MLS: SuperDraft

Jermain Defoe and Michael Bradley stunned world football in coming to Toronto FC in MLS. It’s like, totally happening guys! MLS has “arrived” (no it hasn’t, that doesn’t mean anything).

Except whenever things go relatively well (at least in appearances) for MLS in terms of big name(ish) transfers, an old, smelly debate resurfaces: should MLS go mental and blow up single-entity so that clubs can’t spend whatever the hell they want to attract the world’s best players? Not only that, should it introduce promotion and relegation to North American soccer to punish the weak and reward the strong?

The problem with this kind of “debate” (beyond the endless time consuming and soul-immolating back and forth) is that it rarely follows a coherent framework, on both sides of the divide.

For example, some backers of the current single-entity model in MLS (it’s too exhausting to explain single-entity again, so just read this and come back after) attack promotion and relegation as a system in its own right, rather than focusing on whether it would work in America. This is absurd: you don’t need to crap on a model that has served the vast majority of football-playing nations decades in order to argue against it working in a North American context.

Additionally, boosters will often argue pro/rel’s merits without explaining just how exactly it would be realistically implemented in the US, in 2014 (or 2015, or whenever)—just in the same way it’s easy to keep yelling “public healthcare!” in the United States, but nearly impossible to get it past a House of Reps painted red Republican. The legal problems alone are staggering—what happens to the players’ unions? Does the USSF just ignore MLS and go ahead and set up a separate league pyramid?

At the same time though, backers of single-entity often conflate arguments against the practicality of implementing promotion and relegation in the US with arguments against promotion and relegation per se. Despite the braying (and boring) presence of the Westerveltians on-line, it isn’t necessarily obvious that pro/rel in US soccer would be the unmitigated disaster we all smugly assume it will be.

How, therefore, should we go about this?

To begin, I hate pie-in-the-sky arguments, so I think it’s best to only argue for a pro/rel scenario that has a hope in hell of getting approved one day. So it makes sense to get word on the subject from those with the power to implement it.

So, here’s MLS commish Don Garber in 2012:

The topic of promotion and relegation is something I am asked about regularly, along with the league moving to a single table and possibly changing to a European calendar. While I personally think promotion and relegation would be very exciting, the professional soccer landscape in the United States and Canada is not mature enough to support this type of system, and therefore it is not something we are contemplating.

And here’s the head of the United States Soccer Federation Sunil Gulati in 2009:

I used this analogy with [FIFA president] Blatter: He said the U.S. played two different halves against Brazil in the Confederations Cup final. I said that I was turning 50, facing the second half of my life. U.S. soccer is still in the first half of its life. Twenty-five years ago, in 1984, we had big attendance at the Olympics the eventually led to 1994 and the World Cup. For us, 2009 is still the first half. Questions about promotion/relegation, schedule — they are second-half issues. We will need to be more mature. Maybe 10 years down the road with a couple more southern teams, maybe one dome, more passionate fans. Is it the next year or two? No.

Now, maybe there’s some sort of diplomatic reason for this “someday, maybe” view here (certainly FIFA would like it), but I’m going to take them on their word. So it seems both Garber and Gulati sort of form of pro/rel one day, but not yet.

I also think we can agree that you can’t introduce pro/rel without also dispensing with single-entity, for obvious reasons—a league can’t co-own a team which can theoretically drop out of said league.

Using this framework to guide us, over the next few weeks I want to explore in a little more detail the kind of questions I posed rhetorically in this post from last year (last year!) on this subject. I’m not a fan of projections (Black swans), but I think it’s reasonable to look at the status quo and make some straightforward inferences, of the kind I couldn’t be bothered to six months ago. Until next week…

Comments (4)

  1. MLS already built it’s reputation for many years however, there are a lot of instances that causes misinterpretation especially when it comes to promotion./relegation that lead to arguments.

  2. Pro/Rel WILL happen here one day…. when the MLS expands to +40 or even +60 teams and the big/wealthy clubs push for an “prestigious”, “Premier”-type division.

