Canadian Soccer Business (CSB), the Canadian football’s business arm, signed last week an agreement with Spanish Group MEDIAPRO. @GrupoMEDIAPRO will invest $200 millions and acquire the national and international media rights for the Canadian Premier League (CanPL), the Womens and Mens national teams (women and men), and League1 Ontario (L1O) for the next 10 years. I think that this is a fairly good agreement, which will influence Fury FC’s future decisions towards joining the CanPL.

Production

The often less understood, but most important aspect which MEDIAPRO brings to CanPL is production. MEDIAPRO produces 16 football leagues worldwide, including LaLiga (Spain) and, starting next year, Ligue 1 (France). The group also produces documentaries, such as Six Dreams, offered on Amazon Prime Video.

MEDIAPRO announced from the outset that football is in their DNA, that they ‘breathe the sport’. They truly are a world leader in football production. As such, they will not only produce CanPL games to distribute them on their own but also potentially sell them to traditional broadcasters. On the production side, they will bring quality, technology introduced in LaLiga (such as the 360° videos), the ‘European Feel’, and live stats and analysis (the CanPL data provider is yet to be announced). You can see the MEDIAPRO video sales pitch on CanPL’s website by clicking on this link.

Fury FC and some clubs do their own production, which is cheaper than what USL Production offers. USL Productions is a standalone division of the League, in association with VISTA WorldLink. The current Fury TV production (and of the USL) is directly done by USL Productions, a standalone division of the League, in association with VISTA WorldLink. This production is then sold to national broadcasters (ESPN) and for certain teams, local broadcasters. The production quality is not bad, considering USL stadiums varied sizes and functions. This quality is enhanced when the games are on ESPN, as they are presented on HD, which is also the  not the case on YouTube. Judge by yourself on the YouTube quality:

USL Productions has invested US$10 millions for productions, MEDIAPRO has the potential to bring higher quality production. We have to be careful and consider the size and state of some CanPL stadiums that will undoubtely affect production quality. We will have to see the results to judge, but at this time, on the production aspect, the advantage is to the CanPL’s anticipated production quality.

Broadcasting and Exposure

USL (Championship and now LeagueOne) games are all streamed on ESPN+, a service which also includes MLS, Serie A, the English Football League (not the Premier League), FA Cup, Scottish Premier League, the Dutch Eredivisie, the Australian A-League, and many other leagues. The broadcasting agreement also includes broadcasting of some games on ESPN cable channels, normally at least once a week, ‘the match of the week’. In 2019, Fury FC will not feature in any match of the week on ESPN cable channels.

Certain clubs also have agreements with local broadcasters. In Canada and elsewhere, USL is streamed free of charge on YouTube. Fury’s exposure is good through the partnership with ESPN, but it is focused towards the American market. Only dedicated fans watch Fury and USL on YouTube. Fury FC games are also broadcasted on Ottawa radio, in French and English.

Under the agreement with CanPL, MEDIAPRO will initially offer a subscription-based streaming service on multiple platforms that will be in place for the start of the season or soon thereafter. This will apparently include a ‘Canadian Soccer Channel’, offered 24/7, that will show matches, but also documentaries and other products around the game, similar to what MEDIAPRO does with LaLigaTV. As of now, there are no announced national or local broadcasters, although MEDIAPRO said that many are interested.

Although Fury benefits from a nice exposure across the world through YouTube and ESPN+, this exposure is truly focused on the United States. MEDIAPRO offers the opportunity of specialized broadcasting/streaming, and larger audience broadcasting, if there is an agreement with broadcasters. MEDIAPRO also confirmed that its new channel in France will offer some Ligue 1 and Ligue 2 games, but also the CanPL starting in 2020.

Despite that deals with Canadian broadcasters have not been struck, the MEDIAPRO deal is enticing due to the potential for larger Canadian and international markets penetration and exposure.

Broadcasting services, even online, have the potential to yield better ticketing success through increased exposure. This is an angle that MEDIAPRO said they have done with the Spanish Women’s Football League. Again, because of potential exposure and market penetration, the advantage is to the CanPL.  This is probably the most important aspect, as it also may grow rapidly.

And the financial aspect?

Let’s be frank: we don’t have much facts. MEDIAPRO announced they will invest $200 millions over 10 years. What we don’t know, and will probably never know, is share of direct royalties for the CanPL via CSB through this deal, or indirectly through the resell of broadcasting rights and the apportionment of advertisement revenue. There is a rumour saying the CanPL may get $15 millions per year, but this is not factual nor confirmed information.

