The End of the Beginning

I've been avoiding writing about the MLS labor issues as much as I can because, frankly, we've got a long ways to go between now and January 31 and you have to guess that there's one hell of a lot of woofing and huffing that's going to go on before, at 11:59 PM, a deal gets done.

However, yesterday I read an interesting comment from one of BigSoccers' resident pinkos, superdave, which I thought was so eminently germane that I've been mulling it ever since:

Now we all know what he's referring to here and I think it's a pretty universal sentiment: for years we all watched Wall Street guys make really offensive amounts of money which, they told us, they were earning because they were "really smart guys" who "took enormous risks".

Then came the financial meltdown and all these "really smart guys" were shown to be "really stupid guys" who lost not only their own shirts but everybody elses' too, and yet somehow they're still making offensive amounts of money, most of it because the taxpayers are bailing them out.

And we resent it. Duh.

But here's the thing: investing in Major League Soccer L.L.C. is not an enormous risk. At least, not any more. In fact, as it is structured and is now operating, there's virtually no risk at all, particularly if you can get someone else to build you a stadium.

Which is why some pretty saavy busnessmen are willing to pony up more and more money to buy in; it's not like pulling on an eyeshade and sitting down with Amarillo Slim. It's more like playing canasta with Grandma: win or lose, she's going to slip you a sawbuck anyway.

Put another way, the guys who've bought in have done so in anticipation of NOT having it be a gamble. It's designed that way. The players goal is, essentially, to try and change that basic equation.

In most other sports guys can buy teams, lose their shirts and be forced into a fire sale, basically begging someone to take the thing off their hands in return for assuming the accumulated debt.

That's risk taking, except in markets like New York, but what would a team like the Yankees or the Giants cost you? That's more like buying municipal bonds than cocoa futures.

In the early days a lot of MLS "Investor/Operators" fell by the wayside simply because they couldn't (or didn't want to) meet the yearly cash calls. Which is how Lamar Hunt and Phil Anschutz ended up owning three and six teams, respectively.

The other guys just walked away, proving the validity of the single entity structure: since the league itself owns 51% of each team, when the I/O disappeared the team itself didn't.

Back then, those owners - like people who find themselves upside down on their mortgage - abandoned the property and either HSG or (more often) AEG moved in, keeping the lights on and the plumbing working until new buyers could be found.

In time of course, other guys did buy Kansas City*, Denver, D.C., etc., but neither they nor the new guys in Salt Lake, Toronto, Philadelphia etc. came on board like riverboat gamblers or gold speculators, looking to make a fast buck or to tap into a cash cow.

Rather, they came on board because the league structure makes the risk so low.

That, along with the SUM income - Don Garber's singular contribution - makes it a safe bet short term while long term team values are, if not skyrocketing (original team ownership price was $5 million. DC United sold for $30 million in 2007. The last expansion teams went for $35 million) then they're certainly going up.

Maple Leaf Sports paid US$20 million for their team three years ago. What could they sell it for today? What do you suppose the market value of the Sounders is? Keystone Sports could most likely peddle the Union today for a healthy return on their investment and they have yet to play their first match.

I highly recommend THIS EXCELLENT ARTICLE by Beau Dure, in which he quotes Union President Bob Foose saying:

"The league is very much at a crossroads....This is about big ideas."

While MLS President Mark Abbott says:

"We believe our system and our structure is what has allowed the league to grow over the last 14 years"

That's the whole argument in a nutshell: Foose and the union think the league needs fundamental change. Which isn't going to happen.

I'm sorry to disagree with Foose but the league is not "at a crossroads". Rather, it sees itself as on a very nice, straight, long road. MLS is headed in one direction and has no intention of turning off any time soon.

Now if the Union wants to talk about more money, that's OK. The owners expect that and are undoubtedly prepared to go there. But the union wants to get there by changing the nature of the league, and the league wants to get there by changing the salary structure.

If there was any question about the leagues' direction, what happened this year in Seatlle dispelled it. MLS doesn't see the Sounders as a phenomenon so much as a goal they'd been working toward. Seattle verified that they were right all along. Toronto was the first sign. Philadelphia is looking even better. They - and a lot of other people - believe that it's working.

When Garber tells everyone that each new team is building on what went before, he's not just blowing smoke up your skirt. He means it, believes it, and so do his bosses.

