Major League Soccer could be about to ruin much of the progress it has made with its pursuit of sponsorship money for the post-season playoffs. Currently, MLS has a $200 million league sponsorship deal with Adidas (ADS.DE) that covers the next eight years; it's worth about $25 million a year to the league.
Recently, MLS added Starwood Hotels as a sponsor of its post-season playoffs for the MLS Cup. This all looks very positive for the business side of American soccer.
But now MLS commissioner Don Garber (pictured) wants expand the number of teams qualifying for the playoffs (and thus expand the potential exposure for playoff sponsors) from eight teams to 10. This could be commercial suicide for the MLS, and it may jeopardize its contract with Adidas by driving fans away from the regular MLS season. It's complicated, but if you're a sports fan you'll know that having credible league play is the key to any sports business.
The MLS currently has a baseball-style conference system. The East and West conferences have eight teams each. They all play each other, but at the end of the season the eight teams that have scored the most points enter the playoffs, a knockout competition, for the MLS Cup. This year, the cup was won by the Colorado Rapids.
The playoff system renders regular season play pointless. The Rapids were the 7th ranked team at the end of the regular season. The team they beat, F.C. Dallas, came 4th.
By contrast, the L.A. Galaxy came top in regular league play with 59 points, 13 more than the eighth playoff berth. Los Angeles could literally have forfeited the final four games of its regular season -- forgoing all points -- and still made it into the playoffs. Yet the final featured two teams whose seasons were moderately successful at best.
Expanding the playoff system can thus only expand the likelihood of even more contrary results, creating a huge disincentive for fans to bother watching games during the regular season.
Trouble on TV
That's already happening in terms of the TV audience. The MLS Cup final drew a record low TV audience this year. ESPN2 averaged 249,000 viewers per regular MLS game, down 12% from last year. To put that in perspective, ESPN2's April broadcast of Manchester United against Chelsea F.C. drew 526,000 viewers. The fact that English football often has more TV fans in the U.S. than U.S. football ought to be sobering news. MLS just isn't exciting enough to attract the eyeballs that its sponsors are hoping for.
There are signs of good news, however. The 2010 season attendance averaged 16,675, up 4 percent from last year despite an increase in the number of teams and stadia. MLS attendance threatens to overtake the NHL. The league will expand again next year, bringing in even more fans for the live games.
But the bad news here is that MLS's success in starting new teams may simply be transferring its TV audience over into a ticket-buying live audience. That's good in terms of ticket sales, but bad if you want to attract sponsors looking for mass media exposure. So MLS needs to do something to make its games more compelling for those at home.
Garber faces a decision
It's not clear whether Garber understands this. In fact, he's focused on something else entirely: synchronizing the MLS season with other international football leagues' winter schedules, which play an August to April schedule. (MLS plays March to mid-November.) Aligning with FIFA would put MLS games in direct competition with NFL and college football games -- a suicidal move.
There are two strategic decisions that Garber can make to solidify MLS's success as a business:
- Fix the playoff system: Either by reducing it to a final between the No. 1 teams in both conferences or by abandoning it in favor of the traditional single-league play that occurs in all most other FIFA nations. That would make the regular season, and the final games, increasingly exciting as it draws to its climax.
- Resist FIFA's demands to synchronize schedules with the rest of the world: The focus for MLS should be here in the U.S., not on what's happening abroad. Going up against the gridiron is not something MLS has the commercial strength to withstand.
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