Major League Soccer rejected a $4 billion global media rights deal from international media company MP & Silva, as reported by the Sports Business Journal.
The offer, which would have quadrupled the annual rate of MLS's current deal, comes with the significant contingency that MLS would have to institute a system of promotion and relegation.
The proposed deal would have run for 10 years starting in 2023, after the current deal with ESPN, Fox, and Univision expires.
Those broadcasters have "exclusive negotiating windows and renewal rights," MLS said in a statement on Monday, and thus the league would be unable to consider Silva's offer, no matter the terms.
"As was stated to Mr. Silva both in person and in a subsequent letter, Major League Soccer is prohibited contractually from engaging in discussions about our media rights with other distributors," said Dan Courtemanche, MLS executive vice president of communications.
"We are not in a position, nor are we interested, in engaging with Mr. Silva on his proposal."
MP & Silva Group's founding partner Riccardo Silva, as the co-owner of Miami FC of the second-tier NASL, has an invested interest in seeing a pro/rel system added to the United States, since MLS is taking steps toward a long-awaited move to award a team in Miami to a group led by David Beckham.
Without promotion and relegation, Silva's Miami FC has no route to join MLS in the top flight.
According to the SBJ, Silva made a presentation to MLS executives and owners on June 26. At that meeting, Silva offered to pay $4 billion for MLS's worldwide media rights, including the U.S. and Canada, at which point MP & Silva would sell on those rights around the world.
Courtemanche also rejected the concept of a third-party intermediary in media deals.
"It is also important to note that since its inception, MLS, like the other North American leagues, has dealt directly with its domestic broadcast partners, rather than through agents and brokers," the statement continued. "This ensures that the league and its partners can structure an agreement that addresses all elements, such as scheduling, marketing and digital distribution, that are required for a successful partnership."
An attempt to reach Silva through Miami FC was unsuccessful.
Given that the U.S. Soccer Federation has sanctioned two leagues -- the NASL and the USL -- with Division II status, it's unclear exactly how a system of promotion and relegation would work, but generally speaking, if the proposal was accepted, then after every season, the worst teams in MLS would be relegated to either the NASL or the USL while the best teams from those leagues would move up to MLS.
The insistence on instituting a system of promotion and relegation is also a non-starter with MLS. Commissioner Don Garber has long stated that such a system would not be considered.
MLS is currently engaged in its latest round of expansion, and is asking for expansion fees of $150 million. It's almost certain that either demand would dry up or the fee would be significantly reduced if an expansion candidate were told that it could be relegated to a lower league, be it the NASL or the USL.
http://www.espnfc.us/major-league-soccer/story/3164144/mls-rejected-$4-billion-media-rights-deal-that-hinged-on-promotion-and-relegation
