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.
Why don’t people look more seriously at building pro/rel within the MLS’ single entity structure? It seems like a combination of the two would give more sporting competition furthering the fan experience while limiting the problems associated with developing an open pyramid in the US.
Good question.
Is P&R just a historical anachronism when it comes to the United States? When MLS was founded, the league was ceded first division status without any of the characteristics of a dominant pre-exisiting soccer culture so prominent in other countries. So, despite being given the ‘major league’ designation, every move towards emulating European football is having to be done from an unnatural position; borrowing for a collective history that we did not experience as justification for alterations. The original 1.0 rules have been altered enough to were most everything is synched up with, more or less, global standards. Now that there is a “push” (ie internet chatter) to adopt this concept, part of me wonders if it is just a vestige of a place and time that cannot be duplicated. Because we don’t have the tradition, what justification can be made to adopt it, besides for the sake of pure emulation?
The idea of open competition is great, but I feel like those promoting P&R are doing so by appealing to a naive understanding of equality of oppurtunity. On paper, its a fair, merit-based system. However, the concept cannot readily be applied when the properties in question (clubs, franchises) were built and financed from the onset as a money-making venture. Hard to subvert that agenda for the sake of meritocracy.
I don’t know how you square the circle but all this to say: what is fair isn’t necessarily what’s possible.
There are cultural barriers, but I guess my view is that all barriers can be overcome. But that doesn’t mean they will be.
I’ve been against P/R in the states for the foreseeable future because I believe ownership groups are not going to take on the costs of soccer specific stadiums only to be possibly relegate the next year or never making it into the league. I have recently come to the thinking that MLS seems addicted to the franchise fee to make up for a lack of TV contract money. This can’t continue as the league reaches maximum team capacity. What I can see in the foreseeable future is a creation of a 2nd division within MLS. Let’s call it MLS2. With some revenue sharing, etc, this might provide the financial cushion to make it palatable for owners. It allows the league to continue to reap fees for new teams until TV revenue can assist to sustain the league, and will also provide fans w/ the excitement of p/r.
Okay, let’s see how deep this rabbit hole goes.
I obviously misinterpreted “I think the only way around this conundrum is for MLS to become a minor league for Europe and for European teams to buy up MLS franchises,” because to my unpracticed eye that’s a very good description of minor league baseball and what Chivas USA attempted. If you didn’t want to conjure up a comparison to minor league baseball, maybe you should have suggested something besides an exact replica of the minor league baseball model. I’d be amused to read why you thought that the NASL around 1980 was “doing okay,” but an MLS that has improved on NASL attendance and longevity needs to become a string of European farm teams.
The paper you linked to was – look, you seem to think I’m being uncivil, but I resent having my intelligence insulted. My main issues:
You fail to explain, either here or in your 2003 paper, what “economic competition” is supposed to mean for fans, let alone why it’s a superior definition than things like actual results and championships.
You conflate the opportunity to create a team at the bottom of the pyramid with the opportunity to compete for a championship. Having so few champions in a system which claims to create several dozen viable competitors shows the system is flawed, except from the point of view of the few champions.
Centering a paper on competitive balance by win percentages within a season isn’t addressing the issue so much as changing the subject.
Comparing win percentages between sports that allow ties and sports that either force a result or almost never have ties seems, at best, unhelpful.
Using win percentages within a single season by definition does not take into account the effects of promotion and relegation, let alone explain why promotion and relegation leagues produce so few different champions.
You even say “North American leagues are closer to the theoretical ideal than their European counterparts” and “equality of opportunity in open leagues in Europe has not translated into any equality of outcomes” and “The hypothesis that Europe’s open leagues are competitively balanced is far harder to support than the hypothesis that North America’s CLs are balanced” in 2003, so why in 2014 you would say promotion and relegation gives greater competition is utterly baffling.
Funny you should mention the NCAA. I forgot to, thank you for reminding me. Basketball is not a level playing field on the college level, but hundreds of teams are allowed the chance to compete for the title every year. There have been over 30 different NCAA basketball champions since 1939, a rate that dwarfs the allegedly equal opportunity promotion and relegation leagues. That’s with UCLA hogging a bunch of titles, too. Artificially keeping teams from competing for the title reduces the number of teams that will win championships.
Promotion and relegation is not merely an accident of history, but of geography and population density. Greater travel expenses meant fewer professional teams in the United States.
