CPL TV Contract

[red card]

13 minutes ago, KW519 said:

Why are there expansion fees? Does any league in the world other than MLS charge expansion fees? 

For a soccer forum, I find it a bit puzzling on the number of people terms of reference is how North American pro leagues operate rather than how the world's football leagues operate.

[KW519]

6 minutes ago, dyslexic nam said:

No, but that is usually under a pro/rel regime where teams start at the bottom and earn their way to the top.  In the absence of a pro/rel structure, it is hard to say if anyone can just pull up a chair and join the league, or if the kinds of investment we are seeing warrants some sort of fee.  If I was one of the 7 founding clubs taking the risk, and Ottawa approached wanting 1/8 the investment money (thereby reducing my share) after they have clearly and explicitly sat on the sidelines to avoid that risk, I might be annoyed if they got a free pass into the league.

I certainly understand your point of view and it's a difficult situation in Ottawa. But if a club like Oakvile Blue Devils gets enough financial backing to turn fully pro but has to play in USL 2 because they can't afford a 30 million expansion fee that would be a bad look and create that pay to play vibe MLS has 

[Unnamed Trialist]

If the tv contract projects a quantity of games that can only be fulfilled in function of a league of 12 or 14 clubs in the league, you cannot say that the rights paid only belong to the original clubs. The league has to manage this quantity contractually, I would say, in function of that projection. In other words, MediaPRO provides the service, the CPL complies by expanding. 

You cannot make an argument for founding clubs having an advantage over new clubs if those are terms. 

[dyslexic nam]

6 minutes ago, KW519 said:

I certainly understand your point of view and it's a difficult situation in Ottawa. But if a club like Oakvile Blue Devils gets enough financial backing to turn fully pro but has to play in USL 2 because they can't afford a 30 million expansion fee that would be a bad look and create that pay to play vibe MLS has 

Not sure where $30M comes from.  Even with the most generous interpretation of events so far, that seems way too high. 

Setting that aside, this issue may be the biggest indicator yet of the league's commitment to pro-rel.  If Oakville is allowed to joing without paying a fee, it would suggest a strong commitment to the model.

And even if there were no expansion fee, there would be mechanisms that would resolve the concern I raised.  Any revenue sharing agreement could be front loaded to benefit those willing to shoulder the risk of starting a new league (as it should IMO), or payouts from existing agreements could simply allow for preferential treatment of those at the table at the time the agreements were signed. 

Either way, I am sure league officials are aware of both the challenges presented by latecomers to the league, and the possible means to address them. One thing that has become crystal clear in the last few weeks is that the folks in charge of this league have a good handle on the business operations. 

[Unnamed Trialist]

1 minute ago, dyslexic nam said:

Not sure where $30M comes from.  Even with the most generous interpretation of events so far, that seems way too high. 

Setting that aside, this issue may be the biggest indicator yet of the league's commitment to pro-rel.  If Oakville is allowed to joing without paying a fee, it would suggest a strong commitment to the model.

And even if there were no expansion fee, there would be mechanisms that would resolve the concern I raised.  Any revenue sharing agreement could be front loaded to benefit those willing to shoulder the risk of starting a new league (as it should IMO), or payouts from existing agreements could simply allow for preferential treatment of those at the table at the time the agreements were signed. 

Either way, I am sure league officials are aware of both the challenges presented by latecomers to the league, and the possible means to address them. One thing that has become crystal clear in the last few weeks is that the folks in charge of this league have a good handle on the business operations. 

Yes, but in the interest of the league, no team arriving in 2020 should be considered latecomer. Or maybe not in 2021 either. That is not late, it is early.

Then, as I just argued: there is no basis to argue the tv rights deal should benefit existing clubs over those arriving in the near future, for a simple reason: the CPL has committed to expansion and if they don't, they don't fulfill the contract, which itself is hinged on a larger league with more games, ergo more fans and press, etc. 

I say simply waive all founder rights, or almost all. Every team has put seed money into the league and that can be maintained without going over the top, just slightly scale it to ensure the league can grow to 14 teams across the nation and give cities time to put their contributions together. 

[KW519]

9 minutes ago, dyslexic nam said:

Any revenue sharing agreement could be front loaded to benefit those willing to shoulder the risk of starting a new league (as it should IMO), or payouts from existing agreements could simply allow for preferential treatment of those at the table at the time the agreements were signed. 

I think this is the best way to handle new clubs entering the league moving forward. 

I'll add that in 10 years when the big money deal is up and a new one is signed all clubs should be on a level playing field in terms of revenue sharing. 

