My argument that MLS is really “Minor League Soccer” continued to stoke some controversy over here in the US last week. Judging by the reactions on twitter, most of those who follow MLS do not really contest the point. Serious football fans in the US know their soccer, they watch games in leagues from other countries even if there are no Americans playing in the games, they know all about the Champions League, the EPL, La Liga and more besides.
In short, they are not guilty of the parochialism that is so common in the rest of the rest of the world. Mostly they know that the quality of the football played in MLS is not high, and they accept that this is inevitable in a league where on average each team spends only $5 million on player salaries, a figure maybe thirty times smaller than in the big European leagues, and smaller than probably about 30 other leagues worldwide. As I have said all my career, and as I think most fans have largely come to accept (thanks in no small measure to fantasy games and video games such as FIFA and Football Manager), spending is a fairly good indicator of quality.
There was a fun to-and-fro between myself and Alexi Lalas last week on the issue since he demanded to know what else other than spending demonstrated that MLS is a minor league. My response was that objectively teams with low spending consistently lose more often than win against teams with high spending. The players on teams that win are thus objectively “better”. No doubt there are other statistics one could cite to show that players in better leagues do more – but that is missing the point.
Subjectively, you can still enjoy watching a league where the players are objectively worse in the sense I describe, and a good example in the US is the sustained popularity of college (American) football compared to the NFL. Perhaps if MLS spent half as much as the big European leagues (e.g. 3 times as much as Belgium instead of one third as much) then this point would become moot. As it is, the gap is too large, especially for the TV audience, so that viewing figures for MLS even in the US are on average below the EPL, the Liga MX (Mexico), and no doubt a long way behind the viewing for El Clasico.
So right now we are in a situation where MLS has developed a respectable following in the stadiums, negligible penetration on TV, and is thus unable to generate the revenues necessary to acquire the players that would make it truly Major, while at the same time making a profit. MLS makes in the region of 10% of its revenue from TV contracts – major leagues (in any sport) make in the region of 50% of their revenue from broadcasting nowadays.
A good comparison is the JLeague in Japan. Launched at the same time, with a similar number of teams, a similar level of annual average attendance and a similar problem of limited TV acceptance by viewers who can easily watch better quality football from other leagues. And both leagues could go on like this forever. No problem.
But, the issue, as it seems to me, is that most MLS fans want it to be truly Major- to rival the quality of La Liga, the EPL, the Bundesliga, Serie A and so on. So how could that happen? What most fans seem to say is that MLS is still only young, has done well to get this far, and is set for further rapid growth as the game gains more acceptance in the US.
I don’t buy this theory. First, it is now nearly 20 years old, plenty of time to generate loyalty and interest. The problem is that US TV audiences are not warming to the product and that will not change so long as quality is low. Moroever, this theory seems to rely on the idea that the rest of the world is just standing still – when nothing could be further than the truth. 20 years ago the only rival on TV for MLS was Mexican soccer – there were few other live games shown on mainstream US TV. Now fans can tune into several other leagues, almost all playing at a much higher standard. These leagues spend more heavily than MLS and the amount they spend is growing as fast or faster, from a higher base.
Even worse, new leagues are developing- take the Indian Super League that started last season. Asia is a huge market for football with few leagues of any standing. Historically they had limited spending power- now that these regions are becoming wealthier their domestic leagues may also strengthen. Thus the demand for talent globally is expanding and the US is becoming a smaller part of that global market, not a larger one.
What to do? Like I say, MLS could stick with its current strategy and remain “minor” – after all, as others have observed, in some sense this is just semantics. But if it genuinely wants to grow the market then I think it needs to open itself up to competition. The single-entity (SE) structure that it has adopted makes it more like a workers co-operative – not a business model that has dominated any global market outside of sports. And in the world of sports it only works in leagues like the NFL, MLB and NBA which are unquestionably the dominant leagues in their sport and have long been so. Because football is global market with dozens of seriously competitive leagues, the cosy arrangements of the majors will not work for soccer.
If the SE model were abolished then some owners would seek to make their team dominant. Other wealthy individuals would show an interest in buying a franchise and pump millions into buying the talent. This is what happens, and has always happened everywhere else in the world of football. Most people are familiar with the examples of Chelsea, Manchester City, PSG and Monaco in recent seasons- but there are examples going back more than a century.
Why do these people do it? The sports historian Derek Birley, when talking about the investors in English clubs in late nineteenth century put it thus: “It was more often civic pride, particularly in the smaller towns, and the desire to be someone in the community, that led people to take shares in a soccer club.”
To be someone in the community- only today it is a global community. Bring Lionel Messi to your club and the whole planet will know who you are. And there are now literally thousands of billionaires on the planet with the money and the ego to do just that, or something like it. The US would be very attractive to such individuals, since making it in the US remains the gold standard for business success.
So why not abolish SE, let competition rip and egos soar? The response of American fans seems very timid, and very un-American. American owners, uniquely, have to be in a position to make profits, they say. Let’s be clear, football clubs around the world almost uniformly do not make money. UEFA reports that in most years over 50% of the 700 or so clubs in the top divisions do not declare a profit- and at the lower levels and in other parts of the world matters are probably even worse. But this does not lead either to (a) leagues folding or (b) investors refusing to invest. Even in the US, most colleges seem to not make a profit on their American football team- it’s a recognized loss leader.
