4 more years, both Major League Soccer and US Soccer extend deals today.
by denz on Aug 30, 2010 7:09 PM MDT
Email
PrintOK, I am going to get a bunch of hate from this but I love one deal and hate the other and I am probably the minority on both. Let's start with the news that was so impressive that MLS waited until SBJ published the news before they said anything:
Two weeks ago, Adidas CEO Herbert Hainer flew to Boston from Germany and joined Nilsson and David Baxter, Adidas America 's head of sport performance, for a meeting with Garber and Kathy Carter, Soccer United Marketing's executive vice president. What was supposed to be a two-hour meeting became a six-hour renegotiation session that resulted in the new deal.
Isn't it strange that such a super deal wasn't news two weeks ago when the deal was made? I am sorry but why exactly would MLS agree to extend a deal that had almost half of the deal left? I hear about players in other sports holding out for a new deal to get more money, but no indication that this was the case, so a deal that wasn't going to end until 2014 was done in a closed door meeting at least two years before any extension had to be done. Adidas claims it needs two years to design and produce MLS kits? Really, I thought they just took the old designs of other teams and applied new colors to them, or at least that is what it looks like in most cases.
I have stated for a long time that I think having "the Don" in charge of both MLS, and of SUM leads to conflicts of interest, and I think this is a classic case of that. Oh yeah the new deal will pay MLS 66% more than the current deal, but consider the real facts behind the new 8 year, 200 million dollar deal.
Consider the facts that when MLS signed the original 10 year deal in 2004 that MLS was a struggling league, and that getting some type of money into the coffers was an important step. However let's look at what has happened since then, sales of MLS merchandise have climbed 600% to over 300 million a year, there are now more teams in the league with more to come. So MLS has sold the rights to 2.4 billion dollars for less than 10% of the cut, and did so without any open bids? How exactly is this a great deal as some have proclaimed it? How much would the sale of MLS merchandise be if Adidas did more than just "mail it in"? How much would Nike have paid for the exclusive rights to MLS, and all the MLS related youth programs?
If the cost to buy a new franchise has changed from $10 million to $40 million in just 5 years, so why is it that the merchandise deal is only going up by 66%? I am sorry because I am a huge Adidas fan, in fact the only other soccer gear I buy is USMNT Nike gear, everything else is Adidas, and yes even with their lack of vision or creativity I buy a ton of stuff. I can only imagine what I would buy if Adidas had offered MLS half the variety that Nike had for US Soccer this year?
More after the jump:
So MLS Soccer announced the deal today after SBJ published the details in their online edition, and I thought of the vague statement on mlssoccer.com, that this was the most telling sign of what was really at the core of this:
In line with other recent initiatives by MLS, such as "Generation Adidas" and the newly expanded homegrown player rule, the new Adidas-MLS extension includes a specific focus on youth development. The major aim of this focus, according to league and corporate officials, is to help shape the future of the sport in North America. That future looks increasingly bright, as the game continues to progress, with increasing interest in the World Cup and the growth of MLS to 19 teams by 2012.
See this isn't just about the 300 million dollars a year in MLS gear that is sold, this is about getting Adidas into the youth ranks of soccer in the US. With an estimated 20,000 kids going to be involved in the MLS academy system at some level, that is a really nice market to secure now and for the future, and what better way to get themselves ingrained into the youth systems than to get a deal like this?
We all know that MLS is growing, and Adidas sat down at a table and offered up some cash and in what I believe to be typical "the Don" fashion he grabbed the money.
Now let me let you all in on another issue I have with this deal, it limits the choices and options of the clubs. Oh I know some of you are going to tell me that RSL begged for "Victory Gold" and Seattle pleaded with Adidas until they got "Electricity Yellow". Some of you clearly think that every team in MLS just made the choice to have the exact same designs for their scarfs this year:
The only two who benefited from this is Adidas, cause it is so easy when you have a forced contract with teams to simply tell them this is what you get and of course Ruffneck Scarves, who at least offer some variety.
I believe just like the teams have gone out and found jersey sponsors, well at least the clubs who have some level of engaged ownership who gets the sport and put some effort into it. That allowing each team the right to find a partner for their kits and merchandise would be a great thing for the teams that care enough to go out and get a great partner and for the fans who would then have some type of variety in what they are offered.
No instead we will get 8 more years of very mediocre products and selection and yes, I along with a lot of other fans will buy the stuff because we support our teams. But unlike past years, I have limited the amount of RSL Adidas gear I have bought this year and most of the time I have waited for deals to be offered, because the quality and variety simply haven't been there for the last 18 months.
OK, I will jump off that bandwagon, but trust me I will have plenty more to say about it as we see the product catalogs for 2011 that I imagine will offer us more cookie cutter options.
So this afternoon US Soccer announced that they had signed a 4 year extension of Bob Bradley's contract as the coach of US Soccer. I asked a few weeks ago, if not Bob then who? and in typical fashion most people offered up nothing for options. We all know about Jürgen Klinsmann, and I think he would have been spectacular as the head of US Soccer, but he wasn't going to settle for just being coach here, he didn't want to play the political game that comes along with it.
Oh there are a couple other names out there, but far too many people failed to see what Bob had accomplished in his 4 years. Most people want to look at the 38-21-8 and think the US could do better, and I agree but we played a much higher level of competition over the last 4 years than in the past. We won the Gold Cup in 2007, and almost won it in 2009 with a "C" squad for the USMNT, we won CONCACAF for the first time in ages, we won our group in the World Cup for the first time in 80 years, we made it to the final of the Confederations Cup (and almost won the final against Brazil).
Now I know that there have been a good number of mistakes made along the way, and I am sure Bob will be the first to admit it. So would you rather have a coach who is learning from those mistakes, or one who is brand new and most likely would make a number of the same ones over again.