Edited February 21, 2019 by KW519

[dyslexic nam]

14 minutes ago, Unnamed Trialist said:

Yes, but in the interest of the league, no team arriving in 2020 should be considered latecomer. Or maybe not in 2021 either. That is not late, it is early.

Then, as I just argued: there is no basis to argue the tv rights deal should benefit existing clubs over those arriving in the near future, for a simple reason: the CPL has committed to expansion and if they don't, they don't fulfill the contract, which itself is hinged on a larger league with more games, ergo more fans and press, etc. 

I say simply waive all founder rights, or almost all. Every team has put seed money into the league and that can be maintained without going over the top, just slightly scale it to ensure the league can grow to 14 teams across the nation and give cities time to put their contributions together. 

Being committed to expansion and requiring a buy-in fee are not mutually exclusive.  Every North American pro league I am aware of is proof of that.  Not saying it is the right way to do it - just that being committed to expanding does not preclude that option.  We also don't know the details of the broadcasting contract, so we have no idea what obligations CPL has in terms of new teams, etc. 

And while joining in 2021 may still be reasonably considered as early, it in no way comparable to the level of risk that people took on when the league was still an idea.  In 2021 we will have had two solid seasons, all of the necessary contracts will have been secured, etc.  Again, if I am one of the owners who took on that risk in a very uncertain environment, I am not sure I would like the idea of a new tennant being given entirely equal footing when it comes to the revenue I helped secure.  Without getting in any way pissy about them, Ottawa is a perfect example of this.  Why should they get to walk into 1/8th the revenue streams that the other 7 teams secured as league founders, after they explicitly avoided taking on any of that risk and liability themselves.   That seems pretty unfair to me. 

[dyslexic nam]

19 minutes ago, KW519 said:

I think this is the best way to handle new clubs entering the league moving forward. 

I'll add that in 10 years when the big money deal is up and a new one is signed all clubs should be on a level playing field in terms of revenue sharing. 

I agree with that entirely.

[Guest]

1 hour ago, mpg_29 said:

Why do people keep bringing up expansion fees? I didn't think CPL was a franchise-based league...

An expansion fee does not necessarily make you a franchise-based league. It is the ability to sell the team to owners in a different location that effectively makes the league "franchise based". The league can have a buy-in fee but not allow clubs to be moved: in which case if you want to start a club in some other location, you must pay the buy-in fee to the league rather than re-locating an existing club. This model protects the fans from having their team pulled out from under them for the sake of $$$.

[Kent]

1 hour ago, red card said:

For a soccer forum, I find it a bit puzzling on the number of people terms of reference is how North American pro leagues operate rather than how the world's football leagues operate.

Well I think the reason for that could be that it's relatively rare for a soccer league (at least the ones people on this board are likely to follow) to expand. There is a difference between promotion/relegation and expansion. If a team promotes to the top level league, it's offset by a team being relegated out of it. So if your team were getting 1/20th of the sponsorship dollars before that pro/rel happened (and you are still in the top tier) you would continue to get 1/20th of the sponsorship dollars.

For the CPL we are talking about teams that at this moment are getting 1/7th of the pie in terms of sponsorship dollars, rights fees, etc. Then all of a sudden say 3 teams decide to walk into the league and all the teams are now getting 1/10th of the same pie.

Here we have a case where we have a partially vacant top tier, and a non-existent 2nd tier. I don't think it's unreasonable for there to be some sort of a fee to offset the fact that you are reducing other team's revenue (in the immediate term) by entering the league.

I don't really know anything about the A League, but apparently they require "license fees".

From here: https://www.smh.com.au/sport/soccer/a-league-expansion-date-set-but-how-will-ffa-spend-expected-windfall-20181122-p50hqd.html

"A minimum licence fee of approximately $13 million has been required of each bid to cover the operating costs of an A-League club over the next four years – the period of the current TV rights deal – and ensure existing clubs won't have their annual grants reduced."

[Kent]

One more thing that I meant to point out earlier. For the people thinking it's bad that the CPL is tied down to a 10 year contract, this is a good thing for 2 reasons.

1. It deepens MediaPro's commitment to the league. If it was for a year or 3, they might do kind of the minimal effort and cross their fingers. But a 10 year commitment means they are all in on this and are betting hard that they can help make this league succeed.

2. It means that if/when there is a dip in interest in the league after a few years, the existence of this deal can weather that storm. Instead of having the contract end when perhaps we are in a bit of a lull and then we end up with no deal, or a worse deal.