But even if the league might not fold if some teams lose money, many fans seem to worry that their team might, losing access to top level competition. One of the facts that Simon and I were at pains to point out in Soccernomics is that even if teams owners lose money and declare bankruptcy, the football club almost never disappears. In the last thirty years there have been literally hundreds of football business bankruptcies in Europe, but almost none of the clubs have disappeared. The reason is that there is always someone willing to invest to resurrect the team, and often the fans themselves do the job (there is now a lot of experience in doing this in Europe – look at the track record of Supporters Direct). Ultimately clubs represent communities, and a bankruptcy cannot dissolve a community. It seems ironic that MLS fans don’t see this, since they are in fact some of the best examples of soccer communities in the world.
To be sure, if an MLS team today folded it might be hard to find an investor, but then what’s the incentive? You can’t become a hero by building a stellar team in the SE system, all you can do is maintain yet another mediocre franchise.
One issue that people raise at this point is promotion and relegation. I have written several times over the years that fans in aggregate benefit from promotion and relegation. But then I have also pointed out that the system is not without flaws. This is a separate debate, but an important aspect of the system is that it allows investors to enter at lower levels and build up a club over time.
The bigger point, I think, is that owners are capitalists whom we want to encourage because they risk their money to create better products and services for us. They are our servants, not the other way around. We should celebrate them when they take risks on our behalf, but not create a world without risk for them for fear they might lose some money and take our ball away. Capitalism works best (for us) when capitalists compete. MLS is not doing the job for us.
Finally, if the SE system was done away with and competition let rip, many MLS fans worry that parity would suffer and this would reduce interest. There is now a mountain of published research on the effect of parity on demand in the US and across the world. I wrote a review paper in 2003 and found very few papers provided strong confirmation that parity enhanced demand. In a recent paper Jason Winfree and I reviewed the literature since 2003 and found a similar result. The only conclusive evidence about fan demand, which shows up consistently in the data, is that fans want the home team to win- which is kind of obvious, since most fans at the stadium are home team fans.
No doubt fans in cities where there was less investment in the team would suffer in a truly competitive market, but even then those fans would get to see the strong teams play when they came to town- the Chicago Cubs have never had an attendance problem.
In the end, you will still not find my arguments convincing if you believe that America is just different. This is not just about American exceptionalism. I have taught economics all over the world, and the one reaction that you get consistently is “ah, great theory, works everywhere else, but just not here”. Everyone thinks they are an exception. But, like the vast majority of economists, my view is that when it comes to markets, we all bend to the same forces.
So, the point of this essay is this: MLS could become a truly major league if it allowed the forces of competition to play out. Probably that means dropping the SE structure. Possibly it means adopting a promotion and relegation system. But above all, it means allowing the capitalist system to operate as the capitalist system is meant to work.
There is one exception that you ignore about MLS, the demand is not there. If the Revs folded tomorrow, the hardcore fans would be upset but the region would say “Who?”. MLS is doing the smart thing of growing steadily instead of infusion of foreign talent that will get Eurosnobs somewhat interested. The key to MLS succeeding is for home grown players to be just as good as home grown players in Europe. That takes time and investment, it’s not an overnight fix with huge cash buys for top European talent.
I don’t agree that the demand is not there. There clearly is demand to see live games- attendance is good. The point is there is little demand to watch low quality soccer on TV in the US. I think there would be demand to watch a high quality league based in the US. The EPL manages to generate huge TV revenues at home and abroad with only 30% of players homegrown. The other big leagues are approx 50% made op of foreigners. In any case, I think Americans don’t care much about nationality when it comes to players, they just want quality.
How many teams survived NASL when that imploded? Just 5 teams out of 20, and it took years and a World Cup to get a Soccer off the ground again and a crap load of money, How many teams survived from the ASL? How many teams survived the A-League? I could on and on with all the failed leagues and teams. MLS nearly folded in 2001, but for a few owners they stuck it out. The only reason MLS survived is that Hunt built Crew Stadium where he paid no rent and got all the game day money from concessions. This is not Europe repeat this in not Europe. NFL MLB NBA NHL NCAA FOOTBALL NCAA BASKETBALL then MLS, they are not there yet. MLS road out the recession pretty well.
Why would the Owners break up MLS LLC? its working, just sports writers and Eurosnops seem not to get that this league is only 20 years old. Please give an example of any league that has Free Agency and wages have to skyrocketed.
Funny you should bring up the failed leagues and teams of years past, because their business models were not dissimilar to those currently employed by MLS. They all folded precisely because the closed system and the general top-down approach proved utterly ineffective. Rapid expansion for the sake of collecting entry fees is an antithesis of the “slow, sure growth” that MLS claims to be on.
Most MLS owners would barely blink if MLS folded tomorrow, seeing as they have much more invested in their NFL, NBA, and even their Europe-based teams.
Why do MLS “fans” insist on using terms like “Eurosnob “? I love the football played in Europe, I also love South American football. MLS has a long way to go before it becomes a viable option to hold a sports fans interest. The quality needs to be on the pitch before people will buy in to the product. It’s the 4 P’s of marketing.
The article by the good doctor is spot on in my opinion. MLS is too bland, too many teams make the playoffs, the Supporters Shield is confusing, the Champions League is not given priority. So many things are out of whack at MLS it’s hard to like. I want good football in the US. I want MLS to succeed. At its current pace I fear I won’t see it in my lifetime.
