WILLIAMS: What does Apple’s deal with the MLS mean for the future of Big 12 television deals?

What has been bubbling under the surface for years took a significant step towards becoming a reality this week.

Apple made a blockbuster deal with Major League Soccer. The agreement will reportedly pay MLS $250 million per year and includes the tech giant streaming every game throughout the season. 

MLS made history by becoming the first major American sport to push its chips all-in on digital. 

One gets the feeling Apple is only beginning to flex its financial muscle. 

From 2015-2021, MLS was pulling in approximately $115 million in rights fees with partners in ABC/ESPN, FOX, Univision and TSN (in Canada). This tallies a more-than 100 percent increase in media revenue for the growing MLS, which disappointingly AVERAGED under 300,000 viewers per contest on cable (some higher, some lower) in 2021. 

Notably, the MLS Cup game between Portland and New York locked in 1.14 million viewers on Dec. 11, 2021. The game was on network television (ABC) and was the fifth highest-rated MLS game ever on the Disney family of Networks.

For comparison, the following college football games tallied the following ratings last season:

National title game (Alabama and Georgia): 22.563 million
Cheez-It Bowl (Iowa State vs. Clemson): 4.902 million
Iowa vs. Iowa State: 3.890 million
Iowa State vs. Kansas State: 608,000 
Iowa State vs. Oklahoma State: 2.659 million

My mind is on the upcoming Big 12 television contract, where I will once again hammer home that times are changing in the world of college athletics. Texas and Oklahoma are leaving the Big 12, but the demand for live sports has never been higher, which could ultimately save the league’s financial future.

Check this out: In 2021, Apple reportedly made around a billion dollars a day! The Big 12 just distributed less money per school ($40.6 million) for the 2022 year than Apple makes every hour ($41 million)!

Now compare the market caps of the companies that will be bidding on future college rights packages (Note that these are approximate and significantly lower than where they would have been a few months ago prior to the bear market we are currently in.).

Apple market cap: 2.12 trillion
Amazon market cap: 1.05 trillion
Disney market cap: 172.11 billion
Time Warner (Turner) market cap: 79.54 billion
Netflix market cap: 77.01 billion 
FOX market cap: 17.38 billion 
Viacom (CBS) market cap: 15.84 billion 

Apple’s market cap is more than 10 times larger than that of Disney, which includes all of its movies and theme parks! It’s incredible. 

Apple has methodically been getting into the sports game for a while now. It recently signed a seven-year contract with Major League Baseball for 350 Friday night games over the course of that time (for a reported $600 million). 

Amazon is about to make a splash via the NFL and Thursday night games this season on Prime. 

There are strong rumblings about Apple scooping up the NFL Sunday Ticket and Amazon getting the NBA’s League Pass.

It feels like we are in the first inning of big tech’s hostile takeover of sports broadcasting as we know it.

I’m not here to write ESPN’s obituary. There is a lot of value in America’s first all-sports network and the brand it has established over the course of decades. But with cable and satellite subscriptions (ESPN’s traditional cash cow) dropping by the day, you have to wonder how the worldwide leader will react to so much more competition in the space. 

Apple’s business model with MLS, along with what ESPN has done with ESPN+, gives us a hint as to how this could go for the Big 12.

Apple TV will reportedly offer a soccer subscription to MLS fans. It’s the same model as what ESPN does with its app, say with the UFC, the NHL and Big 12 Now (how you are already watching nearly half of Iowa State’s men’s basketball games). 

Struggling Netflix is a great example of why the money will be there. Its stock was trading in the high 600’s in October of 2021. Netflix’s stock price has fallen 71 percent since that time. And what are the analysts saying? To get into live sports and create what the industry calls “sticky” subscribers. 

There is significant value in fan bases of the new Big 12 buying up subs for a second or third-tier deal with a streaming company, while still giving tier-one rights to a FOX or ESPN (to stay traditional, with network reach for your top games). 

There was a lot of angst when Texas and Oklahoma decided to bounce last summer. But I’m really excited about where all of this is heading. If the new Big 12 is going to thrive financially in the future, it is critical for the tech companies to get in the game, put pressure on ESPN/FOX, or bid on the league themselves.

All signs point to the above happening just in the nick of time.