Someone tweeted me to look at this piece by Dan Loney which deals in part with my previous blog on MLS. Mr Loney took exception to parts of our book on the grounds, I think, that we were not entirely respectful of the state of American soccer. I don’t think he’s a huge fan of ours, and he has more sharp words for me in his current piece. But no matter, he raises some interesting points that are worth discussing. In any case, his piece is primarily about the potential of MLS in general.
First, he takes issue with my claim that “Promotion and relegation (P&R) promotes intense competition at all levels of the league. This contrasts with the American closed league model which MLS has adopted, which creates meaningful competition at the top.” He then reels off stats showing that most leagues of European soccer have been dominated by a small number of teams over many decades, which is indeed correct.
I think it is useful here to distinguish economic competition from sporting competition. By economic competition we mean a process by which competitors devote maximal resources to attracting customers, through low prices, high quality, or both. In the soccer world clubs at all levels do precisely that- almost no one makes a profit because all resources are spent on ensuring a winning team. That is precisely the rationale for Financial Fair Play. See UEFA’s benchmarking report for the evidence of low profitability (this is essential reading for anyone who wants to understand the economics of the game as practised in most of the world). By contrast, I have talked over the years to many American economists on the subject, and they are almost uniformly of the opinion that American sports make money, largely because of the restrictive agreements among the owners intended to limit economic competition (drafts, salary caps, revenue sharing, etc).
But what of sporting competition- doesn’t the dominance of a few teams in Europe prove that sporting competition is limited? I don’t think so. I wrote a paper (click here: JICT) about this (with lots of data) a few years ago with Luigi Buzzacchi and Tommaso Valletti where we estimated the probabilities of teams reaching the highest levels of league competition in Europe and North America. We show that European leagues offer equality of opportunity- any one is free to enter and lots of clubs do – whereas US leagues offer equality of outcome- once admitted to the league almost anyone can win.
This is somewhat ironic, since the political narratives of the two continents are generally the reverse – Europe creates equality of outcome and the US preserves equality of opportunity. If you give people equality of opportunity you create a lot of competition but you also tend to create very unequal outcomes (e.g. the US is a very rich country with a high degree of income inequality relative to other developed nations). Europe has intense sporting competition and very unequal outcomes at the same time.
I did suggest, somewhat mildly I think, that P&R would be good for American fans, but I also said that I didn’t think it very likely to happen. Hence my suggestion that instead MLS franchises might become minor league teams for big European clubs, in the way that Manchester City may manage its New York franchise. This generated great anger and ridicule. Dan’s argument seems to be that (a) minor league baseball franchises have not become big teams in the US and (b) NASL in the 70s tried bringing in foreign talent and that was a failure.
I don’t think these are very good counterarguments. Minor league baseball teams have not been allowed to grow because a major league already exists in the US- why would the majors create more competition for themselves? Foreign owners of MLS franchises have different incentives. The EPL, La Liga, etc may be growing in popularity in the US, but are unlikely ever to command the same audience as a true domestic league stocked with good players, of whom, I think we agree, an increasing fraction would come from the US in the longer term. I also think that the failure of the old NASL is also trotted out a little too easily. the league lasted 16 years, and was in fact doing OK up until about 1980 when it hit several problems, not least of which was the loss of a national broadcast contract. In today’s multi-channel, multi-device environment they might have found life a little easier.
None of this is to say that MLS must, or even ought to follow this path. And if MLS as it is today is good enough for you, then I raise my hat to you.