If you read what you wrote, you would understand the definition of a Eurosnob. If you are not willing to grow with your team or league as it increases in quality, well you’re a snob.
Adding teams like there’s no tomorrow
Letting apathetic NFL/NBA owners take control of the league
Pocketing money from the USMNT and summer Euro friendlies
Driving rank-and-file players into careers in accounting/nursing
Hardly seems like a recipe for a league grow and/or increasing in quality, does it?
MLS and SUM actively encourage Eurosnobbery. You’ll never hear that from them, though.
The NASL is not singe enity. They could have pro/rel with any league below them if they want. Why are the billionaires investing in that league building talent to dominate MLS?
Define ‘little demand for low quality soccer on TV’ in the US. This suggests that there is (and has been) real demand in the US for ‘high quality soccer on TV’, but poor Americans just couldn’t get it. If your free market hypothesis regarding player investments were also true regarding fulfilling the ‘demand’ for ‘quality soccer’ on TV, then the EPL would have been picked up by a major network years ago (and not by a 5th tier extension of NBC Sports). They reality is that demand for soccer in the US has steadily increased over time driven mostly by (a) generational shifts and (b) globalization. As early Gen Xers who actually played the game in youth entered maturity and spending power, the MLS started to get traction never seen by previous attempts at pro soccer in the US. Rivalries, traditions, fan bases and ultimately the demand economics underpinning your thesis do not happen in just 5 years. EPL emerged over 100 years in an environment where other national, let alone global, pro sports leagues did not exist. The U.S. is the most competitive media market in the planet, and hosts the best of the best pro leagues outside of soccer and cricket on the planet. Cut the MLS a break. There is nothing minor about it. Placing wildly unrealistic expectations on it relative to the role of soccer in other markets, cultures and histories is ridiculous.
League soccer in England is indeed very old- but it also came close to collapse in the 1980s. In 1990 the total revenue of the top division clubs was just $200 million, by 2013 it was over $4 billion, and by 2016, with the new broadcast contract, it will be more like $7 billion. I am not comparing a different market here- the EPL competes in the same global talent market as MLS. It is even competing for the same TV viewers. The MLS Cup was the biggest draw on TV for the league last year and managed only 1.6 million viewers – about half the number for the Liga MX final. To be major, surely you need to be at least the biggest TV draw in your sport in your own country?
You do understand that a good portion of the people watching other leagues are ex-pats & their children who have had the tradition of the team past down by their parents? Although you like to point out MLS is 20 years old, half the teams are less than 10. As one generation has grown up with MLS and starts to pass the tradition to the next numbers will increase. Will it ever competed with the big five, who knows? Right now it’s more impressive that MLS can compete with all the other sports in its own domestic market.
FC Dallas is an exception. Low salaries, but one of the best in the MLS. I think they’re an outlier though and that this piece is on point.
I don’t know where to begin. There are so many things that seem wrong with the arguments made here. First, I don’t accept that the MLS product is bad. I think it is good quality and constantly improving. Second, money is rough proxy for quality, but certainly only one of many factors. I think everyone is familiar with the MoneyBall example from baseball. Just because more money is spent doesn’t ensure better quality. We can see that in the past few weeks with CL with no EPL teams advancing in spite of spending the most money.
I also question your knowledge of economics. There are clearly diminishing returns when it comes to soccer spending. If in the next CBA, the league increases the spending per team to $5 million + DPs over the $3 million spent today, I think we will a see a significant increase in quality and depth. If ManCity decided to spend an extra $10 million/year, they are just as likely to see a decrease in quality as an increase.
There are other factors that make MLS attractive over other leagues that make a direct spending comparison less meaningful. First, the US has a better quality of life over many competing leagues, such as LigaMX. If you are a player in the US the chance that you or your family will be kidnapped is pretty slim. Second, MLS pays their players. Many competing leagues have problems in that regard. $200K in guaranteed compensation is better than $500K that may not come through. Third, general anonymity, most soccer players (Theirry Henry for instance) can move around NYC with relative ease and not be constantly harassed by insane soccer fans. Fourth, ease of work permits and immigration. You can come here and play, not so easy in Europe. Finally, I would argue that American players are undervalued. The US still does not get respect in the soccer world. While that may be changing, we can employ good players in the US for much less money.
There is also another key problem with your argument that you mention. We are not Europe, we need to find an American model that works. Our owners want to build a league that is profitable. Our owners are not going to spend for civic pride. They want to make money. The single entity system allows for steady and organic growth that lead to profits which will lead to a better product.
There are several factors that feed growth. For a long time you could not see MLS on TV. Now you will be able to see nearly all of the games. Soccer is the most played sport in the US. Football and baseball are on the decline in youth sports. I think you will see more games available on TV and more people with soccer knowledge lead to more people watching that will lead to bigger TV deals and more player spending.
OK- I didn’t say it’s “bad” – I said it is “minor” – an interesting reflection on your own psychology that you equate the two.
On economics, I suggest you click on the link to my review paper from 2003 above – that will provide you with a deeper appreciation of the economics that underpins my analysis.
I am happy to read the paper. I think fixating on bad or minor, is focusing on a distinction without a difference.
