Half Time on the Messi Deal: Is It Blueprint for Growth or Just More of the Same?

Half Time on the Messi Deal: Is It Blueprint for Growth or Just More of the Same? ¹

“There will always be a before and after Messi when we talk about the sport in the United States.” — Inter Miami Managing Owner Jorge Mas.²

Lionel Messi is nearly halfway into his second season in the MLS and has already made a splash. Since joining the league in July 2023, he has played in 12 games, scored eight goals, and dished eight assists.³ And that’s not to mention his 10 goals in seven games during Inter Miami’s championship run during League’s Cup last summer, which do not count toward his MLS stats.⁴ Off the field, he has earned a lot of money for himself, the league, and its major partners. Amidst the excitement of the “greatest of all time” playing in the United States, however, there are several lingering questions about what this means for Major League Soccer (“MLS”) moving forward. Will the deal help the league become elite? Or, is this just another move by the MLS to bring in players in their twilight years, reinforcing the “retirement league” narrative? How can the MLS leverage the deal without stonewalling the growth of players who lack recognition and celebrity?

This article argues that the Messi deal is a blueprint for growth for the MLS. By leveraging its pre-existing deals with Apple, Adidas, and Fanatics, the MLS has built a creative mechanism to lure international stars, engage fans, and market the product, which will contribute significant growth. However, it is not all roses. The deal has shifted the national focus solely on Messi, which has made it harder for other potential stars to shine. The league will have to find ways to ensure that the rest of the league, both players and teams, are on board with the new vision. If the league is not able to do so, it may disincentivize the development of homegrown talent, and perhaps even discourage players from coming to the MLS. Furthermore, for this mechanism to work, the league needs to continue to aggressively search for international talent to combat the narrative that it is a retirement league.

This paper will first explain Messi’s contract terms and how it works within confines of the strict MLS roster rules. Then, it will detail the extraordinary growth that has resulted from the contract through the lens of each major entity. Finally, it will discuss the downsides of the deal and how MLS can navigate those hurdles to ensure the long-term growth of the league.

I. Messi’s Contract

Lionel Messi’s contract with Inter Miami is a two-and-a-half year deal worth an estimated $150 million dollars through a combination of his annual salary, signing bonus, and an option for future equity in the team.⁵ Here’s how that breaks down. As part of his Standard Player Contract (“SPK”), he receives a base salary of $12 million with a total guaranteed compensation of $20.5 million per season, which includes marketing bonuses.⁶ In addition to the SPK, Messi has separate revenue sharing agreements with Apple, Adidas, and Fanatics. With Apple, Messi has an undisclosed revenue share from new MLS Season Pass subscribers.⁷ With Adidas, since he already has signed a lifetime deal with the brand, he reportedly entered into an additional undisclosed profit-sharing deal for any increase in Adidas sales related to MLS.⁸ With Fanatics, the exclusive merchandise partner of the MLS, Messi reportedly has a similar revenue sharing agreement that is undisclosed.⁹

To put Messi’s deal in perspective, the second highest player in the MLS is Lorenzo Insigne of Toronto FC who earns $7.5 million per season, with a total guaranteed compensation of $15.4 million. ¹⁰ Number three on the list is Xherdan Shaqiri of the Chicago Fire who earns $6 million per year with a total guaranteed compensation of $8.153 million. ¹¹ Beyond that, only a handful of players are earning in the millions. ¹² None of these players participate in any revenue-sharing deals with partners beyond marketing deals via the MLS. In this sense, it seems that Messi has signed onto be more than just a player in the league, and instead a quasi-corporate partner.

II. The Deal in the Context of the CBA

The MLS, like other leagues, has a strict salary cap and scores of roster rules designed to ensure competitive balance in the league. The 2020-2027 MLS collective bargaining agreement (“CBA”) sets the Salary Budget for each year of the CBA.¹³ In 2024, the Salary Budget is $5.47 million dollars, with each year scaling upwards of about $400,000.¹⁴ The CBA permits each team to have up to 20 players on its Senior Roster with each of those players’ salaries counting against the Salary Budget.¹⁵

So how can Inter Miami pay Messi a base salary that is more than twice its entire Salary Budget for the year? The answer to that question is the Designated Player Rule. Effected in 2007 to allow the LA Galaxy to sign David Beckham ¹⁶, the Designated Player Rule permits each MLS club to designated up to three players as Designated Players (“DPs”).¹⁷ For these marquee players, the maximum Salary Budget Charge per player on the roster is a set rate determined by the CBA. In 2024, the figure is $612,500.¹⁸ In other words, of Messi’s $12 million annual salary, only $612,500 counts against Inter Miami’s Salary Budget of $5.47 million, or roughly 10% of the total. The purpose of this rule is to enable MLS clubs to attract international talent without upsetting competitive balance.

Since Beckham’s debut in the league as a Designated Player, numerous players have come into the league as DPs such as Zlatan Ibrahimovic, David Villa, Thierry Henry & more.¹⁹ In 2007, Beckham famously negotiated a deal that included a percentage of LA Galaxy’s total revenue.²⁰ Messi’s deal expanded upon Beckham’s by striking revenue-sharing agreements. This creativity may pave the way for future stars to do the same.

III. The Winners

The most obvious winner in this deal is Lionel Messi. In just over a year, the superstar has ingratiated himself to an American audience, put himself in a position to purchase an ownership stake in an MLS club, and availed himself to future opportunities in the US and beyond. Worth noting, however, is that he reportedly turned down a $1.5 billion – yes, billion—for a three-year deal with the Saudi League, where Cristiano Ronaldo recently signed. ²¹ By turning down such an enormous offer, it seems that Messi himself has bet big on the MLS and his ability to make an impact. It is likely Messi made a calculated decision that the life cycle of his deal with the MLS is not simply two and a half years, but something that could last for his lifetime. This bodes well for the future of the MLS.