For examples of a lull we don't have to look that far back to see MLS history. In year 1 the average attendance in the league was 17,406. the very next year it was down to 14,619, and it got lower in year 3, and year 4, and again in year 5 when it hit a low of 13,756. If say it was a 5 year deal and they see attendance is decreasing every single year, they might want to bail. Then in year 7 MLS shed 2 teams. After year 10 the league had averaged more than 15k fans per game in 2 straight years, after only achieving 15k in 2 of the previous 8 seasons. So it looked like it was rebounding at that point. CPL's 10 year deal can help weather that kind of a storm.

[Unnamed Trialist]

1 hour ago, dyslexic nam said:

Being committed to expansion and requiring a buy-in fee are not mutually exclusive.  Every North American pro league I am aware of is proof of that.  Not saying it is the right way to do it - just that being committed to expanding does not preclude that option.  We also don't know the details of the broadcasting contract, so we have no idea what obligations CPL has in terms of new teams, etc. 

And while joining in 2021 may still be reasonably considered as early, it in no way comparable to the level of risk that people took on when the league was still an idea.  In 2021 we will have had two solid seasons, all of the necessary contracts will have been secured, etc.  Again, if I am one of the owners who took on that risk in a very uncertain environment, I am not sure I would like the idea of a new tennant being given entirely equal footing when it comes to the revenue I helped secure.  Without getting in any way pissy about them, Ottawa is a perfect example of this.  Why should they get to walk into 1/8th the revenue streams that the other 7 teams secured as league founders, after they explicitly avoided taking on any of that risk and liability themselves.   That seems pretty unfair to me. 

Ok, but that is being extremely short-sighted. To the point of not understanding what you need to reach your objectives. A seven-team league is a shit league anyway you look at it, it is a joke. It is like being born with one leg. So what are we talking about: a one-leg league sitting there complaining about how the other leg wasn't there at the start, when it had to limp around on its own?

I think CPL is not as tunnel-visioned as that.

You are also forgetting the motive for the league, the key priority, is to give pro chances to Canadian players and give live pro soccer to communities across the country, inspiring kids everywhere. With all those new and updated stadiums that will be legacy for the next 30-40 years. For me, it is better to most definitely welcome Fury or anyone else with open arms, but of course the terms clear and the rules for everyone set out and adhered to. 

[Initial B]

Late to the party, but here's my take:

The CPL now has a guaranteed revenue stream for the next decade. Regardless whether they are leaving money on the table or not, this provides the stability and planning to ensure that the league will still be around in 10 years, at which point hopefully it will have taken root in the national consciousness and survive the growing pains that have killed every single Canadian attempt that has come before it. For once I'm really hopeful for the future.

[Ams1984]

34 minutes ago, Initial B said:

Late to the party, but here's my take:

The CPL now has a guaranteed revenue stream for the next decade. Regardless whether they are leaving money on the table or not, this provides the stability and planning to ensure that the league will still be around in 10 years, at which point hopefully it will have taken root in the national consciousness and survive the growing pains that have killed every single Canadian attempt that has come before it. For once I'm really hopeful for the future.

Very true. 

[dyslexic nam]

2 hours ago, Unnamed Trialist said:

Ok, but that is being extremely short-sighted. To the point of not understanding what you need to reach your objectives. A seven-team league is a shit league anyway you look at it, it is a joke. It is like being born with one leg. So what are we talking about: a one-leg league sitting there complaining about how the other leg wasn't there at the start, when it had to limp around on its own?

I think CPL is not as tunnel-visioned as that.

You are also forgetting the motive for the league, the key priority, is to give pro chances to Canadian players and give live pro soccer to communities across the country, inspiring kids everywhere. With all those new and updated stadiums that will be legacy for the next 30-40 years. For me, it is better to most definitely welcome Fury or anyone else with open arms, but of course the terms clear and the rules for everyone set out and adhered to. 

That may be the vision for the league in terms of the broader soccer community, but the teams that essentially constitute that league are owned by business people that generally aren't purely altruistic.  Giving away money - to other business people who didn't accept the same level of risk - is not really in the playbook.  

[Unnamed Trialist]

38 minutes ago, dyslexic nam said:

That may be the vision for the league in terms of the broader soccer community, but the teams that essentially constitute that league are owned by business people that generally aren't purely altruistic.  Giving away money - to other business people who didn't accept the same level of risk - is not really in the playbook.  

It's not their money, it's managed by CSB and signed with both the league and includes the NTs and L10 Ontario. But I realise you are stating a standard argument, I just hope they don't go that way. 

But hey, if they want to take it and sniff it all down for themselves cause they got to the party first, all we'll get is a bunch of guys with white powder on their faces, thumbing their deviated septums at all others who did not get in early like they did. 