Calling someone a Eurosnob because they prefer to watch higher quality soccer is getting to be tired rationalization. It is a bit like telling someone who lives in a small town with a single A baseball team that they shouldn’t be fans of MLB because there is a team right there in their backyard. If you watch games there is a clear gap between the top leagues in Europe and MLS (and for that matter the FMF). If I would rather watch Barca because their quality of play is far superior to say the San Jose Earthquakes, that does not make me a Eurosnob, it makes me a fan of quality soccer.
As the American soccer community grows and becomes more knowledgeable and informed on what quality soccer should look like it will become increasingly important that MLS change their approach. The SE structure was needed to get the league off the ground, but even kids have to take the training wheels off the bike at some point if they want to become successful riding a bike (and yes this does mean there might be some crashes). If MLS will not take their training wheels off they cannot be upset that the increasingly knowledgeable American fan base turns to better forms of soccer. That does not make these people Eurosnobs, it makes them intelligent consumers.
Very well put. MLS, SUM, and even the American media encourage the so-called Eurosnobbery on a daily basis — hell, the Champions League trophy is scheduled to make the rounds across the US later this month! Never mind the relentless hyping up of the competition itself, on top of the plethora of summer friendlies, on top of NBC’s production of EPL matches (which, btw, are far superior to even the coverage of “big four” leagues among other US networks).
The term “Eurosnob” in itself is nothing more than a naked, yet ultimately empty attempt at shaming and guilt-tripping those who choose to invest in a demonstrably better product. Since when did making a rational consumer’s decision become akin to snobbery and treason?
The whole ‘Eurosnob’ charge comes from assuming if it in the US, it is not good and if it is European it is great. I think everyone would agree that Barca, Man City, Bayern Munich, Real Madrid are truly superior (with same 5 or 6 teams entering or leaving the truly elite in any given year). They are superior to almost everyone. If you look at the bottom of the table in La Liga, Bundesliga, EPL or LigaMX for that matter, soccer is far below the top standard. I would pit LA Galaxy against any of those bottom of the table teams and I think you would see LA, or New England (the MLS cup teams last year) performing well. That would not have been true 10 years ago.
Will MLS be as good as Real Madrid spending $3 million/year, no. Having said that, neither will Leicester City spending what I am certain is many times more than the average MLS team.
My point is there is good soccer played in the US. There is also bad, but the share of ‘good’ is increasing each year. The soccer in the US is also developing into a unique style just like all of the other big soccer leagues. I personally am not a fan of most of the EPL soccer, but I can marvel at the play in La Liga and Bundesliga (probably because I can only see Barca, Madrid and Bayern most of the time). One last point, most of the additional spending in Europe (outside of the top teams cited above) is not necessarily building vastly superior starting teams, it builds depth to compete in league play, CL, Club WC etc.
Stefan,
Excellent piece. I think you may be on to something worthy of deeper analysis in trying to underatand why attendance at MLS games is good yet TV viewership is poor. The product on the pitch is definitely part of the equation but I suspect there are a number of other factors contributing to the “major” vs. “minor” discussion.
The single entity philosophy was definitely beneficial for the league to establish itself, weather tumultuous financial periods and low interest levels but to evolve into a truly world class league the SE philosophy must evolve as well.
“Ultimately clubs represent communities, and a bankruptcy cannot dissolve a community. It seems ironic that MLS fans don’t see this, since they are in fact some of the best examples of soccer communities in the world.”
I think this statement is incorrect with regards to the American sports scene. The top flight in each major American sport is a closed league where the ownership is not necessarily required to stay with the community. Each sport has seen clubs move locations leaving the vacated community with no equivalent team to replace them at the decision of the ownership group and with the consent of the rest of the league owners. Even when the team was replaced (in some cases decades after the initial relocation) it was a new team with generally a new logo and no connection to the past team. This creates a different fan dynamic for American sports fans and i don’t think most fans see the same connection between the club and the community that fans from around the world do with their own teams.
As a result, I think a lot of Americans view their pro sports in more of a business sense than non-Americans and there is not the same level of community attachment. That attachment seems to be much more tied to college sports and probably partially explains their popularity.
Ultimately, it is the closed nature of the American sports leagues which make professional sports different in the US compared to the rest of the world.
I think this discussion ties in with the free agency debate because it gives us an insight into the owners psyche and their current vision for the league.
The most important distinction between MLS and other US leagues is not only that it must operate and “compete” in an international market but that international market is far more influential upon the level of salary than MLS denial of free agency which can only ever apply domestically.
Therefore if MLS wants to approach the quality offered by other leagues denial of free agency within MLS rapidly becomes irrelevant as a cost control factor because the quality of player they need to improve are all free agents within the global market and the owners surely know this.
So why would they dig in and try to deny free agency?
Because ultimately granting free agency would erode the bricks and mortar of the single entity structure which is currently the owners comfort blanket.
As long as that exists they can pick and choose the level they have to actually compete within the free market by inventing other mechanisms such as the DP rule.
This tells me that the owners are completely disingenuous when they talk of wanting MLS to be a top 5 global soccer league by 2022 – without free agency and a rigid Single entity structure it cannot happen.
With the DP rule they can maintain the illusion of being relevant domestically and operating globally while controlling costs which is a smart strategy to grow MLS to where it is now but buying up the odd ageing star name will not give you a league of top standard. Top leagues have Super DP’s in the prime of their careers in every position and in backup positions relative to the MLS model which has the odd end of career DP.
single entity structure was the smart and safe way to build MLS but it now threatens to strangle further growth.