I’m sure there’s a fantastic reason why you used Belgium for your data instead of Spain or Germany. I just can’t think of any.
“Since we are interested in competitive balance rather than uncertainty itself in this paper we have restricted ourselves to considering win percentages during the regular season only” is pretty freaking hilarious. If your model can’t accept the existence of playoffs, maybe the fault is in the model and not in playoffs. You even say “However, since the ultimate Championship winners [in US leagues] have been determined by play-offs that are more random than the regular season, this is probably not a problem. By contrast, the G-index for the OL [open leagues – come on, were you on a budget and couldn’t afford full words?] suggest that entry into the top 5 has been more or less as difficult as into the top rank, and without a system of play-offs this suggests both little mobility at the top and considerably less competitive balance than in the closed leagues.” So why are now saying promotion and relegation increases competition? Compared to what?
This probably isn’t mathematically important, but no North American major sports league has a balanced schedule. It probably doesn’t affect whatever point you’re trying to make, but it should have been noted.
Seriously, why would you use a model that only measured regular season games, and then try to draw conclusions about competitive balance?
Yes, the expansion of North American teams has increased the number of potential champions. That was kind of the point. There have been, what, eighty teams or more in the top English divisions since Richard the Lionheart, and they can’t even mix in as many champions as American leagues that had less than twenty teams until 1960? The hell, man.
And summing up that paper in 2014 with “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” is not borne out by what I read. It sounds to me like you’re arguing with yourself from eleven years ago.
As to why MLS doesn’t institute a promotion/relegation system – notice those 30 or more teams in the other North American leagues? The ones that have a better chance of winning the championship than European teams that have had a century or more head start? The ones that are more profitable than the ones dicking around in the Third Division? That’s the model they’re using. I know, weird.
The alternative is a system where teams don’t make money and only a few teams compete for the title. How this is even theoretically good for fans is mysterious to me.
But games between bad teams at the end of the season are “meaningful!”, comes the cry from fans who aren’t actually fans of those teams, and who, according to ratings, would rather watch good teams than bad teams no matter what the league structure. Nobody had any reason to watch Bobby Valentine’s Red Sox in 2012, and they didn’t. Yet the Red Sox and baseball survived. Lo and freaking behold.
You obviously took time to read the paper- which I appreciate. We start the paper by looking at the standard deviation of win percentages (because this is what people do in most of the economics literature)- BUT then we then make exactly the same point that you do- this is not a good way to think about competitive balance over time- so that the original contribution of the paper is to analyse the probability that teams reach the highest level in the league over time so that we can compare the potential number of teams that could reach this level in a hypothetical world where every team has a 50% chance of winning every game it plays (competitive balance), to actual number of different teams that reach this level.
The reason for not considering post-season play is that it would have be far more complicated to calculate, and that in any case would only lend further support to the point that both we and you want to make. We put it thus – the US system generates equality of outcome – every team gets to win eventually. The European model offers equality of opportunity while generating highly unequal outcomes- anyone can compete, there are no non-sporting restraints on entry, but in reality on a small number of clubs dominate. That is what we said then and that is what I say today, and I actually think you agree with this too. As I say, the irony seems to be that Americans embrace “equality of opportunity/inequality of outcome” model of competition for most economic activities but not sport, Europeans vice versa.
As you point out, the important issue is whether fans are better off with one system or the other. You ask how fans benefit from economic competition. I would go back to my original blog post comparing wage levels in MLS to other leagues in the world- http://www.soccernomics-agency.com/?p=562. I claim the following – (i) in the market for soccer higher spending on player salaries leads (on average, notwithstanding random variation) leads to better quality teams (talent costs money) and (ii) in an economically competitive environment MLS would not have a salary spending that was lower than 20 leagues in Europe, including the Romanian league (with all due respect to Romanian soccer). In this sense I claim that fans would benefit from a higher quality of competitive soccer under a P&R system.
The statement “in an economically competitive environment MLS would not have a salary spending that was lower than 20 leagues in Europe” deserves some exploration.
A similar argument was made in the lawsuit players brought against the league, with the players trying to claim that if the USA had two Division I leagues, their salaries would be higher. Columnist Paul Gardner saw through it: “For an entire session, this totally fictitious exercise dragged on, as the good Professor Zimbalist revealed charts and calculations to ‘prove’ what must have happened had a whole series of improbable conditions existed. They never did exist.”