Fourteen years of getting sand kicked in their faces by the NFL and NBA, of being the butt of the jokes and sneers of legions of jock-sniffing American sportswriters (who don't know any better) and Euro-snobs (who ought to) are now bearing fruit and they're not going to fundamentally alter the model that got them there, not for Bob Foose or anybody else.

Let me just repeat that for emphasis: the league is NOT going to change its' structure, which the owners see as not just ancillary or transitional but integral to it's success.

If the players think they have the muscle to force the league to thow out the business model the owners believe got them to this point then they're delusional. I honestly believe that the league is willing to let them strike until hell freezes over before they'll abandon the fundamentals of the enterprise.

Would a strike hurt the league? Sure. but not enough to make the owners back down. Phil Anschutz and Andrew Hauptman and the Guarana Drink Austrian and Vergera and Kraft and all the rest aren't going to have to tell the little woman to start clipping coupons.

I found it humorous a few weeks back when Jimmy Conrad, who apparently thought he was doing some Union saber rattling, told a writer that Foose had advised everybody to "put some money aside" so they can make it through if there's a stoppage.

I don't mean to be Wet Blanket Willie here, but how much can a guy making $60,000 a year with a mortgage and a couple kids "put aside" in a couple of months?

When the UAW strikes one of the automakers, they not only have a strike fund roughly equivalent to the gross national product of Bolivia they also have the workers at the other two car companies still pumping in cash. When they strike they can theoretically stay out for years and probably enjoy it..

The same is true with the other major US sports: baseball goes out, a player just has to dip into the portfolio a little to tide him over, while the owners are losing hundreds of millions of dollars every week.

Of course, players making $10 million a year are losing huge sums of money as well, but few of them will end up living in their cars or end up stocking shelves at Sam's Club.

Their reps can look ownership in the eye and say "Here's the bottom line" and mean it.

If Foose tries that all he'll see is a bunch of MLS suits packing up their briefcases and heading out for drinks.

The only thing the players have going for them is the perception mentioned above: the league has some momentum finally, and a work stoppage would kill it dead. The owners desperately need that momentum to continue, so the theory goes, and they'll cave in on the big issues rather than see it grind to a halt.

Perhaps they're right. There's no question it will hurt. At the same time, if MLS goes dark until May will opening day in Qwest resemble a ghost town? Will the Philadelphia Unions' first game be poorly attended? Will the diehards in Toronto, or DC or Columbus or Chicago or LA be so pissed off that they won't come back?

I doubt it. And I think the owners doubt it too.

These guys are smart businessmen, not the paper-pushing fools at Goldman Sachs. Do you think "we demand that you have a deep pockets owner" was entirely about being able to meet some cash calls? If so, let me disabuse you of that notion: another reason they will only partner up with ludicrously rich guys is because ludicrously rich guys don't scare.

Now I wouldn't contend for one minute that none of these guys would notice or care if the league were to suddenly vanish completely, that's just not so. No matter how wealthy you are, you don't like losing millions of dollars.

But in the overall scheme of things they can, and will, take the hit rather than abandon the concepts they believe got the league to this point. They would rather weather the losses than let the players redesign their business.

Can the players say the same thing? If every MLSPU member suddenly found himself "at liberty", how many of them could find another team someplace? 10%? 15%

Heck, at the moment we're not sure that there's a second division league in the US any more. Think Greg Berhalter can catch on with the USL2 Wilmington Hammerheads?

At the end of the day, the owners are holding all the cards here.

Oh they'll give up some more money, that's always been true. The cap goes up 10% maybe 20%.

Frankly, they might have already done so but the owners held back so that they could give it up at the bargaining table.

But the players must surely see that a salary budget of $2.8 million or $3 million or even $3.5 million really doesn't do them that much good, and certainly a third DP isn't going to put more food on the average players' table.

What the money will mean is that MLS can pay their stars more, particularly foreign ones, and keep a few more guys like Grella and Davies over here. The vast middle class isn't going to see much if anything.

I think most people recognize that some of MLS' player practices are patently unfair and, not that it matters much, in more or less blatent violation of FIFA regulations.

As I've noted previously, what the Crew did to Dante Washington or what RedBulls did to Eric Brunner, to name just two, are so patently outrageous and unfair that you can't imagine how the owners can look at themselves in the mirror without retching.

At the same time, as many people have noted, soccer is a worldwide market. If you think La Liga or the EPL or Serie A or, yes, MLS, is treating you badly, you can pack up and peddle your skills elsewhere.

If nobody is willing to buy, then maybe you aren't worth what you thought you were and should have stayed where you were.