MLS rejected $4 billion media rights deal requiring promotion/relegation

Major League Soccer rejected a $4 billion global media rights deal from international media company MP & Silva, as reported by the Sports Business Journal.

The offer, which would have quadrupled the annual rate of MLS' current deal, came with the significant contingency that MLS would have to institute a system of promotion and relegation.

The proposed deal would have run for 10 years starting in 2023, after the current deal with ESPN, Fox and Univision expires.

Those broadcasters have "exclusive negotiating windows and renewal rights," MLS said in a statement Monday, and thus the league would be unable to consider Silva's offer, no matter the terms.

"As was stated to [MP & Silva Group's founding partner Riccardo] Silva both in person and in a subsequent letter, Major League Soccer is prohibited contractually from engaging in discussions about our media rights with other distributors," said Dan Courtemanche, MLS executive vice president of communications.

"We are not in a position, nor are we interested, in engaging with Mr. Silva on his proposal."

Silva, as the co-owner of Miami FC of the second-tier NASL, has a vested interest in seeing promotion and relegation added to the United States, given that MLS is taking steps toward officially awarding a new team in Miami to a group led by David Beckham.

Without promotion and relegation, Silva's Miami FC has no route to join MLS in the top flight. An attempt to reach Silva through Miami FC was unsuccessful.

According to the SBJ, Silva made a presentation to MLS executives and owners on June 26. At that meeting, Silva offered to pay $4 billion for MLS' worldwide media rights, including the U.S. and Canada, at which point MP & Silva would sell on those rights around the world.

Courtemanche also rejected the concept of a third-party intermediary in media deals.

"It is also important to note that since its inception, MLS, like the other North American leagues, has dealt directly with its domestic broadcast partners, rather than through agents and brokers," the statement continued. "This ensures that the league and its partners can structure an agreement that addresses all elements, such as scheduling, marketing and digital distribution, that are required for a successful partnership."

Given that the U.S. Soccer Federation has sanctioned two leagues -- the NASL and the USL -- with Division II status, it's unclear exactly how a system of promotion and relegation would work, but generally speaking, if the proposal were accepted, after every season, the worst teams in MLS would be relegated to either the NASL or the USL, while the best teams from those leagues would move up to MLS.

The insistence on instituting a system of promotion and relegation is also a nonstarter with MLS. Commissioner Don Garber has long stated that such a system would not be considered.

MLS is currently engaged in its latest round of expansion and is asking for expansion fees of $150 million. It's almost certain that either demand would dry up or the fee would be significantly reduced if an expansion candidate were told that it could be relegated to a lower league, be it the NASL or the USL.

Beyond Beckham's Miami team, MLS' current expansion plans call for two expansion teams to be awarded this year, with two more to follow, bringing the league to an eventual 28 teams, which would be the largest top division in the world.

Beckham exercised his MLS option for an expansion team in 2014, more than a year before Silva founded Miami FC, and the former star player is finally making progress on building a stadium after years of delays. Miami FC plays at Florida International's football stadium, which in April was renamed after Silva.