I realize this is a different sort of situation — competing Division I leagues instead of an “open system” ladder — but the argument is similar. Salaries aren’t depressed in the United States because of a lack of competition. They’re depressed because this country was very, very slow to embrace soccer. Actually, this country had large bulwarks *against* soccer for generations, and those are only now starting to come down.
U.S. soccer history as a whole tells us that any full-scale economic competition, whether it’s the old “Soccer Wars” that tore apart the ASL in the 1930s or the free-spending ways of the NASL in the 1980s, leads to a pie being sliced too thinly.
And I’m afraid history simply trumps economics in this case.
But MLS is stepping into economic competition at the top end. The league still has cumbersome rules for handling players who are out of contract, but if a team wants to sign a Jermain Defoe or Michael Bradley, that team needs to be ready to pay market value.
At the bottom end, the reality is that any owner of an NASL or USL Pro team understands the financial difficulties of operating a Division I team. Leagues are generally welcoming of any team that can meet the criteria for that division. And the reality in this era of “economic pro/rel,” many teams have opted to move DOWN the pyramid, mostly from the semipro ranks to the amateur ranks, where they don’t have to pay salaries, workman’s comp, etc. They’re not looking for promotion.
I think it’s a perfectly respectable argument to say that the US cannot sustain a league of comparable player quality to those of the big, or even medium-sized leagues in Europe- though I’m not sure I believe it. Sure, not the EPL or La Liga at the moment- but nothing comparable to, say, Belgium? But you can make the case- the problem I think is the follow-up, which I hear often, along the lines that slow and steady development will one day create a league of comparable standard. I just think that’s unlikely. The rest of the world is going to become more competitive, not less so- the US economy will not grow faster than the rest of the world. So if the resources are not there now, why will they be in, say, 10 or 20 years? If the rest of the world were to stand still, then maybe. But it won’t, and the economies that are going to grow fastest are often fanatical about soccer. Maybe MLS can only ever be what it is now- minor league soccer.
But conditions for *soccer* in the United States have changed dramatically in the past 22 years. The sport was reviled in the past. Now it’s celebrated.
And MLS growth reflects that. Teams now spend 2-3 times as much on one player as they once did on an entire roster.
So I think the odds of surpassing Belgium and any other leagues that isn’t the top four are pretty good.
Now that I think of it — aren’t Belgium and other countries being left in the dust by the Big Four leagues? Remember when Ajax and other Dutch teams were champions and contenders in Europe? Now Ajax is more or less a feeder club in the same way you posit MLS teams will be.
That trend will likely continue unless the EPL and La Liga’s bubbles burst, which would bring them back to the pack of other leagues around the world.
Back to pro/rel for a moment — in your book, National Pastime, you mention that pro/rel limits investment in infrastructure, and you even cite the Bradford disaster as a tragic consequence. Given the USA’s need to build infrastructure, wouldn’t pro/rel therefore be a really bad idea?
According to UEFA average salary levels are more than three times the level of salaries in MLS – I would think that gap is growing right now, and Belgian soccer is doing rather well. FIFA has 209 members- probably half have professional soccer leagues, and I reckon more than 30 spend more on salaries than MLS. The US has struggled to compete in the past when it had bigger economic advantages- why woudln’t it struggle in the future- like I say, the rest of the world will not stand still to let the US catch up.
Again — economic factors within a country are not the sole indicator of the health of its first-division soccer league. Soccer itself is growing more quickly in the USA than it is in Belgium, the Netherlands or nearly anywhere in Europe. (It may be growing more quickly in the EPL because of the influence of foreign owners and foreign fans.)
You say you “would think” the gap between UEFA and MLS salaries is growing right now. Maybe in the EPL — again, thanks to its global brand. Elsewhere, I’m much less sure of that. The salary cap per MLS team in 2005 was $1.9 million. Now the average payroll per team is $5.4 million. Have salaries in Belgium nearly triple in nine years?
The bigger question is whether MLS can build its TV product in a crowded marketplace. The USA airs more EPL games than English TV does. Then factor in the No. 1 soccer product in the USA, Mexican soccer.
