Lionel Messi’s MLS Compensation Still a Mystery to Many League Owners – Sportico.com

Here’s something I know: Lionel Messi joining MLS is a watershed moment for the league. He’s perhaps the world’s most famous athlete, and the business impacts will be immediate.

Here’s something I don’t know: How to weigh that fact with the unprecedented pay package that Inter Miami, MLS and its commercial partners are ready to lay at Messi’s golden left foot.

The 36-year-old striker will formally join Inter Miami CF later this week, and is set to enter a series of contracts that we’ve never before seen in major U.S. sports. Not only will Messi be the highest-paid player in league history, he’s also negotiating an equity option in Inter Miami, plus the ability to share in the economics via the league’s broadcast and apparel partnerships.

I’m not the only one wondering about the details. MLS owners are also trying to figure it out. In the past few weeks I’ve spoken with a handful of owners, all of whom said they’ve been kept in the dark about the Messi talks. Some expressed frustration over the league’s lack of transparency, particularly regarding how the unique compensation might affect the economics of their own teams.

“It’s fun to think about all the ways this could transform the league,” said one owner, who was granted anonymity because the matter is private. “But how do I know if I like the deal when I don’t know what’s in the deal?”

This is a uniquely MLS issue. The New York Jets have no expectation to know the player contract negotiations of the Dallas Cowboys, but Major League Soccer’s unique structure and the unprecedented nature of Messi’s pay package make his signing something of a league-wide affair.

MLS was built as a single entity, meaning the league centrally owns all the teams and all the player contracts. It largely operates akin to other major leagues, but at times the league can take a heavy-handed approach to rules changes and big player signings. The Messi saga highlights both the benefits and the pitfalls of that system—the league can pull many levers to get Messi into an Inter Miami jersey, and owners can gripe about being left out of that decision-making.

Much of the confusion stems from how Messi might share in the league’s new media partnership with Apple. The 10-year deal carries a headline value of $2.5 billion, but that’s just a guaranteed minimum. The league receives an average of $250 million per year, and if the Season Pass product passes certain sales metrics, Apple and MLS have agreed to share the additional upside. 

Is Messi’s portion coming out of the minimum guarantee? Or will it come from the league’s share in the upside? Or maybe from Apple’s? MLS teams don’t know. There’s also confusion over whether Messi’s share will be for global sales, non-domestic sales, or sales from specific countries, such as Spain or his native Argentina.

“We’re all wondering the same,” another owner told me.

None of the owners and executives, who were granted anonymity because league matters are private, said they’d received any direct indication from the league that their share of the minimum guarantees in the Apple deal would be affected. An MLS representative declined to comment; an Apple spokeswoman didn’t return an email seeking comment.

Messi is on the verge of signing a 2 ½-year deal with Inter Miami that will be worth about $150 million in salary and equity options, Sportico reported last month. That cost, according to people familiar with the plan, will be paid in full by the club, co-owned by Jorge Mas, Jose Mas and David Beckham.

Even that number, however, contains some mystery. Is equity a majority of it? A minority? And what’s the valuation?

Regardless, no one has more at stake in the Messi experiment than Inter Miami, which is willing to shatter the record salary for a “designated player” in order to lure Messi to MLS. It’s a calculated risk that a record contract—and a chunk of equity—will pay for itself in new business.

The early returns are good. Inter Miami tickets are selling quickly (though there appear to be hundreds of face value seats available for Messi’s debut next week). The team, currently sitting in last place, just announced a new sleeve sponsor at a hefty fee increase, and the club’s Instagram following is up nearly 10x, eclipsing the following of every NFL team.

The benefits will likely extend to other teams as well, and not just when Messi comes to town. His arrival will boost viewership and sales of Apple’s Season Pass product, increase sales in the MLS shop and likely lead to more league-wide sponsorships. Even a portion of tickets sold in Miami are distributed across the league as part of MLS revenue sharing.

Because of that, some owners and executives aren’t concerned about the specifics of Messi’s Apple agreement, because they view the added sales as found money. “As long as I don’t go backwards, I’m not concerned in any way if he’s sharing in upside that he’s driving,” one team executive told me. “Because it likely wouldn’t be there without him.”

Messi’s side deal with Adidas is expected to be executed directly between the player and the sportswear giant, according to people briefed on the current plan. Messi already has a lifetime agreement with Adidas, and while official Inter Miami gear isn’t yet available, the company is already selling some pink-toned Messi/Miami garb without MLS marks. The Germany company is looking to grow its North American business, and is expected to grant Messi a share of Inter Miami jerseys sales out of its own cut, without impacting payments owed to the league. A spokesman for Adidas declined to comment.

Messi is also in talks with Fanatics about a separate agreement with the league’s official ecommerce and fan gear partner, according to multiple people familiar with the negotiations. It’s also unclear how that deal might be structured.

In my conversations over the last few weeks, some owners voiced concerns that Messi’s contract might impact their own capital calls, or set a precedent for other players to push for deals that involve similar (but smaller) equity options.

Those worries seem overblown. In 2007, MLS took the unprecedented step of giving Beckham a contract that included the right to purchase an expansion franchise at a discounted rate. In the 16 years since, no MLS player has received anything similar.

Owners are expected to be briefed on the Messi negotiations next week when they gather in Washington, D.C., ahead of the league’s All-Star Game. Even then, however, owners aren’t sure how many details will be shared, because it’s unclear when all the agreements will be final.

Here’s something we do know: Two days later, Messi will make his Inter Miami debut. And MLS won’t be the same.