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MLS commissioner Don Garber said that he expects the league to take a $1 billion revenue hit due to the impact of the coronavirus pandemic.
Speaking on a video conference call with reporters, Garber said that the main reason for the decrease is that MLS, unlike other North American sports leagues, is heavily reliant on game-day revenues.
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“Major League Soccer will take a billion dollar revenue hit due to the pandemic,” Garber said. “And that’s a function of lost revenue that regardless of what we’re able to do, is going to be nearly impossible to to generate at the levels that we need.
“When we lose the ability to sell tickets and we lose the ability to have any hospitality and other game day stadium revenues … today that is on hold. And we really don’t know what it’s going to look like, going forward.
“But I think it speaks to the desire of our ownership to continue to be courageous and to continue to believe in a league and, frankly, I think it represents on our part of this belief that this pandemic is going to end at some point.”
That has led to the league looking to cut costs anywhere it could. Garber spoke of how MLS has adjusted its budgets, both at the league level and at the club level.
“We were able to literally cut hundreds of millions of dollars of spending. We went through salary adjustments at the league level and at the club level, both at the staff executive side and on the technical side.”
The league then set its sights on player compensation. MLS reached an agreement with the MLS Players Association on Wednesday that included economic concessions by the players for 2020 as well as modified terms for the Collective Bargaining Agreement. The framework of the CBA was agreed to last February, but not ratified by either side until Wednesday.
The concessions by players included a five percent pay cut on an annual basis, a cap on bonuses of $5m as well as changes to a revenue sharing agreement. A force majeure clause was also added to the CBA, and the terms of the deal was extended by one year until Jan. 31, 2026.
The negotiations were tense at times, with the league threatening a lockout if players didn’t accept their latest offer. Garber said the decision to do that was his alone, and marked the first time in the league’s history it had engaged in such a tactic, at least publicly. Whether it pushed the two sides towards an agreement is debatable, but a deal did get done.
“I think so many times, labor negotiations are framed when they’re over [in terms of] winners and losers,” he said. “The winner here is this league is going to go forward.
“And the players are going to be able to have security for five years there regardless of the impact on revenue associated with just a recession, or fans decide they don’t want to go to games, or sponsors decide that they no longer, because of the impact on their businesses, going to spend at those levels. We have locked in our spending through 2025.”