Edited February 22, 2019 by Unnamed Trialist

[CDNFootballer]

19 minutes ago, Unnamed Trialist said:

It's not their money, it's managed by CSB and signed with both the league and includes the NTs and L10 Ontario. But I realise you are stating a standard argument, I just hope they don't go that way. 

But hey, if they want to take it and sniff it all down for themselves cause they got to the party first, all we'll get is a bunch of guys with white powder on their faces, thumbing their deviated septums at all others who did not get in early like they did. 

CSB is owned by the CPL's club owners who are also CSB's directors and was created purposefully for the CPL owners.

[matty]

weird unpopular thought. i want those guys at canadaland to do a podcast on this and have someone with more know than anyone here to explain what's likely at play here to jessie, who would maybe be a sit in for us by asking dumb things and throwing out his stupid ideas. i'd also be curious to know the impact a foreign investor might have controlling this sort of canadian content.

Edited February 22, 2019 by matty

[SthMelbRed]

Anyone that is advocating for new clubs to be gifted a 1/8, 1/10, or 1/16 ownership stake in both CanPL and CSB at no cost seriously need their heads examining.

CanPL and CSB are owned by the (currently) 7 founding clubs.

Let's say, hypothetically, that CanPL (the league entity) is valued at $14m and CSB is also valued at $14m. In that scenario, each of the 7 founding clubs own $4m worth of shares. If Ottawa Fury come in as team 8 in 2020, the value of each team's stake drops from $4m to $3.5m. In this scenario, the minimum amount that Ottawa Fury should be coughing up on entry is £3.5m just to pay for their ownership stake in the two companies. That's before you start factoring in the dilution of each existing member's share of the annual TV deal.

It's certainly in the interests of the existing clubs to set the entry fee at a fair level that addresses the above matters of simple arithmetic, but doesn't act as too severe an impediment to the new partners' viability. I'd suggest that a $10m entry fee, with a phasing in period for the sharing of league-generated revenues, for Ottawa Fury in 2020 would be a fair deal for all involved.

[Unnamed Trialist]

6 minutes ago, SthMelbRed said:

Anyone that is advocating for new clubs to be gifted a 1/8, 1/10, or 1/16 ownership stake in both CanPL and CSB at no cost seriously need their heads examining.

CanPL and CSB are owned by the (currently) 7 founding clubs.

Let's say, hypothetically, that CanPL (the league entity) is valued at $14m and CSB is also valued at $14m. In that scenario, each of the 7 founding clubs own $4m worth of shares. If Ottawa Fury come in as team 8 in 2020, the value of each team's stake drops from $4m to $3.5m. In this scenario, the minimum amount that Ottawa Fury should be coughing up on entry is £3.5m just to pay for their ownership stake in the two companies. That's before you start factoring in the dilution of each existing member's share of the annual TV deal.

It's certainly in the interests of the existing clubs to set the entry fee at a fair level that addresses the above matters of simple arithmetic, but doesn't act as too severe an impediment to the new partners' viability. I'd suggest that a $10m entry fee, with a phasing in period for the sharing of league-generated revenues, for Ottawa Fury in 2020 would be a fair deal for all involved.

With all due respects, I think people are losing sight of why this league was founded, and why we are here. 

Reducing the argument to these sort of AMERICAN shareholder models, when the league has social and sporting motivations and all parties should understand that expansion is essential, is a direct path to failure. To me, if they work in this narrow-minded way, and lack the basic nous to understand what building a market is, it will fail--and it will be our fault.

[SthMelbRed]

^So, what you're saying, Mr Marx, is that you don't believe in private ownership of property?*

*this is a joke, and I'm generally pretty left of centre...definitely not a Trumpian fascist. :-D

[Copes]

I've spent two days processing the TV deal. Initially I didn't know what to think. As more information has come out I'm more and more okay with this. 

The biggest reason I deem this good, as others have pointed out, is that it kind of gives the CPL runway, and a minimum life expectancy. A company like MediaPro isn't going to toss away this investment. Given that we have the World Cup in 2026, there will be a lot of content outside of just the CPL that they can avail of. Further, with the buildup and ultimate climax of 2026, attention on soccer in this country will likely be higher than ever before. I very much see this transitioning into strong support, and therefore a strong opportunity to renegotiate, come 2029. 

As an entrepreneur myself though, the early years of any new venture are so varied and so crazy that paying later for short-term stability is very often a great idea. That's how I look at this deal - in the early years when growth will be the focus, CPL has consistent revenue they can count on, and a partner they can point to in order to demonstrate the success they are having. This will be massive for growing the league, and it also means they can focus on the actual management of their teams, bringing in new clubs, etc. while MediaPro handles getting the product in front of eyeballs. MediaPro has more experience with this too. So that's a plus. 