I don’t think a simple chart showing economic growth in each country is going to tell you much about its soccer league. India is growing more quickly than many other countries, but it’s likely to remain more of a cricket country than a soccer country. Ireland’s Celtic tiger didn’t raise its domestic league above semipro level. The USA also has other sports and a glut of televised soccer, and yet the growth in soccer is so strong that MLS has felt confident in nearly tripling its salary expenditures.
Simply put — the USA has a lot of unique variables.
How do you know that soccer in the USA is growing faster than anywhere else? You can see the numbers for yourself if you look at the UEFA report I linked to. On your figures wages have grown at an annual compound rate of 12.3% over nine years in MLS. UEFA say Belgian wages increased 77% between between 2007 and 2012- that’s an annual compound growth rate of 12.0%- almost identical. But UEFA also lists 18 countries (out of 54 members) that had a faster rate of growth of wages over the period. I suspect a similar pattern will be found in the rest of the world. The growth of soccer is a global phenomenon, not an exclusively American one.
Wage growth is a form of growth, but it’s not a form of growth which necessarily shows MLS isn’t growing more or less than interest in the Belgian league, for instance.
The reason MLS is at least theoretically growing much faster than the Belgian league is because the market for Belgian football is saturated, but the market for MLS is not saturated. Since 2007, Belgium’s wages may have gone up more than MLS, but MLS added more fans through expansion teams. MLS still has many markets left to stimulate – and what MLS really offers a soccer fan is being able to go watch decent quality local football. Look at the recent ESPN map – in Washington, Oregon, Utah and Kansas, people were most likely to have watched a MLS game in person. In the other 46 states, a people were most likely to have never watched an MLS game either live or on the TV. This shows a soccer club in the U.S. is highly localized… With the continued expansion, with Orlando coming in you instantly get several thousand more MLS fans the Belgian league would love to have. And there are still question marks over New York and Atlanta.
MLS also artificially controls its wages in an attempt to keep the cost structure low, leading to teams with very top-heavy salaries, which could affect wage comparison with European teams.
“slow and steady development will one day create a league of comparable standard. I just think that’s unlikely. The rest of the world is going to become more competitive, not less so- the US economy will not grow faster than the rest of the world. So if the resources are not there now, why will they be in, say, 10 or 20 years? If the rest of the world were to stand still, then maybe. But it won’t, and the economies that are going to grow fastest are often fanatical about soccer. Maybe MLS can only ever be what it is now- minor league soccer.”
Thankfully your take on the projected growth of soccer in America/MLS is based on looking at the wrong things. Saying that MLS quality or competitiveness will grow according to the growth of the US economy as compared to the rest of the world’s economies, is well…misguided (being nice here). MLS will grow in competitiveness and quality as the US fan base grows and advertising/TV revenue increases, blah blah, not as a % of GDP…or whatever. More money, more ability to buy players domestically and from around the world. Players that might otherwise be in Euro leagues. However, you could end up being right about the state of MLS compared to the Euro leagues not changing over time. It just won’t be for the reasons you assert.
Well, thank you for being nice 🙂
As with the previous comment- what makes you think that the US is exceptional in relation to the growth of the fan base, advertising and TV revenues? I think soccer is booming globally, not just in the US.
Answering your response to me and your response to Paul in one place — after all, the question is what makes us think the growth of soccer in the USA is exceptional.
The answer: Several books on U.S. soccer history and culture. Including mine. And yours! 🙂
Also by the argument that the quality of the soccer is directly proportional to the size of the salaries, the 2014 players in Major League Baseball are vastly superior to the players who played in the 1980′s before the TV contracts exploded and indirectly made the MLB player salaries more lucrative. Perhaps the 2014 players are a little bit better than the ones from 1987ish. However, I doubt how much better they are is directly proportional to the salary differences.
Same with EPL. Salaries are better because teams have a bigger TV revenue pie to work with than in MLS. That doesn’t mean that the players are proportionally better. Many are better but not as much as the difference in pay. It just means that the cost of doing business is higher because everyone has greater access to money. Also, teams are willing to pay a lot more on a gamble that a player is just a tiny better than the next best player. It doesn’t always work out that way yet the team still has to pay the higher contract. Over time, those higher salaries based on that gamble become the new normal without a salary cap.
Sort of like how rents are more expensive in Washington, D.C. than Baltimore when both cities have similar populations and are geographically close to one another. However, one city’s economy is based on jobs that pay more on average than the other. Therefore, since there is more money floating around there, rents cost more because more people can bid them up.