    It can oly work with the appearance of building “upwise” rather than dumping teams into an NASL-type situation (even if it will effectively be the same thing.

    Lonooog way off though….

  3. 1. Is it even theoretically possible for MLS to at some point abandon single entity, say by giving clubs back their 30% of gate sales, allowing member clubs to vote on how national TV money is distributed, returning the responsibility for paying player wages and contract negotiations to the clubs, and eliminating all wage restrictions on the upper end?

    If history is any guide MLS cannot abandon single entity without open leagues. Every US attempt at top-flight closed league soccer without single entity has failed. Closed leagues have failed to accommodate autonomous clubs time and time again. There’s no reason to think that the situation has changed.

    When Canadian and US federations sanction open leagues, promotion and relegation, the end of MLS single entity becomes theoretically possible. Until that day this line of questioning is purely hypothetical. Single entity was designed to do something every preceding attempt at top-flight closed league soccer has failed to do: Survive. As long as our federations insist on maintaining closed leagues, we’re locked in a sanctioned MLS structure that stands firmly in the way decentralization in North American club soccer.

    I don’t think it’s a conspiracy theory to suggest that MLS single entity was set up to create theoretical conundrums on it’s abandonment. This line of questioning illustrates – sans a compelling outside incentive – there is neither hope nor theoretical possibility of MLS abandoning it. You may as well be asking about Walmart ditching single entity.

    Any incentive to ditch single entity must come from supporters via federations. Judging by the perfect correlation between collapse and top flight leagues of autonomous clubs anywhere in the world, it will have to entail a move to promotion and relegation.

    When both federations decide to make this move, there is only one simple scenario for any MLS outlet to transition out of single entity: Sale. No need to worry about opaque internal governance procedures: As a single entity, MLS certainly has a right to sell their properties. The league certainly deserves full compensation for their teams. A handy sum might be gleaned from just the sale of top brands.

    The reflex argument against sale-based transition is that values of MLS outlets are wrapped up in the system that protects them from relegation. The argument itself screams for change. After 20 years of protections in which to build legacy and brand loyalty, soccer club values shouldn’t still be wrapped up in subsidies and protections.

    We can’t force MLS to do anything. We can only encourage them. Like any company, they’re allowed to pursue their destiny in any way they see fit – apart from limiting the destiny of others. That’s exactly what the closed single entity system does when combined with perpetual D1 sanction from US and Canadian federations.

    Obviously the MLS status quo contains perks that any accountant would find difficult to abandon. If owners don’t want to ditch single entity and join an open pyramid, that’s their call. They’re welcome to employ any business model they want, and maintain any arrangements they choose. They are not allowed to demand sanction for the privilege. That’s a federation call, not a league call.

    2. Or is there theoretically a pathway MLS could take in transferring salary costs and centralized revenues back to clubs gradually over time?

    Single entity is especially resistant to gradual or piecemeal change. In many ways, MLS is a cartel. Is there a way to gradually break up a cartel? It either exists, or it ceases to. A gradual departure from single entity is a theoretical conundrum.

    Like all great soccer clubs, many US pro clubs are paying their own players today. What is stopping our D1 teams from doing the same? Once a club escapes MLS central control of a club, that club is largely on its own. The escape is their choice.

    3. Could MLS clubs take a more mixed approach and agree to cover player salaries but maintain a salary cap or institute a luxury tax? Or would that violate anti-trust laws?

    This is perhaps a greatest example of MLS resistance to piecemeal or gradual change. Single entity structure served as the anti-trust antidote in Frazer v MLS. It is also probably the best example of the need of a sea change in US Soccer policy to move this system. We certainly cannot depend on MLS evolution when legal decisions in their favor hang on status quo.

    4. Does the legal partnership between MLS and its owner/investors prevent any change to the current set up? What are the views of owners on salary liberalization? Would a vote for dissolution need to be unanimous?

