If there was one positive of that wretched time period for me in 2020-21 when the world was avoiding the SARS-CoV-2 virus that was the COVID pandemic, was it forced me to get a major crash course on how the world of business works. The best 3 hours of my morning was watching a show on Bloomberg Television called Surveillance, where hosts Jonathan Ferro, Tom Keane, and Lisa Abramowicz delivered the business news (the news that in one way or another does effect people of certain generations retirement more than others) in a way that everyday people could at least learn what they were talking about.
It wouldn’t take long before you would pick up on key buzzwords that would perk the ears up. Two of those words that first caught my attention were the words ‘downsize’ or ‘rightsize’. Whenever you saw those two words about an entity, you knew things were going poorly.
That brings us to yesterdays’ article published on World Soccer Talk, where the true details about the 2024 changes MLS announced to MLS Season Pass came to light. A net total of 10 people gone (18 not retained, 8 new people brought in), amongst the list of people not returning those who were critical of MLS and decisions made. Some of those who are back are only back because of pay cuts taken, with some of those pay cuts as much as 1/3rd of their salary from last year.
The ‘MLS-only crowd’ upon immediately seeing the article ran right into spin mode, the spin making the situation worse for them in the process. That spin, mentioned by multiple people in private were saying in unison ‘MLS is rightsizing the operation’. After 1 year, you don’t downsize/rightsize if the operation is going well. When things are going well you ramp up to make significant improvements. The decisions made for 2024 are a major net negative, with the Spanish MLS 360 product being the only positive to what they are doing in 2024. Production is more or less going to be the same with no improvements to it. At least games are still going to be in 1080 HD.
In business you only rightsize the operation when things are bleak. It doesn’t take a genius to figure out why things are bleak. For the $250 million per season Apple is paying MLS, Apple has yet to see a ROI. Sports Business Journal can bark about MLS Season Pass having over 2,000,000 subs, but the number of paying subs has yet to be made public. My working hypothesis is that the vast majority of that 2,000,000 are free via the T-Mobile and Metro PCS signup from last year. Even with the best case scenario where those 2 million were paying the $99 dollar annual rate Apple is still operating this rights agreement at a $52 million dollar annual loss. Take those free subscriptions out of the equation and that loss is significantly higher.
Here’s the damning indictment to all of this: Apple shareholders don’t have a clue how bad things are because this information is not discernible on Apple’s public filings. All these numbers being thrown around are only being done from the ‘MLS friendly journalist’ side of the equation. MLS isn’t mentioned on Apple’s investor calls, which is never a good sign. The lack of information from Apple is likely going to need to take an investor lawsuit to get that information. I will admit upfront this bit is purely speculative but I would not be surprised if the lack of information about this partnership from a publicly traded company doesn’t eventually find its way to the SEC for them to at least poke around why this information isn’t being reported out.
It’s been widely reported that Apple does have exit valves written into the contract. Seeing the production downsized, immediately followed by the spin mentioning rightsizing, gives me the impression that Apple is strongly considering those exit plans at least on the corporate level. I’ve said it since the beginning, Apple isn’t going to lose money for too long on a proposition before they wipe their hands of it and move on. They may get through this season, but I expect if Apple isn’t seeing a viable path by the end of the 2025 season where profit is possible Apple starts the process of exiting the contract. That is likely the reason MLS in private is using the term rightsizing because they know that option is well and truly on the table.
If Apple does exits MLS entirely, MLS needs to have their productions costs as cheap as possible. However, if Apple does leave MLS, all it will take is a call to Ligue Un to ask how easy it is to get a TV deal nowadays. MLS might have to take the entire operation in house and hope for the best.
Image credit goes to Unsplash.
Maybe Apple is in for a longer term.
With the World Cup coming and other soccer action happening in the U.,S. World Football will be very visible and that could/should bring more subscribers.
Indeed, the recent Apple earning call's lack of detail about AppleTV stands in sharp contrast to the previous call in November, 2023, when there was effusive mention of the MLS Season Pass, etc.
p.s. Thanks also for the good tip on the Bloomberg Television Surveillance series! I am going to look it up!