That’s not a very good argument. The Yankees today are not competing with the Red Sox of 1980- but with the Red Sox of 2014. They have to spend more than the Red Sox of today to have a better team- 1980 is irrelevant to today’s competition. Likewise MLS is in global competition for talent today, not the talent of yesteryear.
Perhaps it is a good argument because you (more elegantly) just made my point about the arms race nature of the EPL salaries. A big chunk of the higher salaries in the lower half of the EPL are due to the salary arms race in their own league, not a gap in soccer talent between other leagues like MLS.
As I understand it you want to make the argument that players in the EPL and players in MLS are not in the same market – at least that is my interpretation as an economist. If two products are in the same market and are of the same quality then they must command the same price- otherwise there will only be demand for the better quality product- because in a market the buyers shop around (this is also sometimes known as “the law of one price”). There are transactions costs- so a player in Seattle would might need a slightly better wage offer to move to Sunderland – but I would argue it would not have to be that much greater, and might even be less for some players who would like the chance to play in the EPL. But the idea that a player could command a salary 10 times greater in the EPL and be of the same ability as a player in the MLS makes no sense to me. Why doesn’t the EPL club then just release the expensive player and hire the cheap one? There are few obstacles to movement, no obvious preferences for English players over foreigners. Why wouldn’t the market work? And this is not just about the EPL and MLS- the market is truly global, thousands of players crossing national borders every year- what is market failure here that prevents price from reflecting ability?
A couple of barriers to movement, though none is impossible to cross:
1. Work permit laws, particularly in the UK, that favor those with European passports over those without. (Even Tim Howard scrounged up a Hungarian passport when he first made the move.)
2. Familiarity and scouting limitations. When you move away from the giant clubs, you find rosters that are usually filled with domestic players or those from nearby countries. A mid- to lower-table Bundesliga club isn’t likely to have a Mexican player in place of a German player.
3. Desire to live at home. We tend to forget that players have families and other ties to their homelands. Will a big contract with Manchester United pull someone away? Sure. A $700,000 contract with Genoa when MLS is offering $600,000? Less likely.
1 is a barrier to very mediocre talent- but that is plentiful anyway. The second was true once but not any more- half the BL is foreign, 2/3 of EPL is- in a very competitive market you can’t afford to ignore cheap talent. 3- usually we’re talking about young men excited by adventure and without settled family ties.
I think you underestimate the volume of trade- there are about 20,000 international player transfers per year, including about 300 into and out of the USA. The numbers going into and out of the England are about two and a half times larger. This is a lot of trade. So there might be a small difference between the wage that the same player could command in e.g. England compared to the USA, but how on earth could it be a large difference? and if wages roughly reflect ability, then the wage gap between most of Europe and the MLS must also reflect quality.
“the market is truly global, thousands of players crossing national borders every year- what is market failure here that prevents price from reflecting ability?”
The market is global, but at the same time, it’s not. As a rule of thumb, a team in a country will field a majority of players from that country. If you’re truly looking for economic benefits, you think a team would have gone and tried to hire a bunch of talent from countries where you can purchase players cheaply, but this itself comes at a cost of finding and identifying talent.
And the best teams don’t fit the rule because they can buy whoever they want. Manchester City have six English players on their roster. But when you start getting down into the depths of the rosters and the depths of the clubs in the leagues, the dynamic changes, and you could have a situation where a Belgian club can more easily pay a local with the same ability as an American more money to sit on the bench than identify the American and bring him to Belgium to have him sit on the bench.
But again, this depends on the financial situation of the club as well, and Anderlecht clearly have more resources than KV Oostende where MLS makes this divide less clear between say Seattle and New England.
Finally, many European teams have a large number of European international players, which supports the assumption many clubs are limited by geography in their scouting and their ability to bring players in.
Do you really believe this or are you just trying to win an argument? My claim is that the wages paid for players with different levels of talent do not vary that much internationally- so MLS cannot be of very high quality given the low wages. It might be that a player will be paid $200,000 in England but be paid only $100,000 in MLS – so I am not claiming the market is perfect – but it’s not the case that a player paid $100,000 in MLS is good enough to earn $1 million in England. Also, a player worth $100,000 in MLS could not make much more than that in Belgium – where wages levels are not that much higher than MLS, since Belgium doesn’t have the cushion of broadcast rights income that the European big leagues have.
