a sports league from scratch, without the baggage of the existing linear television system, you might come up with something like this.

I could see a day where the NBA, MLB, and NHL offer access to all of their respective games with a single subscription available through Amazon, Apple TV+, and/or ESPN+, with season-ticket holders automatically getting access to their respective team’s games and a smattering of games available to subscribers of each service’s base package, if not offering all games involving in-market teams at no extra charge with the base package, with each league producing all games under a similar framework to this MLS deal. Perhaps high-demand road games and sellouts or home games that clear certain thresholds for secondary-market ticket prices could be made available on linear television locally or otherwise have lower barriers to viewing, similar to the NFL’s old blackout rules. The NFL could already move a significant distance down this direction with Sunday Ticket likely to be distributed primarily via a streaming service going forward, especially if they choose Amazon as their partner; access to every game not available on linear television locally with a Sunday Ticket subscription, maybe even some games that are available on linear TV with the base package, on top of Amazon’s existing exclusive package.

For as small-time a league as MLS might be, they may have just established a new paradigm that could define how we consume sports – and perhaps with it, how sports themselves operate – for years, if not decades, to come.

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