Shwetha Surendran, ESPNJul 11, 2023, 7:00 a.m. ET
CloseShwetha Surendran is an ESPN-American University investigative fellow in ESPN’s corporate and investigative unit.
When seven-time Ballon d’Or winner Lionel Messi announced he was leaving for the US to start his MLS career, the “Messi effect” was immediate. Inter Miami CF’s social media following exploded, ticket prices skyrocketed, and upcoming fixtures sold out. And all before he even signed the contract.
Ahhh, the contract. As leagues and clubs begin discussing the specifics of Messi joining Inter Miami following the expiration of his PSG contract on June 30, questions have been raised as to how one formulates a deal that compensates for that leverage. Will simply offering money be enough to woo the second-placed player in 2023 Forbes list highest paid athlete in the world at $130 million?
What else can you bring to the table? Miami and MLS’s answer seems to be bringing league partners into the mix.
The deal, unique in its structure, raises interesting questions about revenue sharing for superstar athletes and the cascading impact on media rights negotiations.
Based on Sport, Messi’s 2½ year deal with Inter Miami “is worth a total of up to $150 million in salary, signing bonus and equity in the team.” Sources confirmed to ESPN’s Jeff Carlisle that the option for partial ownership of Inter Miami will not be as subsidized as it was in 2007 for David Beckham, who was able to buy the MLS team for a discounted $25 million.
But that’s not all. In addition, revenue-sharing agreements with Adidas, Apple and others are currently being negotiated. Here are some key questions and answers about Messi’s “unprecedented” MLS deal and what it means for others.
Lionel Messi, the 36-year-old Argentinian star, will join Inter Miami later this month. VCG/VCG via Getty Images
Why are we talking about Messi’s Inter Miami contract?
Contract talks are usually boring talks unless you have the 36-year-old Argentinian soccer legend accompanying him. And this one does.
While the multi-million dollar salary side of contracts is stale news in modern football, revenue-sharing agreements with league partners offer something new. An industry expert called Apple’s part of the deal “unprecedented”. Others call it “unusual.”
The deal has never been given to anyone in baseball, basketball, football, and it is very unique, said Irwin Kishner, co-chair of the Sports Law Group. “This is kind of generational, and it’s hard to think if you’ve ever seen anything comparable.”
ESPN confirmed that part of the ongoing discussions is a cut in revenue from new subscribers to Apple TV’s MLS Season Pass streaming service. The subscription service on Apple TV+ was launched earlier this year when Apple and MLS kicked off a decade-long $2.5 billion media rights partnership.
“I actually think significantly that’s what it is [Messi] deal on customer acquisition,” said John Kosner, president of Kosner Media, digital media and sports consulting. “Customer acquisition is probably the biggest issue in sports and sports media today.”
Apple currently holds exclusive worldwide rights to every MLS game, and the season pass also features English and Spanish speaking broadcast crews. “This [Messi’s arrival] is what will get them noticed and expand their international reach,” said Ed Desser, President of Desser Media Inc. “That kind of thing is really exciting for a global company like Apple.”
A similar profit-sharing – reminiscent of Air Jordan’s Nike-Michael Jordan deal – is said to be in discussion with Adidas, the league’s official supplier and the player’s own longtime sponsor. How much of that increase, if any, Messi will get is still unknown. Any deal between Messi and Adidas will be strictly between the player and the company and will not involve MLS directly, ESPN confirmed in a previous report.
Ernesto Bruce, CEO For Soccer and former Adidas senior director of football, likened this deal to the “evolution” of Beckham’s contract when he signed for LA Galaxy in 2007. “David Beckham was a huge catalyst when he came on,” he said. “He had a deal with Major League Soccer, he had a deal with LA Galaxy, and he also had a partnership with Adidas while I was there. It was a revolutionary moment because part of that deal was having a future stake in an undisclosed MLS team .”
That MLS team eventually became Inter Miami, of which Beckham co-owners with brothers Jorge and Jose Mas. Now, Bruce compares Messi’s contract and presence in MLS to an “accelerator”.
What does this deal mean for other star athlete contracts in the future?
MLS, a relatively young and innovative league, and Messi, one of the greats of sport, are uniquely positioned assets in their own way as parties to a deal within this sphere. In the upper echelons of sporting legend, few have the same impact as the man from Rosario.