It is not a coincidence that the CBA negotiations and free agency debate are reaching crunch point now – it is precisely because MLS has now reached a level where it needs to operate within the free market if it wants real growth rather than maintain restrictive protectionism.
That is the crossroads that MLS is at. Does it stay below the radar and continue to play it safe and be a quaint domestic”minor league” with slow growth potential (Which is what the owners actions suggest they want) or do they do away with the protective but inhibiting crony capitalism of single entity and compete with the big boys?
The truth is MLS is scared to operate in the free market. The owners want to be a big fish in small pond rather than a small fish in a big pond and take their chances right now.
The only way MLS can become relevant on the world stage as a top league with that strategy is wait for a plethora of domestic talent to come through but guess what? If MLS is to capture those players it is till going to have compete with the global market for their talents so it is a self defeating policy.
If MLS continues along the same path it will grow a little along with expansion and slightly better domestic TV deals but by 2022 it won’t be near the top leagues, not by 2050 either.
It will find its niche in the US market and be a “nice little league.”
There was no demand for even the best leagues or the World Cup until very recently. Also, liga MX has giant ratings but only among Mexicans and despite not being a world leader. And what about the psychology of other countries in which it is acceptable that only the big city teams will compete for the title, due to the resources. That’s not the American way. Parity does not mean mediocrity. It means having a chance, even in a few years. The silliness of the “relegation battle” is being delerious that you’re not the worst. All so you can do it again next year. Or “qualifying for Europe” so you can play second stringers in Europa league. The world audience watches the top 5-6 teams in the EPL. That won’t work in the US, where every city in the other sports has teams that go through cycles of being good. That’s why I enjoy MLS.
When you say no demand for soccer you are talking about within the US specifically which is a very small and insignificant soccer market in global terms.
Because MLS has to compete globally I’m afraid parity does mean mediocrity because MLS has no means of monopolizing all the best players – quite the opposite.
And parity within MLS (which truly cannot be describes as anything above mediocre in quality) is merely a mirage thrown up by the glare of single entity hubris and the randomizing effect of playoffs.
As quality of the league improves so the disparity will increase even with controls such as the salary cap in place. One might argue that a hierarchy within MLS is already beginning to emerge.
So long as growth and quality are limited to the lowest common denominator then quality will suffer – that is why socialist and communist systems ultimately stagnate and deteriorate.
If MLS could operate in a bubble like NFL then it would be different but it can’t because the best players operate outside the US as free agents.
It can maintain limited improvement with the DP rule and better homegrown talent but it can never rise beyond mediocrity with forced parity rules.
I particularly like Stefan’s GLOBAL perspective. that soccer, unlike NFL, MLB, NHL and NBA is a GLOBAL game subject to GLOBAL competition. as such, a single entity USA/Canada only system doesn’t work in the GLOBAL ecosystem. because MLS is competing with the WORLD for talents. i read that Tim Cahill (formerly NYRB) is picking up $5 million for one year (figure unconfirmed) to play in China Super League. which is no big deal as MLS regularly pays more $ for Kaka, Lampard, Gerrard, Beckham. however, what caught my attention is, the China Super League pays $11 million per year for a coach, Marcello Lippi (Guangzhou Evergrande). did MLS ever pay $11 million to a coach? my survey of China Super League reveals many teams hire european/brasilian who played at the best euro leagues not only to play but also to coach. (something like US Soccer’s hiring Jurgen Klinsmann).
MLB, NHL and NBA are part of global sports. It just so happens that the US leagues are at the top or near the top for those three sports. There is competition from Europe and Asia for players in baseball ,basketball and hockey. Stephon Marbury, Steve Francis, Gilbert Arenas, Tracy McGrady all play in China. They used to be stars in the US.
The difference is that MLS is on the other side of that equation. I would much rather see MLS emulate the models of the NFL or MLB than the EPL. Profits should drive spending on player salaries not just the ego of the owner. What happens to when Manseur loses interest in Man City? Look at Berlusconi and AC Milan for a real life example. If an MLB or NFL team wants a new owner there is no problem finding one because they generate profit (albeit from publicly financed stadiums, but I digress).
But then what about the membership model of Barca, Real Madrid and Bayern Munich? What about the growing Support Trust Movement (Supporters Direct, etc)? The difference I think is, roughly speaking, that the MLS owners put profit before the interest of the fans, whereas elsewhere the interest of the fans comes before profit.
The elite model in soccer reminds me of college football in the US. A few teams are highly profitable and high spending with almost everyone else losing money. The NFL and MLB models ensure that all of the teams are profitable. I think that model builds stability. My team DC United would not exist without the single entity system. Now that DC has a stadium deal, I suspect they will be profitable in the next 5 years.
I think having fan ownership is a very interesting idea. There is precedence for it in the NFL with Greenbay. I suspect that it could work for a USL team. For MLS, I think stadium financing would be tough, but not impossible. For teams like Seattle, Portland, KC, DC, RSL and LA with hardcore fan bases and good supporter groups, I think it could work.
Great article. Articulates a lot of things I’ve been thinking for a very long time.
