The Weekend Mumbo: The Mess(i) that is the latest big sports deal and whether it could change our industry
Welcome to the Weekend Mumbo.
Sport recently took a big turn on the business front and is about to get even more interesting if you believe the analysts.
Last week US football (soccer) team Inter Miami apparently pulled off the signing of the season, if not the decade, by managing to get seven time Ballon d’Or winner Lionel Messi to commit to the team. There is a caveat there and I’ll get to it later.
A Budweiser ad starring Lionel Messi prior to his departure from Barcelona
Let’s put that in context. One of the greatest footballers of all time signing for the (currently) worst team in the Major League Soccer (MLS). Despite its name, the MLS is not one of the world’s major leagues.
At 35, the deal according to Messi is about enjoying his football a bit more.
He would not be the first European football star to make a move like this, but he is by far the most notable. It is also notable that there was significant interest from Saudi Arabia, with a purported €1 billion move to the Pro League once seen as close to a formality.
The deal allegedly would have seen Messi playing for either Al Nassr, Al Hilal or Al Ittihad. It’s not often the Middle East loses a battle for a big name in sport – it has the money after all.
Messi’s eagerness to move to the MLS is not likely as obviously financially lucrative as that of the Saudi Arabian offer, so why would Messi choose the MLS over the Middle East, where other big name players like Cristiano Ronaldo have gone?
Firstly, to enjoy his football, as he said. I’ve never been to Miami or Saudi Arabia but there seems to be no doubt that Messi believes the former provides a better lifestyle.
Secondly, the answer is advertising and media dollars, and this is where it gets interesting for our industry. With the MLS salary cap rules, Messi is far from affordable for teams in the States, let alone the team that is currently stone cold last.
According to ESPN via The Miami Herald, “… it would be a “complicated” deal valued between US$125 million and US$150 million over the length of the contract, which it estimates to be 2.5 years in length, with an option year for 2026.
“The report states it would include salary, bonuses and equity in the team. Both Apple (the MLS broadcast partner) and Adidas (one of the league’s biggest sponsors) were offering profit-sharing agreements on merchandising and subscriptions to MLS Season Pass.”
In the MLS, players sign contracts with the league, not the individual teams, and, as mentioned, there is a salary cap which is relatively complicated. That means that other teams need to be kept in the loop on the deal and that there is no way Inter Miami alone could afford to attract Messi. Which means the deal with Adidas and Apple in particular becomes particularly important.
We are in the midst of an intense streaming platform war at the moment. The battle began on the TV series and movie front as well funded platforms fought to sign the best actors, directors and screenwriters to create content for their platform. Now it’s moved on to sport.
According to The Athletic, “…part of the deal also necessitates discussions with Apple regarding revenue share on new subscriptions for the MLS Season Pass service. A source briefed on the current negotiations said the Apple deal will be based on revenue driven by new international subscribers.”
Not a bad way to top up a superstar’s salary. Also not a bad way to attempt to gain new subscribers. Could it open up a new battleground for the streaming platforms? An international battleground where, once they have the rights to a league, they go after the global stars that will (hopefully) attract new audiences either locally or globally in an attempt to gain new and sticky paying subscribers?
How sticky could those subscribers be, though? Would Messi fans, for example, just pick up and leave the service if he decides the MLS, after all, is not for him long term?
Would you believe it, there are a few sports-mad fans in our industry not short of an opinion.
As one senior media buyer told me, “don’t believe the hype, it’s a false start. Perhaps internationally some of the big platforms can afford to do stunts like this, but not locally. Could you see Paramount profit sharing on new subscribers to try and bring (England captain) Harry Kane to the A-league later in his career? Not a chance. I doubt the profit would be much at all.
“Nothing against Harry Kane, but added to the relative obscurity of our local league, our time zone is absolute crap for the US and Europe and sports isn’t as fun when it’s not live. The economics don’t stack up.”
That exec went on to say that sadly not many other of our leagues, be it NRL, AFL, BBL, NBL etcetera, had large enough interest overseas to make a big signing worthwhile.
For example, Kayo trying to get an NFL start to convert to NRL in a reverse of the Jarryd Hayne San Francisco 49ers case? Doesn’t make sense at all.
Globally though, the consensus is that sport ownership and distribution is changing, and more deals like this will be seen.
Speed managing partner Ian Perrin said it most succinctly.
“Ownership is changing from traditional structures to sovereign governments and major investors. From the Saudi government to Todd Boehly to Ryan Reynolds and in this case David Beckham and the Mas brothers. They all have more money to spend, but also have bigger expectations for financial returns.
“Distribution is changing from traditional broadcasters to streaming services. From Amazon to YouTube and in this instance Apple, who have just inked a ten-year deal for the MLS. And similarly, their intent is to monetise the investment.”
Perrin also backed up the thoughts of many others I spoke to, perhaps in a more overt manner, when it came to the local market.
“So Messi’s move is very simply about money. For him. For David Beckham. For Apple. Will that be replicated in Australia? No, because the earning potential for a high profile owner isn’t big enough in our comparatively small market. And will they do it to help “grow the game”? Absolutely not, because it’s about money, not growing the game.”
For what it’s worth I did reach out to Paramount to see if they would ever entertain such a deal. Unsurprisingly there was no comment, and to be fair I can’t blame them.
But I said there was a caveat at the top. And it’s a pretty big caveat. The deal isn’t completed yet. Messi’s assertion that he wanted to join Inter Miami apparently even took the MLS by surprise.
We’re in for an interesting ride on a number of levels. Ownership and distribution is indeed changing significantly, and it’s going to affect the way brands work with sports and its stars in a big way.
The rest of the week
For a week that began with a public holiday, it’s been a pretty busy one of the media and marketing front.
Mumbrella was first with the news of the launch of the latest indie agency, Supermassive, which will be led by Laura Aldington, Simone Gupta and Jon Austin.
Aldington wrote on LinkedIn, “We’re also pretty stoked to be one of the first majority female-founded creative agencies in Australia.”
It came just a week after another trio launched a new agency.
It was also sad to hear that one of the leading executives in Australian PR, Michelle Hutton, would be moving on from Edelman. It comes after 13 years at the business with the new chapter beginning with an extended break. Very well deserved.
And on the media front the ABC dominated headlines with some questionable redundancies while The Guardian put its foot down on gambling advertising, something which we discussed on the Mumbrellacast.
I had specifically mentioned the industry needed to make a call on its stance. I didn’t think some of it would happen this quickly.
Signing off
Congratulations to all of the shortlisted entries in the Mumbrella Travel Marketing Awards. It’s great to see that industry really start to take off again, no pun intended.
Sadly no long weekend this time around so enjoy your two days.
Have your say