    Hitting nail on the head here. Opacity is complete on these issues. If purpose-built roadblocks to single entity exist, they could be easily hidden. What are procedures on MLS Board of Governors? Are they public? Are decisions made by consensus or majority vote?

    In lieu of these mysteries on internal governance, MLS selling properties out of single entity captivity is cleanest and simplest route out of single entity. We may never know the details of single entity procedure, but companies have been selling divisions and product lines off for ages.

    5. What would the legal/practical implications of this change be for the Major League Soccer Players Union?

    Obviously there are huge implications for players in this transition. Indeed, few organizations could expedite transition as the MLS Players Union. CBA could play a pivotal role. A call from the union to remove salary caps and DP restrictions would expose the core of single entity theory, beg the question on promotion and relegation, and signal to the footballing world that we were moving to the next level.

    Should MLS as an entity expire after their properties are sold, new CBA would have to be drafted with the entity into which D1 soccer morphs.

    As it happens, current CBA is about to expire. Good timing for a structural overhaul.

    6. Would the USSF have to agree to any changes?

    Even more so than the players union – US and Canadian federations must be catalysts for change. MLS is free to decide their future for themselves – but not for every club in the US. It’s a federation’s job to define and govern the pyramid.

    US Soccer can’t make or break any MLS move. They can only choose to encourage behavior. Encouragement needed.

    7. Based on the current financial means of the various MLS team owner/investors, could most owners absorb current salary costs?

    Like most soccer clubs in worldwide, ours will have to make choices based on their means. MLS outlets undergo mass player transfers every year. Even if this transition produces major roster shifts, they couldn’t be any more drastic than they are today.

    Indeed, the point of an ultimate transition out of single entity and into promotion and relegation system is for every team to live within its means or face the consequences. MLS teams will be no different. Current MLS ownership is as well endowed as any league in the world. It is not a question of “could they”. It is a question of “would they”.

    8. What are the projections of increased revenues to the league based on higher profile player acquisitions in more revenue rich markets? How would they impact gate sales? Local and national TV rights? Sponsorship deals? What’s the worse/best case scenario for each of the current 19 member clubs?

    The premise of this question is flawed. If MLS experience proves anything, it’s that big player signings have a relatively small impact on revenues – and virtually no impact on ratings. If ratings and web search are any indication, we like great clubs as much as any supporters in the world and great clubs are the key to increases in revenues, not scattered poster-boy players.

    Our closed single entity system doesn’t permit great clubs. In order to attract significant new revenues at all levels, we need one that does. That system is defined at US Soccer.

    It sounds like you’re fishing for guarantees on seamless transition of current revenue streams – when the system we’re transferring to carries with it no such guarantees. Teams do fail in open systems. Unlike in our closed system, they never take leagues down with them. On top of that, MLS hasn’t even protected every team from failure. Mutiny and Fusion attest to that.

    Let clubs that can attract the market succeed. Let those that cannot fail. Sounds fair to many Americans.

    9. Would these revenue increases be enough to offset the cost of inflated player salaries and transfer fees?

    Why the assumption player salaries will automatically inflate? Why can’t clubs be expected to spend within their means?

    Instead of a system in which owners must be babied to survive – we need a system that allows owners decide what is in the best interest of their clubs. The premise of this question appears closed league specific. Our system has proven incredibly sensitive to the overspending of a few unscrupulous owners. Our closed soccer leagues have proven very prone to collapse from harboring a few bad apples.

    Open leagues are incredibly resilient by comparison. In a system impervious to collapse from one crazy owner, we won’t have to guarantee revenue, restrict spending, and worry endlessly about short-term cash flow. We will let owners decide what is best for their clubs at every level. Each will choose which destinies to pursue, without the glass ceilings designed to protect a tiny few.

    10. Could wealthy owners cover club losses with equity payments? Or would there need to be a break-even clause to protect the smaller markets?

