In a move that has sent shockwaves through the world of sports, Lionel Messi, the Argentine forward, is expected to sign with Inter Miami, as the New York Times reported. The deal is unique, offering Messi a percentage of the subscription revenue generated by additional Apple TV+ subscriptions and a share of the increase in merchandise sales of Adidas apparel. This new and highly innovative approach to player contracts, which directly ties an athlete’s earnings to the commercial success of their team and its partners, is a game-changer in the realm of sports contracts.
The Inter Miami deal is obviously, in part, a testament to Messi’s global appeal and the commercial potential he brings. His move to Major League Soccer (MLS) is expected to boost the league’s visibility worldwide. This unique contract structure is a win-win for all parties involved, as it aligns Messi’s financial incentives with the commercial objectives of Inter Miami and its partners.
Lionel Messi’s deal with Inter Miami also represents a significant milestone in the evolution of sports contracts. By incorporating revenue-sharing elements tied to the team’s and its partners’ success, Messi’s contract reflects the growing recognition of athletes as key drivers of commercial success. This innovative approach opens up new possibilities for athletes to maximize their earnings while aligning their incentives with the goals of teams and sponsors.
This type of agreement, though unique, is not entirely unprecedented. In recent years, there have been similar types of agreements between teams, leagues, sponsors, and athletes. For instance, the Women’s National Basketball Association (WNBA) and the Women’s National Basketball Players Association (WNBPA) reached a groundbreaking eight-year Collective Bargaining Agreement in 2020. That deal included significant increases in player cash compensation and benefits, with a 53 percent increase in total cash compensation, consisting of base salary, additional performance bonuses, prize pools for newly created in-season competitions, and league and team marketing deals.
Moreover, the recent changes in Name, Image, and Likeness (NIL) laws in collegiate sports have opened up new opportunities for athletes to profit from their personal brands. These changes have led to discussions about whether professional sports leagues or teams can sign NIL deals with college athletes. While the legal landscape surrounding NIL agreements continues to develop, it is clear that the traditional model of player contracts is being challenged and reimagined. The Messi deal is thus, just the tip of the iceberg.
To provide some rationale and deeper understanding, one really needs to understand the relationships in place between MLS, Apple, and Adidas that are all primarily based on sponsorship, licensing, and promotional partnership agreements. Apple and MLS have a partnership centered around streaming rights, with Apple TV+ becoming the exclusive home for all MLS matches while Adidas is all about uniforms, equipment and visibility.
Apple TV+ has created a new revenue stream for the league, and Messi’s global popularity is likely to attract a significant number of new subscribers to Apple TV+, thereby increasing the revenue generated from this source. The deal is reportedly worth $2.5 billion, with Apple paying MLS $250 million annually. This partnership is expected to help MLS connect with a younger demographic and expand its audience. Messi, with his global appeal, and Apple with it’s global reach can deliver that. So Messi, is clearly capitalizing on that combination. As part of Messi’s reported contract, he is expected to receive a percentage of the subscription revenue generated by additional Apple TV+ subscriptions.
Now let’s look at Adidas. To put it bluntly, Adidas wants to kick Nike to the sidelines and with a league wide relationship, and now the Wayne Gretzky, Ted Williams or Tom Brady of soccer, they have the star to start doing just that once again, as not since Pele has there been a futbol star with the global recognition like Messi brings to any brand.
Adidas also has a long-standing relationship with MLS dating back to the league’s inception in 1996. In 2023, Adidas and MLS renewed their partnership, extending it through 2030. The deal is valued at $830 million and represents Adidas’ largest-ever investment in North American soccer. Under the terms of the agreement, Adidas continues to supply the league with branded apparel, footwear, training gear, and the official match ball. With more exposure on Apple TV, that means more youth soccer players will be bought Messi jersey’s for their birthdays also adding to the value he’s bringing to the table for Adidas and the MLS.
Similarly to the Apple+ portion of Messi’s contract, Adidas’ deal with MLS, has also influenced Messi’s contract. Given Messi’s status as one of the world’s most popular and successful soccer players, his move to Inter Miami is likely to drive a significant increase in merchandise sales. From that, Messi is expected to receive a share of the increase in Adidas merchandise sales. By tying a portion of Messi’s compensation to the rise in Adidas merchandise sales, the contract aligns the interests of the player and the sponsor, further solidifying the mutually beneficial nature of the agreement.
The groundbreaking nature of Messi’s contract will extend beyond the realm of soccer. It reflects a broader trend in the sports industry, where player contracts are evolving to incorporate innovative approaches and adapt to changing market dynamics. The Women’s National Basketball Association’s groundbreaking Collective Bargaining Agreement and the evolving landscape of Name, Image, and Likeness laws in collegiate sports demonstrate the ongoing transformation of player contracts across various disciplines.
As the sports landscape continues to shift, we will likely see more contracts structured similarly to Messi’s. The success of these innovative agreements will depend on the ability to strike a balance between athlete compensation and the commercial objectives of teams and sponsors. This new era in sports contracts really marks a new game-changing approach towards a more collaborative and mutually beneficial relationship between athletes and the entities they represent.
So as sports contracts continue to evolve, we can expect to see further experimentation with new models that reshape the relationship between athletes and the sports industry as a whole.