Lastly, I think this deal removes any concern about content quality. I for one am now very excited to watch the CPL, as I'm not worried about shaky low-definition content. 

I think this is a smart move for the league's first decade, and I think it nullifies a significant amount of early risk. I commend this signing, and although I'm eager to learn HOW I will watch, I'm very comfortable with the fact that I'll be able to!

[Unnamed Trialist]

3 hours ago, SthMelbRed said:

^So, what you're saying, Mr Marx, is that you don't believe in private ownership of property?*

*this is a joke, and I'm generally pretty left of centre...definitely not a Trumpian fascist. ?

It's okay, I can talk about all political positions, but with people who have something to say.  I am not Marxist by the way, I am closer to Bakunin, so take that where you will!

We have to remember that the whole point is to avoid a solely monetized business model with the bottom line as the dominant objective. We also have to remember that the structure as conceived is not yet complete. I made the one leg argument before, we could call it a big house with the roof missing, or a large freighter with no ballast, I don't care: don't start to get greedy too soon, and start thinking any newcomers have to pay through the teeth, because they are the ones who will help finish the roof; or balance the ship. You need them as much as they need you. 

The objective is primarily social (sporting survival) and it uses solid finances to ensure that. 

Even then, it is incorrect to argue the value is solely in the league. For example,  new public (or mixed) investment is involved, in at least 3 cases clearly, and then I am not sure about Edmonton. And will be needed for all further additions, except in fact Fury as I see it (or getting a team in Mosaic in Regina). So you cannot ignore public stakeholders spending public money, who want the league to survive and thrive to properly justify the expenditures being made. If the tv deal means Laval gets a new stadium, or Saskatoon, or one is built in Kelowna, that means we are using it to drive major infrastructure in the benefit of Canadian soccer for the next 30-40 years. That is what I defend as the logical economic model, because the more teams we have, the more hedges in the case of individual cases of financial failure. 

[dyslexic nam]

14 minutes ago, Unnamed Trialist said:

It's okay, I can talk about all political positions, but with people who have something to say.  I am not Marxist by the way, I am closer to Bakunin, so take that where you will!

We have to remember that the whole point is to avoid a solely monetized business model with the bottom line as the dominant objective. We also have to remember that the structure as conceived is not yet complete. I made the one leg argument before, we could call it a big house with the roof missing, or a large freighter with no ballast, I don't care: don't start to get greedy too soon, and start thinking any newcomers have to pay through the teeth, because they are the ones who will help finish the roof; or balance the ship. You need them as much as they need you. 

The objective is primarily social (sporting survival) and it uses solid finances to ensure that. 

Even then, it is incorrect to argue the value is solely in the league. For example,  new public (or mixed) investment is involved, in at least 3 cases clearly, and then I am not sure about Edmonton. And will be needed for all further additions, except in fact Fury as I see it (or getting a team in Mosaic in Regina). So you cannot ignore public stakeholders spending public money, who want the league to survive and thrive to properly justify the expenditures being made. If the tv deal means Laval gets a new stadium, or Saskatoon, or one is built in Kelowna, that means we are using it to drive major infrastructure in the benefit of Canadian soccer for the next 30-40 years. That is what I defend as the logical economic model, because the more teams we have, the more hedges in the case of individual cases of financial failure. 

Geez - I haven't heard of anyone claiming to be closer to Bakunin since my philosophy days.  Studied Godwin, Proudhon, Kropotkin and Bakunin.  Been a long time since I have heard reference to any of them.  Kropotkin seems to get some airplay since the idea of mutual aid modifies some of Darwin's thinking, but there is usually no love for the classical anarchists.

 

[Unnamed Trialist]

4 minutes ago, dyslexic nam said:

Geez - I haven't heard of anyone claiming to be closer to Bakunin since my philosophy days.  Studied Godwin, Proudhon, Kropotkin and Bakunin.  Been a long time since I have heard reference to any of them.  Kropotkin seems to get some airplay since the idea of mutual aid modifies some of Darwin's thinking, but there is usually no love for the classical anarchists.

The most important compiler and editor of classic anarchist texts in English is in fact Canadian (using the pseudonym Robert Graham), and Canada also has some leading publishers. There are some interesting young academics in universities, one who is actually quite funny and engaging is geographer Simon Springer at U Vic.

But culturally, you are correct, Canada is not particularly responsive to anarchist thinking or practice of any substance, at least not any more.

The reason this is on topic is that the owner of MediaPRO still has leanings in favour of positions that are clearly anti-system, which is odd considering most young radicals now rich business people seriously adjust to the right.