Thus (i) if team salaries are twenty or thirty times higher in the top European leagues, then MLS is a long way behind and (ii) even if the gap between MLS salaries and Belgium are not as large, they still represent a significant difference.
What it is about the markets that falsifies the hypothesis?
Work permits limits this, but over all I agree with you, especially with International players.
To an Argentinean the global market is the same (in theory at least). So if the Argentinean player was good enough to get a 500K offer from Belgium over a 250K offer from MLS, most likely that player would move to Belgium.
I disagree in the point that you seem to down play the restrictions in the movement of labor.
Sorry, looks like my last comment didn’t take!
I really do believe this. If there were no barriers in the market at all, you would see teams fielding players from all over the world at the rate at which that team could pay the player.
But if you go down to League One, which logically would be slightly less pay than the MLS for an average player (if MLS is less than the Championship), and most of those teams field players from the British Isles.
I don’t dispute that a player will make decisions based using the formula (overall salary) > (opportunity cost). But that’s not the correct argument, because what we’re really looking for is something which shows there are barriers in the market which causes the wage theory to be incorrect, at least partially.
Those factors are at the level of teams and leagues, not players. Using economic geographic theory, teams do not participate 100% in an open international transfer market. Sure, there are African players in the Icelandic league, but there aren’t many. Therefore, I’d expect the English players in League One, since they are in such high demand for their skill level, would make more money than an equivalent player in another league. Tranmere Rovers only has one player not from England or Wales and yet they’re technically in the same worldwide salary bracket as MLS!
Furthermore, work permit laws and league by-laws also limit the hypothesis. English clubs may have a whale of a time bringing in an international. MLS artificially caps wages for the vast majority of their players, because MLS “technically” only represents one club in the international transfer market. There have been some rumblings of salary cap manipulation as well, such as paying players much more in incentives than in salary in order to get that player under the salary cap guidelines, and those incentives go unreported.
I’m not trying to make the point New York Red Bulls are a better team than Manchester City or anything, or even that the MLS is good. I’m just trying to show a direct salary comparison for comparing the quality of leagues, while economical, may not always yield accurate results.
According to Transfermarkt about 30% of League One consists of non-English players, including two Americans. The FA report last week bemoaned the fact that the restrictions on non-EU players are not really effective, You would expect a higher English share at lower levels- even England has plenty of players at that level of talent- but it’s clear that the market is still very international. I think we agree the market is not perfect, but also the market is not so distorted that there are far better Americans willing to play in League One but can’t gain access to the market. It might be that English salaries at that level are a little inflated- but the comparison still seems reasonable.
Regarding permit restrictions, I do wonder why are there no more American/Canadian players in Bundesliga, the foreign player restriction is very relaxed in Germany, so the Work Visa restriction is not an excuse to move there.
I think a better study would be why MLS players do not try going to Bundesliga 2 if they want to get paid better money?
Perhaps #2 and #3 in your list.
Sure but this is more than just English players, the arms race includes all EU players, if the EPL can pay more than all other European leagues, the top talent in Europe would gravitate to the EPL, as of now there are still teams outside England that can match the spending power of the EPL. So this does not happen.
Mr Stefans point would be better if the USA or Canada were part of the EU, then we would see a lot more American/Canadian players playing in European divisions that pay more than MLS, but being outside the EU allows MLS to keep player wages relatively lower than European wages.
Now that breaks down a little for International players (with out EU or Green cards). European markets and the USA are in the same global market for those players, therefore market forces will put the best (example African) players in Top European leagues and rest in Asia/MLS/lower European leagues.
Mentioned both in this thread and the earlier, related blog post thread, is Liga MX. Mexican, U.S. and Canadian soccer are interconnected in many ways, commercially and competitively. To further integrate the soccer of these countries, and provide more matches than we get in the CCL, MLS should invite the biggest Liga MX clubs into the league. Obviously, there are business model hurdles and archaic FIFA rules to navigate, but the idea would be to leverage the best of what both leagues have to offer into one, stronger, North American league, from Montreal to Mexico City.