I think the thing that a lot of MLS fans struggle to understand is why the NFL/MLB model doesn’t work for soccer here.
If you are a fan of American football, you’re going to watch the NFL regardless of where you live. It far and away the best option, and is very easy to access. So if you live in Oklahoma City or Portland you’re going to watch it even though you have no local team. And in this world, parity is king. Parity makes the games more compelling and keeps more people watching games that otherwise wouldn’t matter right up to the end of the season. But this only works when all of the fans of your sport are already watching you league.
With MLS, unless I have a team in my town that I can get emotionally invested in, there is really no good reason to watch MLS. If anything it’s easier to watch European games, to say nothing of the quality difference. You’re simply never going to get a TV revenue stream that’s going to match the other big American sports, unless American fans somehow prefer to watch the domestic league.
While it’s very true that the quality of play is improving, and that this helps somewhat, this isn’t necessarily going to result in increased TV viewership among unaffiliated fans. The quality is still nothing like other leagues on TV, and it’s not going to be, and in this globalized sport there is no reason for a soccer fan in Nashville to be more interested in the Columbus Crew than in Chelsea or Everton.
The only advantage MLS has in winning over American fans, is giving them a local connection. You have to have as many teams as you can possibly manage playing in cities throughout the US and Canada so that fans start to buy in to the idea that this is “their” team. People will watch a mediocre product only if they feel a connection to it. Then they will start paying attention to the rest of the domestic product.
It’s absurd that MLS and NASL are trying to pull in different directions, because US professional soccer needs teams in all of these cities, and a dozen more. But MLS is trying to build the same closed cartel like system as in other American sports, when it can’t ever work. By keeping the league small in size you’re giving up the only advantage you have in winning over American fans.
You don’t need pro/rel or anything like that. You only have to look at college sports in the US to see that you can have dozens if not hundreds of teams competing in the same system. It’s not a level playing field, and some teams will always have advantages over others, but it provides the maximum number of fans with a reason to get invested and pay attention to the league. It’s better to have a poor team in a medium sized city – even if that team struggles to win – than to simply let soccer fans in that city spend their time watching a foreign league.
There is no escaping the facts:
2014: USD 100MM+ in losses by Don Garber’s own admission
1996-2014: 19 straight years of losses when considering CAPEX and Beckham Rule off-balance sheets costs
2014: Real Madrid, a fan-owned and operated club, generated more revenue (USD 750MM+) than all four professional leagues and their clubs combined across all three pro divisions (MLS, NASL, USL Pro and NWSL)
2014: The Dutch league (population 17 million) generated more revenue than MLS (population of USA+Canada 352MM) Source: Deloitte
MLS’s current strategy is to maintain the status quo — which means the revenue gap between the USA+Canada and Europe will widen over the next decade.
MLS’s revenues are capped for nearly the next decade.
I agree with you doctor but there are some questions I have. If MLS is in the 30s when it comes to wages where is Liga MX in wages. I ask this not to compare with each other but two combined. I would like to know from economic perspective. How big of a economic growth would MLS have if they were to combined with MX and form a true north American league. Would the economic affect Bump the new League into the top 10 in the world. And with the economic gain allow the newly liga to be competitive and use a American style of sports economic. Maybe not a salary cap but shared revenue and A luxury tax so it would prevent club America from winning the league title every year. Would love to set up an interview with you about the economics of let American soccer here in the US for documentary
Interesting idea. I don’t have data for Liga MX wages – any ideas where you can find it?
I and trying to get in contact with Univision and Telemundo for some data. And also with some reporters that cover Liga MX Eric Gomez and a British man Tom Marshall originally from Manchester now residing in Guadalajara and covering Mexican soccer in. But if you have any dat about how much money latinos generate here in soccer in the US it would be helpful for my documentary about Latino soccer culture here in the US. Thank you for your time Dr.
Here is my issue with your math. You seem to take a mean average way of discussing wages. Sure, Chelsea, Man U, Man City, Barca, Real, Bayern, PSG, Monaco and a few other teams spend massive amounts on wages. However, half of La Liga pays 20 Million or less and have of the EPL pays $60 million or less.
Bundesliga pays about $600,000 annual per player and Ligue 1 pays less.
You obviously are a big fan of free market capitalism. However, free market capitalism in these other leagues results in few teams that can actually compete for a league championship. Of course the answer from the free market capitalists is that this is fine, because the weak teams get to play to stay on the first level, so it can even be exciting for fans of weak clubs.
I also see your arguments don’t really take the DP issue into consideration. Some teams are paying above 10 million in DP salaries. Concentrating only on the salary cap misses these players.
When we consider the salary cap, along with DP payments, teams like the Sounders, Galaxy, Toronto, etc, are paying in the range of $15 million a year in player salaries. That is right smack dab in the middle of the bottom half of La Liga in player salaries.
So the question is, what are we talking about when we are talking about the top leagues? Because half of these leagues look different than the top of their fixtures with respect to salaries. If we use mean averages, we get a distorted view because each league is skewed by radical outliers at the top.
That being said, MLS definitely needs an increase in spending. Whether this means a second group of DPs in the $500,000 range, with an increase in the salary cap for Non-DP players or just a salary cap increase is not important. However, there is no reason to jump to an entire free market system model.
Team Salaries in the range of $15 to $25 million, which would allow for some flexibility would be enough to raise the level of play to attract American television audiences. But, when you have a $39,000 level player on a first division team, your level of play is just not good enough.