The second winner of this deal is Apple. Over the past few years, Apple has begun to enter the world of sports and entertainment. In 2022, just before the Messi signing, the MLS signed a 10-year, $2.5 billion partnership with Apple.²² Messi’s arrival in Miami had an immediate impact on subscribers. According to the Wall Street Journal, “Apple TV+ [had] more than 110,000 MLS Season Pass signups the day of Messi’s Miami debut—a 1,690% bump from the previous day. It registered another 65,000 when Messi played his second game and scored two goals in the first 30 minutes.” ²³ This bump was not just a flash in the pan. According to Sports Business Journal, prior to Messi’s debut, Apple TV had around 1 million subscribers. By the end of the 2023 season, MLS Season Pass surpassed 2 million subscribers.²⁴ In a world where customer acquisition is everything, this is monumental growth. Apple may not necessarily be profiting directly from the deal yet. However, they too seem to be betting on the growth of soccer in the United States.

Likewise, the MLS has benefitted handily from the partnership with Apple. As with any sports league, TV rights are critical to building the brand, gaining exposure, and generating revenue. On top of the $250M a year it received from Apple, the MLS can earn additional revenue if Season Pass subscriptions surpass a certain threshold that has not been disclosed publicly.²⁵ MLS Commissioner Don Garber recently stated that once the threshold is reached, the league will receive “50 cents of every dollar” in additional subscription revenue.²⁶ Early reports suggest that the target is within reach.²⁷ By signing Messi, the league found a way to capitalize on star power via global distribution almost instantaneously. Notably, the Apple deal represents a paradigm shift in American sports as the MLS opted for a TV rights deal outside the traditional networks. Because the MLS has the youngest fan base by median age at just 37.4%²⁸, it makes sense that it opted to go for a globally distributed streaming partner instead of a traditional American TV network.

Adidas also stands to benefit from this deal. In 2023, the iconic soccer brand inked a six-year, $830 million deal with the MLS to extend their partnership through 2030. According to Forbes, Messi’s jersey became the most-sold jersey of the season within 45 minutes of its launch.²⁹ While this pace may be unsustainable, it underscores the immediate impact that Messi has had on one of the main revenue sources of the league.

Lastly, Inter Miami has also benefitted greatly from the deal. Immediately after signing Messi, ticket prices surged 1,700%.³⁰ The club has also seen enormous growth on social media. Prior to the Messi announcement, Inter Miami had 1 million Instagram followers. At the end of 2023, it boasted more than 8 million followers, which ranked fifth among American sports franchises; only a handful of NBA teams are ahead.³¹ Today, that number is 16.8 million and growing rapidly.³² Moreover, if Messi exercises his ownership option as anticipated, Messi’s cache and connections in the world of soccer could help them sign future marquee players to join the club. As a result, it is possible that Miami will continue to be a dominant force on and off the field, further driving engagement and revenue. Look no further than Suarez’s decision to join the team for the 2024 season.

IV. Lingering Questions Moving Forward

While there has been plenty of good, there are lingering questions about the negative effects of the Messi deal. First, there is likely no immediate impact on the rest of the players in the league with regards to compensation. Because the MLS rules regarding rosters are strict and the Salary Budget has been set through 2027, there is unlikely to be any realized impact on wages in the near term for non-marquee players. Thus, there is some tension between players and the MLS for facilitating a deal that benefits the league and its sponsors, but not necessarily the players themselves. In theory, when players are driving growth for the league in particular ways, the PA can use it as a bargaining chip when the CBA is up. However, this author could not find any example of the Player’s Association speaking publicly about the deal or how it might play in the context of negotiations. Further, there is no guarantee that Messi will even be in the MLS when the CBA expires.

Worth noting is that there is some correlative evidence that the Designated Player rules have led to growth of player salaries. In 2007, the minimum salary for reserve players was just $12,900.³³ By 2023, that number ballooned to $67,360.³⁴ This indicates that there is some truth to the adage rising tides lifts all boats.

The other critique levied at the MLS is that it is a retirement league for stars looking for a landing pad in their twilight years. Today, Messi is another member of this growing list of international soccer stars who have migrated to the MLS in their late 30s. For the MLS to truly overcome this charge, it may have to find ways to sign international stars at a younger age who will play on teams during their prime. Given the creativity inherent to the Messi deal, there is potential for the league to leverage it again to reel in a younger star. But the MLS cannot rest on its laurels. It needs to continue to push for new talent and plan for a post-Messi future, at least as a player.

V. Conclusion

The creativity inherent to the deal has provided the MLS with a blueprint to reel in international stars. Early indications suggest that the growth is real and sustainable, which will help drive revenue, engagement, and fans. Further, the deal appears to have moved the needle even more than the Beckham signing in 2007. Look no further than the social media growth at Inter Miami and the fact that Messi himself boasts over 502 million followers.³⁵ However, given the potential for tensions among the players and the retirement league criticism, the league and the PA need to ensure that players are being represented. One way to do that is to increase the salary cap and raise the reserve minimum. While this deal does not by itself transform the MLS into a league on par with the Premier League or Serie A, it has laid the foundation for growth for years to come. Further, this deal may also serve as a blueprint for other up-and-coming leagues like the WNBA, which has an influx of brand-new stars coming into the league.

Written by: Mitchell Parrish
Mitchell is a 2024 J.D. Candidate at Brooklyn Law School

Article Sources

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Half Time on the Messi Deal: Is It Blueprint for Growth or Just More of the Same?

I. Messi’s Contract

III. The Winners

V. Conclusion

Article Sources

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