I like the deal, I actually like Bob and while I may not agree with a lot of his decisions, I do think that he is a good coach who will get better over the next 4 years.
OK, feel free to offer up your opinions, I know that most of you will disagree with me on a lot of these issues and you have the right to do so.
OFF MY SOAPBOX
6 comments
|
0 recs |
Do you like this story?
Comments
My opinion...
Is that this is a good move. Consistency is key right now. I think Bradley has learned a lot and will continue to grow. And with this move, I believe the U.S. will advance deeper in the next World Cup.
For sure
I think that Bradley has done a great job. 4 years ago, if someone told us that the USMNT would be able to accomplish all that it has, I think very few people would have believed it. The fact that people are calling for Bradley’s head is perplexing, to say the least.
You seem to be suggesting...
That adidas keeps 100 percent of jersey sales. I can’t imagine that’s correct. I’m sure MLS keeps a huge chunk, the teams get another a chunk and adidas probably gets whatever is left over. If I’m wrong, I can definitely understand the argument over why this is a bad deal. As far as I know, though, adidas just bought the right to product kits not necessarily resell them.
Read me at Sounder at Heart and Dreaming of Wigan
Not at all
Clothing manufactures don’t get 100% of the profits, not in any market but clothing and the type of merchandise that Adidas provides to MLS are huge markup items, you really don’t think it costs them 70 bucks to have some kid in a 3rd world country make a jersey do you? Clothing is one of the more lucrative profit industries, with wholesale margins usually around 50-60%, and another 20%-30% on the retail end, I would love to see the actual costs of the products Adidas is offering to MLS. Because I know that I can order hats at wholesale for about 3-4 dollar, they are sold in our team stores for 20. Scarves can be ordered in quantity for $4-5 bucks but they charge $35 in the team stores for them. I have to believe that with the quantities that Adidas orders of these items that the costs are probably half of what I can find the products for at wholesale.
Adidas will again be the primary company that designs and produces the jerseys, most t-shirts, hats, jackets, and other merchandise. Stop in your team store and take a look at how much of the merchandise is made by Adidas, it will be about 80%. They do sell that merchandise both as a wholesaler and as a retailer (they carry it their retail stores as well as online), now they make much more when they sell it themselves vs. the wholesale role but both produce good markup and margins for them.
Remember that this deal goes beyond just merchandise as also gets a ton of free advertising as an official partner, but one of my major issues is that it forces our teams to buy their products, which limits the ability for them to negotiate for themselves. This simply drives down the creative and quality aspects of the products, while it drives the prices up, I can live with the prices as all of the leagues usually charge artificially high prices for their products, but after seeing the collective catalog of what Adidas offered to the team the creativity and quality were severely lacking as they took a very “template” drive approach to every team in the league.
I think you're missing my point
I’m not questioning whether there’s a markup, that’s obvious, it’s what portion of profits adidas keeps as opposed to MLS. You seem to suggest that a jersey sold equals only money in the pocket of adidas. I think adidas has simply bought the right to produce kits, not necessarily keep all the profits from them.
Read me at Sounder at Heart and Dreaming of Wigan
by Jeremiah Oshan on Aug 31, 2010 3:03 PM MDT up reply actions
They get 100% of the profits they get from
Selling merchandise to MLS and teams at the wholesale price that they charge them, same as anything they sell at wholesale to any business. They get to keep 100% of the profits from anything that they sell directly to the public, either in their stores or via their website.
I expect that MLS gets a fairly competitive deal on what they purchase from Adidas, but make no mistake they do not pay the cost of the product, there is a great deal of markup. Based on my limited retail experience the markup from manufacturer to wholesaler is usually quite high on clothing, and the margin from wholesaler to retail is again a hefty one, and finally the margin from retail to customer is again a big chunk of change.
So let’s start in reverse, if a scarf is sold at retail for $30 dollars to a customer (we can only guess what MLS pays for this item but since most teams offer 20-25% season ticket discounts (specials up to 40%) we can deduct that they may be paying $10-15 dollars for the item), which give retail their typical 75-100% markup on clothing related items.
So if Adidas sold the scarf to the league or team store for $12.50 (I split it down the middle), we know that you can order buy them in 1.000 qty for about $4.00 a pop from wholesalers/manufactures and I have to believe that Adidas pays less than that. So let’s say they pay $3.00 for each one that they have made either direct costs or when they purchase them from the company that makes them for them. So that would mean they would make at least $9.00 per item, that they sell to MLS, team stores. Even if they sell the to the teams and others at $10.00 each, that would mean a likely profit of at least $7.00 per item, or more.
So no I don’ t think they make close to 100%, of the profits but they do control a vast majority of the items that MLS and their team stores sell, they control a majority of the 300 million in annual MLS merchandise sales. They control their costs even more when they use their “cookie cutter” templates on products, which is something we have seen them doing more and more over the last couple years.
I just believe if we have teams making 2 million a year for a sponsor to put their name on a jersey, how can we accept a deal that if you average it out (200 million for 8 years = 25 million per year) 25 million for 19 teams or 1.3 million per team per year for the rights to control the majority of the 300 million dollars a year in annual MLS gear sales. I would think big market teams that sell more gear would be very upset that they are getting a fairly small slice of a very large pie. I also have to question that others (Nike, Puma, Kappa, Umbro, ???) wouldn’t be willing to offer more than that if they were allowed to negotiate with with individual teams.
Comments For This Post Are Closed
Secondary Sidebar
User Tools
FanPosts
Community blog posts and discussion.
Certain photos copyright © 2012 by Associated Press or Getty Images. Any commercial use or distribution without the express written consent of Associated Press and Getty Images is strictly prohibited.