In addition, CSB will likely manage those royalties and their redistribution not only to CanPL, but also to Soccer Canada and L1O. CanPL, although probably the largest, will not be the sole beneficiary of this deal.

The numbers we have seen are nice, but are not a large amount compared to other leagues. The MLS (through Soccer United Marketing (SUM), CSB’s equivalent) receives an average of US$3.75 millions per team per year through broadcasting rights. The Australian A-League broadcast deal is estimated at CA$54 millions $CA per year for their 10 teams, also including the rights for the National Womens and Mens teams. A Polish ‘average’ team (Lech Poznan in the Ekstraklasa First Division) received CA$4.5 millions in broadcasting/media rights in 2016/17.

Despite all of this, the deal between MEDIAPRO and CSB is an interesting amount, and especially for a start-up. It is clearly more than the Indian Super League, where teams get NO broadcast revenue because all rights belong to India Star, a league co-owner.

We don’t know what Fury FC gets from the deal between USL and ESPN. Speculation fixes ESPN+ revenues between US$50 and 100 millions per year. There are however no numbers on rights revenues flowing from ESPN to the USL. It is however difficult to believe, from a business point of view, that there is no revenue for the USL, even if the league is an ESPN minor partner.

In terms of revenues from media rights, there is a very limited amount of available factual information. I think at this point that the advantage may be to CanPL, just because clear investment numbers have been shared.

This said, the agreement is over 10 years, providing the CanPL with revenue stability. However, this could rapidly be undervalued if the CanPL increases its value. We also have to note that the potential revenue per team may decrease with the arrival of new teams.  This is an important business aspect to consider over the long-term.

There are other revenues!

Sports’ teams revenues come generally from four main sources: media rights, transfers (for soccer), matchday revenue, and corporate revenues. The last two include ticketing, sponsorship and licensing (apparel and equipment) revenues. Media rights are usually the largest revenue source, but teams must diversify their revenues sources to be financially successful.

We know for example that USL teams receive an average of US$300,000 from licensing agreements, which is not an insignificant amount.  And we don’t know what Fury gets from sponsorships and ticketing.

But we still don’t have an idea on how much CanPL teams will get from sponsorship deals, notably from the agreement with Volkswagen, nor from licensing, ticketing, or other corporate revenue sources.

In Ottawa’s specific case, we also have to see the revenue issue in terms of the larger Ottawa Sports and Entertainment Group (OSEG) operation. OSEG has other teams, the stadium and the Landsdowne district. Revenues (and expenses) hence have different streams. Before 2017, OSEG had a large operating deficit, despite a revenue increase (due to the Grey Cup expenses mostly). That deficit was expected to disappear, mainly due to the full operation of Lansdowne’s business and entertainment district. Numbers past 2017 are unfortunately not available. We know however that OSEG has invested $15-million CAD in Fury FC, which includes the start-up costs, franchise fees for both the NASL and USL, and overall operating losses.

So What?

At this point, I think that the media rights agreements is a turning point in Fury FC (and OSEG) future decisions. The creation of a dedicated Canadian Soccer Channel, with all-around programming beyond game broadcasting is enticing. The deal, beyond direct revenues, will increase the national and international CanPL exposure, which may increase indirect revenues, notably from ticketing.

Fury FC and OSEG, when they needed to make a decision in 2018, had no confirmation of the deals that CSB is now confirming and signing for the CanPL, although they may have had information on negotiations.

Uncertainty is not a good business partner, but as this uncertainty reduces with the signing of firm and stable deals, the environment may change for Fury FC and OSEG.

The club may soon realize that the best option is to join the league that provide them not only with the best sport challenge, but mainly with the best business opportunities and the potential for increasing revenue and create a certain level of profit, or at least break even.

The CanPL media rights deal is certainly a step in the right direction from a business standpoint, but it is not the sole factor, and other revenue sources must be considered by Fury FC as part of a full package. These factors are not public and we can only be certain of one thing: Fury FC will make the business decision which brings the most stability over the long-term.

The CanPL seems to be on the right way, with CSB, to build a viable, stable, and durable Canadian soccer economy on all aspects. I firmly believe at this point, with the information at hand, that upcoming Fury and OSEG decisions will be easier this year, than in the midst of uncertainty from last year, due to the deals made by CSB and the CanPL.