    Another closed league specific concern. If owners believe in their market, their community and their club – why shouldn’t they be permitted to invest whatever they think necessary? Why provide disincentives to investment in order to maintain a closed league system and/or single entity?

    I think this question bleeds into European overinvestment that precipitated Financial Fair Play rules. It is a problem I’d welcome in the US. We need as much investment as possible in this game. We don’t need to be limiting it for the profits a tiny few.

    11. How would the changes impact player development in the US and Canada? Would the incentive of higher salaries at home help keep players from going abroad?

    A tiny handful US players are making relatively high salaries. Under DP rules, that number is extremely restricted. You may incentivize those players to stay, but what about the dozens of US players that can’t even afford their own apartment under DP and cap rules?

    Virtually everyone in the US game agrees that talent continues to fall through the cracks. A few fat salaries may draw attention from players around the world, and perhaps incentivize a few US kids. By themselves – especially in a closed MLS system where a few astronomically paid players coincide with dozens who live on peanut butter and jelly – the impact of a few richly compensated players on club and player development is limited.

    The key to retaining talent is reforming the entire system, not enriching 2 or 3 US players. With promotion on the line higher salaries will coincide with a revolution in development. When teams have to pay for performance on the field – and aren’t encouraged to spend obscenely on poster boys – income will certainly be distributed more fairly. Every club in the pyramid will be incentivized to discover and sign local talent as never before.

    12. What would the decision mean for other centrally-controlled North American leagues, like the NFL? What would the legal implications be? Would there be pressure from other professional leagues not to change the status quo?

    Great question. That US owners fear a ripple effect from any attempt to reverse the recent trend towards centralization and owner control seems obvious – and that’s before even mentioning promotion and relegation. In truth, they have little to worry about.

    My arguments for decentralization are soccer specific – to which NFL presents the ultimate contrast. NFL has myriad good reasons for central control that a top-flight soccer league doesn’t have. It’s an isolated league without any global or national competition, and has no tradition of lower divisions.

    NFL balance of power is much more fragile than that of any open soccer league. Most agree great soccer players are built on many more intangibles than US football players. NFL player skills are often described entirely in terms of sheer size and raw athletic ability. Under that rubric, loosing salaries in NFL could enable owners to build juggernauts more quickly and effectively than any soccer club owner.

    Soccer also doesn’t share the institutional protections of US sports. NFL and MLB also benefit from legislation and legal precedent specific to their sport that seals their subsidies. There is no baseball anti-trust exemption for soccer. Congress has written laws for NFL, but none for MLS or soccer at large.

    Perhaps NBA and NHL would be vulnerable to some fan outcry for pro/rel, but it is still difficult to see how promotion and relegation would present a serious threat to them. Unlike MLS, both leagues are still widely regarded as the best in the world. That perception alone should shield them for the time being. Add to that no global standard on pro/rel, little in the way of federation governance and no thriving inter-league competition, and their status quo looks even safer.

    Even if we acknowledge dubious worries of US sports owners who would prefer that pro/rel never broached our shores – especially those invested in MLS – they’re too late. Both USA Cycling and USA Ultimate have both come into the pro/rel camp in the past year.

    Hopefully US Soccer joins them soon. Soccer doesn’t enjoy the isolation, the lack of independent governance, or the perceived dominance of our other sports leagues. Hopefully MLS goes along with it, but if they don’t that’s their call.

    Our 100 year experience with club soccer has taught us valuable lessons on the incompatibility of fully autonomous clubs and closed top-flight leagues. MLS and US Soccer’s response has been to limit autonomy via single entity. More and more Americans are demanding that we open leagues instead – and with darned good reason!

  4. Good Grief Ted – take a breath!!

    98% of what you wrote is complete crap but the best is “Why the assumption player salaries will automatically inflate? Why can’t clubs be expected to spend within their means?” Name for me please the clubs in Europe the past 15 years that have won their League spending within their means and not outspending their closet rival?

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