The DP rule has brought some excitement, but MLS needs more players like you would see in the lower halves of the major conferences all over the pitch to raise the overall level of play. That is how they will eventually be a top league. Not by some radical free market transformation.
You’re right to say that the mean salary could misleading – it’s possible that a few of the top MLS teams could give some of the smaller clubs in the big leagues a good game- but then a few teams in AAA baseball could probably give some teams in MLB a good game too. But AAA is still minor and MLB major.
I believe it is a mistake to equate salary with good soccer; it is a bell-shaped curve at best. And while I do watch soccer from England and Europe, I almost exclusively do so when there are no MLS matches available to watch.
The matches I do watch will generally be either to see an American play or a match between at least one, preferably two, top 5 teams. So, for example, I would spend two minutes watching a match between Stoke vs. Hull.
While I won’t pretend to imply that MLS is an elite league, the level of soccer in MLS, is fairly comparable to what I’ve seen outside of the top eight teams in one of the top four European leagues and quite frankly, I enjoy watching it. Also, I don’t think your article gives MLS enough credit for the rapid increase in talent that we’ve seen in the past three years. I would expect this trend to continue for another year or so and then level out until the next TV contract. This factored in with the maturation of MLS team academies bodes well for MLS.
the link between wages and winning in soccer is incredibly strong- if you don’t believe me you need to look at some of my research.
I do give credit to MLS – it has raised spending to a level at which we can truly describe it as minor, in my opinion. If you want to say AAA rather A, then we can have that debate- you might even be right.
I think you are missing the point of what success is. Realistically only 3 to 4 teams at most have a chance at winning in each of the European Leagues and they are the same teams every year. MLS does not have the revenue to steer away from this current format, nor the fan base. The European Leagues represent everything that is wrong in the economics of sports. They are even worse then MLB. I started following MLS to get away from that. What you are proposing would bury RSL and teams in those unattractive markets for marquee players. Look at the NBA and their system. It is a joke and every year teams are on the verge of moving and needing to be sold. No one gets rich by following your proposal which is have some rich owner take a loss in hopes it will recover as the whole league will benefit from overpaid stars. Watch Once in a Lifetime and then re-write your proposal that sounds a lot like Obamacare.
As the saying goes, I’m not missing the point, I’m missing your point. If you don’t like soccer as played in Europe then you’re entitled to say so. My opinion is that that most soccer fans, including MLS fans,recognize European leagues as the gold standard, and I see far more people agreeing on this point than on your point.
Mr. Szymanski,
I am a big fan of your work (I gave the most recent update of “Soccernomics” to my father as a birthday gift recently and we discuss it at great length, usually until my mother rolls her eyes makes us both stop). Great and thought-provoking work.
But I do have a bit of an issue with your treatment of the “TV problem” that MLS continues to struggle with. I feel like you (along with Mr. Kuper) have generally ignored the significant challenge of substitution/displacement that MLS faces in capturing meaningful TV revenues. I’m not sure you have correctly identified the “competition” that MLS faces in the televised sports market, particularly as relates to time slots and non-soccer sports programming. As a result, I believe you may be greatly overestimating how quickly and easily MLS will be able to fully realize the massive TV revenue available here.
In the US, generating significant TV viewership (and subsequently revenue) generally means capturing the 18-49 male demographic generally recognized as “TV sports fans”. Competition for these fans (most of whom watch more than one sport regularly) is fierce, particularly on weekends when the vast majority of MLS games are played. Unfortunately, for MLS, this audience is largely spoken-for by the deeply-entrenched “big dogs” of American sports (professional and college football, along with baseball), particularly during the latter and most meaningful stages of the MLS season. From a televised time-slot perspective, this is the actual “competition” for MLS (rather than global club soccer, which may be consumed in addition without substitution). If MLS truly wants to capture big-money TV contracts, it has to be able to prove that a 25-year old male is increasingly likely to prefer watching MLS above an NFL game or a big-time college football matchup on a weekend afternoon or evening. Otherwise, it will always be a marginal sport with reflectively minimal TV revenue
By comparison, the EPL does not have this problem in the US. Because of the time difference, there is effectively minimal or no overlap amongst time slots used for EPL games, and those occupied by NFL and college football. Basically, all the EPL needs to do to “earn” viewership is convince the US sports fan to get out of bed. There really is no “competition” for European club soccer in the eyes of the American “TV Sports Fan”, outside of non-TV activities
This is a big difference and a very different challenge. To me, it seems naïve to think that spending a few more dollars on bigger-name individual talents will help MLS achieve a quantum boost in TV ratings. The problem for MLS is not convincing American TV sports fans that MLS is now (or soon will be) equal in quality to the EPL or Serie A… it is convincing them that MLS soccer is more compelling viewing than the NFL game they are usually watching during that same time slot. This just won’t happen overnight, and it is not simply a matter of getting a few better soccer players. This requires a transformative, culture-level change, the sort that may take 1-2 generations to fully complete (although I do believe it is underway, at least to some extent).
Disagree?
Thanks for being a fan- I don’t expect everyone to agree with me, but I do hope I make a coherent case.