Perhaps in time, this league could compete with the big South American leagues for the title of best league in the Americas. I’m not yet concerned about the ability of MLS to compete with the European leagues or P&R, but rather taking advantage of market and cultural dynamics unique to North America. While I’d prefer this version of MLS to be salary cap free with no limits on player nationality slots, these issues are, of course, much debated in many soccer communities.
I’m not saying an MLS player making $100,000 could make $1m in England (even though it’s only 600,000 pounds). Let’s take a look at the lower leagues in England, such as League One. A cursory glance of the squads in League One shows teams have only a few internationals not from Britain or Ireland, and on average they make about as much as the median MLS player (as 83% of MLS players make less than the average salary.)
Therefore, either MLS = League One because salaries are equivalent, or there’s something else going on. Because lower league clubs field mostly Englishmen, there’s greater demand for English players. Why do they field Englishmen? Is it because English players are better than American players? Or is it because there’s some sort of geographic financial advantage you get by investing in players closer to home? That’s an answer I don’t have a question to, though it’s in part problematic due to work permit restrictions.
Furthermore, MLS may be the most top-heavy league in the entire world when it comes to salaries, but I don’t have further evidence to back it up. I do know building a good team in MLS requires you to play a different game than building a good team in England or Belgium due to the requirements imposed by each league and country (MLS Salary Cap, EU Work Permits).
Therefore, I agree the market displays a wage/ability dynamic, but the further away you get from the top clubs, the more the dynamic favors local players, which in turn leads to a local market in that country. Otherwise you’d have a truly open market, and I don’t think that’s what you’re arguing either.
If buying cheap Americans would get you promoted out of League One the English clubs would do it in a heatbeat
In theory yes, better yet buying cheap Brazilians.
But the player market is not a free market, there are restrictions on the labor market that protects local labor and artificially inflates their value.
Actually the evidence is that Brazilians are not cheap – there’s an interesting paper from a few years ago showing that teams with above average numbers of Brazilians do worse that you would expect given the salary levels- suggesting that they are overpriced – or that fans prefer to watch Brazilian players even if they do not win more often.
League One clubs can’t buy cheap Americans due to English employment laws
Not only are there Americans playing in Football League One, there are even Americans in Football League Two e.g. Will Packwood played for Bristol Rovers and Jon-Paul Pittman played for Wycombe Wanderers this season. As I pointed out, the FA specifically complained that it is too easy for foreign players from outside the EU to get work permits and play in the lower divisions.
Stefan
The promotion and relegation argument boils down to a simple equation: Will US supporters demand the same from their clubs as any in the world, or continue to abandon the US game for imports? Whilst the latter may not serve the US game, has the closed league system and D1 privilege granted to MLS allowed them to profit from that abandonment?
In my experience, a small die hard minority in the US insist that US clubs be limited. Another group goes to MLS blissfully unaware that MLS does not offer their clubs the same opportunities as any in the world. Most US supporters simply tune in to imported soccer.
Google Data is clear on this trend. As recently as 2005, MLS was the most searched league in the US. Since then, UEFA Champions League and Premier League have leapfrogged over MLS doubling and tripling our top flight in search interest. Same story in mirrored in TV ratings.
If you’re an MLS backer, the league has adroitly found a way to profit from this dynamic. If you’re me, you say they’re cynically selling the US market. Whatever you say, this effort called Soccer United Marketing (SUM) and it was formed over a decade ago. In this arrangement, MLS owners profit from nearly every high profile friendly in the US…. and we’re in for a banner summer in that department.
How valuable is SUM to an MLS owner? By my rough calculations, the shares every MLS owner gets upon entering the league are are now worth about $20 million.
According to Facebook, there are more US soccer supporters on their platform than people living in Spain. This goes towards the point of American soccer potential, which Facebook indicates is breathtaking. How much of this interest are MLS owners not only willing to concede, and how much do they profit from doing so?
As MLS trumpets their relative success in wage control and survivability to the rest of the world, perhaps it would be interesting to ask other leagues if they would accept giving up their domestic market to imports in the quest for financial stability and even profit. It is a critical component of the MLS model.
Bringing us back to my thesis: As long as US fans are content with this scenario, MLS will trundle on subordinating US clubs in the global marketplace while selling the US market to imports. This is perhaps the most special circumstance under which our top-flight exists.
I can’t imagine Brits would allow BPL clubs to be limited and the league to be subordinated – while owners turn around and sell the UK market – for owner profit.
Can you?