In the NBA, one could argue, what about Steph Curry? LeBron James? Would Messi’s potential profit-sharing deal inspire something similar for them?
“That’s really going to set off a few alarms,” said the former NBA agent. “For the right players and the right player agents, if they have individuals who can really move the needle — so Giannis Antetokounmpos world, Nikola Jokics world, Joel Embiids world, they’re going to look at this in the next collective bargaining and say, ‘Listen, the players control the league,'” he said.
But even with NBA star power, it may not be enough to match Lionel Andrés Messi Cuccitini. “I don’t think they have Messi’s level of power,” Kishner said. “There is a global reach, but not like Messi has.”
Just like on the pitch, Messi is in a league of his own at the negotiating table, his influence matched only by a select few ultra-elite. The Argentinian has the third highest following on Instagram — 478 million — behind only the social network itself and fellow soccer star Cristiano Ronaldo, who has 596 million followers.
However, there may be other ways to creatively approach such negotiations. “What I’ve learned over the years in licensing, there’s such a thing as ‘licensing’ — because you can cut the cake,” says Cara Lustik, branding and licensing expert.
Lustik explained that while not every athlete can match Messi’s scope of influence in securing revenue-sharing agreements, cutting the subscription model into smaller segments in certain regions could benefit other athletes. “There are so many leagues that could use an extra eyeball, and to do that, the easiest way is to take advantage of the talent that has it, and everyone wins,” he said.
Other leagues that might take notice? NWSL, says Bruce. “The US leads soccer in the women’s game,” she said. “So how is the NWSL adapting to this?”
What about Apple, MLS, and the harbinger of the future of live sports programming?
The streaming giant wants a bit of live sports programming and in recent years, they’ve been chomping at it. Amazon’s Prime Video features “Thursday Night Football” from the NFL. Apple TV+ partners with Major League Baseball to stream games. Google’s YouTube TV is now home to NFL Sunday Pass, and you can add an Apple TV+ MLS deal to the growing list.
Research by Parks Associatesa consulting and market research firm, points out that “annual sports OTT subscription revenue in the United States will be $13.1 billion in 2022 and will nearly double to an estimated $22.6 billion in 2027.”
Eric Sorensen, senior contributing analyst at Parks Associates, attributes this change to the pandemic and the need for a more immersive experience for sports fans. “Online sports, on streaming services, is much more interesting from the interactive feature set, from the opportunities and the ability to place bets and bets, statistics and data and integration that appears on the screen,” he said.
But it’s not all doom and gloom for the traditional broadcaster. Kosner, a former executive vice president of ESPN, insists that tech companies aren’t media companies first. “I think we’re going to see a different ramification of rights really based on the interests and priorities of these bidders, including traditional companies as well as the viewing habits of sports fans,” he said.
The available choices and competition for live sports programming set the stage perfectly as the NBA’s $2.66 billion-a-year deal with Disney and Warner Bros. Discovery ended after the 2024-25 season.
“I don’t think the NBA could have planned it any better,” said Desser, the former chief negotiator for all NBA and WNBA national media agreements. “A combination of different parties trying things for the first time and seeing what can happen will benefit the NBA.”
Who is the real winner in this deal?
Umm, so far… everything?
Messi, Inter Miami, MLS and all their league partners turned up in great form. And while the Saudi Pro League may have missed the chance to sign one of its best, the footballer still has a $25 million public partnership with the country, according to a New York Times Report. The only ones missing are the Barcelona faithful, whose hopes of a Messi return may have to wait a few more years.
And while the terms of the entire deal remain undisclosed, one thing is certain: Messi at 36 years old is still Messi.
You only need to check out the latest clips from the recent friendly internationals between Argentina and Australia. It’s the 33rd minute of the game, and Messi – tenacious, unbothered, with the ball glued to his left foot – glides between the back four like a player in his prime. And soon enough, that talent will be on full display in the US, when he is expected to make his club debut on July 21 against Cruz Azul in the League Cup.
As Inter Miami co-owner Jorge Mas told the Miami Herald, “I think there will always be before and after Messi when we talk about sports in the United States.”