I take your point that MLS needs to compete for space on TV with the established major leagues and this is a challenge. sure, EPL doesn’t have much TV competition on a Saturday or Sunday morning. But then that’s also not prime time – which is where most viewers are to be found. If you’re right, then you tend to reinforce my point, which is not only that MLS is not major now (I don’t think that’s seriously in dispute), but that the obstacles it faces to becoming major are huge. You’ve identified further obstacles. You say. along with many others “it can succeed if you give it time” – but I’m not convinced – I think its global competitors are progressing more rapidly and will continue to do so.
Agree that MLS is not yet a major league, and I concur that the growth curve is (and will continue to be) slow. What I am saying is that the solutions you are suggesting – including abandoning or relaxing the strategic focus on LT parity/profitability in favor of signing more stars – are unlikely to yield much acceleration given the competitive landscape MLS faces
I just don’t think that an “impatient solution” exists. Displacing the sort of competition that MLS faces in the TV market (which really isn’t soccer– it’s football) cannot be done quickly by simply increasing the short-run quality of the soccer. It involves a cultural transformation that is likely to take place over the course of generations rather than a few years.
Fair comment
I was going to leave a comment but you summed it up perfectly for me. I could agree with this article 100% if MLS was just competing against other soccer leagues for eyeballs, however MLS isn’t really competing with them at all except for labor. Competing for bodies in stadiums is of course a non issue. As for TV the time slots do not match up so you can easily watch a foreign league and MLS. Sure an increase in quality would attract those soccer fans who don’t have a local attachment and just want to watch quality (there are many; until the most recent expansion no one in the south east could really claim to have a home team and its still hard for most even with Atlanta and Orlando coming on board). However I contend that even if you converted ALL US soccer fans to watching MLS it could still not compete with the NFL, MLB, or NBA for prime time slots on major channels. You need generic/casual sports fans to care about soccer for that to happen and they just don’t exist in this country yet. I don’t think buying out the EPL wholesale and moving all the teams to the states tomorrow would move the needle for the 50 year old who never grew up with soccer and doesn’t know a thing about it. We just need to wait for the late gen Xers and early millennials who are the first generation to really follow soccer in significant numbers to transmit that love to their kids (and wait for college sports to implode due to rights issues and football’s labor pool to dry up due to head injury concerns).
At best increasing quality through a competitive market would just ensure a greater percentage of the slow but steady stream of new soccer converts turns to MLS to get their fix.
Sounds plausible. But right now Gen Xers are learning to watch EPL, CL, Liga MX…anything but MLS – that’s not good for the future
I like the way you compared MLS to different minor league baseball strata. The league has grown from 1A to where it currently stands right now at AAA. Every 5 years a new CBA is hammered out, hopefully the new one will go one step further and give a significant boost to the salary cap. Now, on the other hand I haven’t heard you talk about how European soccer is moving toward a more controlled spending environment with its Financial Fair Play rules that have recently been established. According to Platini,
“Fifty per cent of clubs are losing money and this is an increasing trend. We needed to stop this downward spiral. They have spent more than they have earned in the past and haven’t paid their debts. We don’t want to kill or hurt the clubs; on the contrary, we want to help them in the market. The teams who play in our tournaments have unanimously agreed to our principles…living within your means is the basis of accounting but it hasn’t been the basis of football for years now. The owners are asking for rules because they can’t implement them themselves – many of them have had it with shoveling money into clubs and the more money you put into clubs, the harder it is to sell at a profit.”
It seems to me that MLS is heading up with its foundation already built and Europe is trending down in spending in order to make it’s clubs more viable. I think the European owners see the future in the way MLS is operating.
Good points. The gap, of course, is huge, but there’s no doubt many clubs in Europe want tighter cost control. FFP might do that, but really only applies at the elite level (MLS clubs, for example, would probably be exempt from FFP in Europe since their wage spending is too small). FFP is being reviewed in European courts – should know more about its legality in a month or two. My view is that FFP is not good for the future of European football, which gets back to the point that I don’t mind if rich owners plough money in and get no profit back – that’s always been the way in soccer and soccer has been better for it in my view.
A little off topic from many of the comments, but can you give me any of the examples going back more than a century of wealthy people buying a club and pumping money into it?
It would give me some serious intellectual high ground when people criticise monied owners in the modern game without thinking about how much better they make the sport. And I love the intellectual high ground.
Henry Norris at Arsenal and the Agnelli family and Juventus would be a good place to start
2 ponts
If MLS & USMNT had their own channel high quality production plus football news, they could partner with BEIN sport and get on almost every network out there. Buy GOL TV and have english & spainish channels with local tie ins to clubs etc.. they you could get a solid base of 1-2 million viewers it would save a fortune on media, branding, marketing etc.. also if the goal is to sell clubs (future MLS second division to big euro clubs) also let them in as minority low voting rights investors into MLS teams they could raise a ton. I would let BEIN run MLS TV and let european clubs run the academies. This would drive the model to the next level.
MLS needs to compete in Americans wide competitions as we are leaving a huge future fan base off the table. If MLS could partner and expand into Carrib, Central & South American with academies & TV deals (in spainish hence the tie in with BEIN/GOL TV) this could be a nice source of both talent (cheap, fans, jerseys, tv deals and a nice bump in attendance 5k per club is realistic per game)
There is a ton that MLS can do, but they seem tied to a very weird model that has no proven success in other soccer leagues while they fight any best practices that work all over the world.