Don Garber thinks Financial Fair Play is just smart

Discussion in 'MLS: News & Analysis' started by vevo5, Aug 8, 2012.

  1. triplet1

    triplet1 BigSoccer Supporter

    Jul 25, 2006
    I could not agree more strongly with what you have said.

    I realize we'll soon have a blizzard of posts that the big clubs don't really want it -- that the present system of mauling little clubs in their domestic league suits them -- but economically I don't think there is any choice. As I mentioned earlier, right now there are perhaps 30 - 40 really big clubs in Europe ($125 million plus in revenue), but even there the gap between the top five, the top ten, is widening every year. Money is concentrating in the biggest clubs, and the biggest clubs will be the only clubs that can afford the best players. In 2009, Wenger said a European League would be a reality within ten years, and I think he's right. And now Arsenal, one of the richest clubs on the planet, struggles to keep up financially without a sugar daddy.

    But rather than get too bogged down on re-hashing whether big clubs can be appeased to keep things as they are (or not), let's assume for this discussion that it is going to happen.

    What does that mean for MLS?

    Let's not kid ourselves, a European League would be formidable competition for TV and commercial revenue in the United States. You might even see it on a major U.S. network, who may rightly see the next NFL. MLS will have to up its status significantly to compete for attention and players, or it really will be consigned to a small niche that's hard to financially maintain, let alone grow. Think Big East Conference. Or MAC.

    But there is opportunity too. MLS has great markets. MLS has sports industry savvy people. And if it can raise the level of competition significantly, it could provide clubs for this new Euro league to play in some tournament. (You'd think the CL as we know it loses considerable luster when the clubs are playing in the same league -- they'll need to develop something else.) And I don't think it's impossible. Heck, the Winnipeg Jets reportedly grossed just under $100 million last year playing in a "small" market the league once abandoned. Is it so far fetched to think MLS teams couldn't do the same if they really had no choice but to take the risk and try to grow to that level?

    The traditionalists will moan and cry about the market culling, but I think these changes may actually be great for MLS -- if the league can change and adapt fairly quickly. But I do think the clock is probably ticking.
     
  2. ceezmad

    ceezmad Member+

    Mar 4, 2010
    Chicago
    Club:
    Chicago Red Stars
    Nat'l Team:
    United States
    That could go against EU laws not really sure.

    I know that in here there is a law by congress that allows Pro Leagues to pool their TV rights and sell them as a package nationally.

    The UEFA Qualifiers are now also being pooled and being sold by UEFA (so I have read), so that to me is similar and I guess the EU is ok with that rule. So the revenue side could work.
     
  3. Fanatical Monk

    Fanatical Monk Member+

    Jun 14, 2011
    Fantasyland
    Wanted to add, great thread, lots of good opinion and info in here.

    I read sometime back that UCL prize money is going up substantially because of the new tv deal. The gap between haves and have-nots is going to be getting much, much larger very soon.

    The early season excitement and feelgood stories like Swansea, Everton, and Vallecano will soon give way to the winter cold and realization that much of the seasons results are decided long before the first ball is kicked.

    I like that MLS is different every year. I like seeing SJ change their fortunes. I like that Dallas is going through a transition year. I like that Chivas disappoints Knave. I hope the parity never leaves. There are enough leagues that have no parity involved. It's possible to watch, and enjoy both.
     
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  4. DCU1996

    DCU1996 Member

    Jun 3, 2002
    N. VA
    Club:
    DC United
    Nat'l Team:
    Korea Republic
    haha how about college draft, too instead of spending $$$ and developing players hahaha
     
  5. AmeriSnob

    AmeriSnob Member+

    Jan 23, 2010
    Queens
    Club:
    New York Cosmos
    Nat'l Team:
    United States
    I don't know triplet, it depends on the specifics of the European Super League's formation. I'd assume that the clubs choose to not compete in domestic or Champions League, completely breaking away from UEFA? How many and which clubs? Does the European League have any connection with national leagues (pro/rel, domestic cups, etc.) Many questions to be answered.​
    With one European Super League the TV market for the European domestic leagues in America becomes nearly zero, I'd predict. After all, I'd take a guess that a league with the marquee matchup being Fiorentina-Udinese would not do well on TV, even compared to MLS. Same with a league featuring Valencia-Villareal.​

    Maybe only the Premier League (after removing the top 5 or 6 teams) would still be a good performer in the American TV market (though I don't know - a lot of fans of the Premier League are there because it's the "best football league in the world," who knows if they'll still be there when it isn't).

    All the major sports TV networks will want at least some piece of the soccer pie. And with only two or maybe three flavors appealing to American taste buds rather than five or six, MLS can view this as an opportunity to grow rather than be bullied out of the TV market altogether, with or without significant changes.

    Of course MLS improving its product significantly is an eventuality, anyway. Whether long-term or short-term. As it is MLS is getting better every year, imagine the growth that will come with a big TV contract in 2014.
     
  6. SYoshonis

    SYoshonis Member+

    Jun 8, 2000
    Lafayette, Louisiana
    Club:
    Michigan Bucks
    Nat'l Team:
    United States
    Oh, I'm not sure either. I was just providing the rationale for the idea. In the short term, with clubs on the brink of failure, it seems like a decent idea, but it doesn't really stand up to long-term scrutiny.

    All true. What FFP does is keep clubs from taking the short cut of spending money that they don't have. I look at it as a band-aid, treating the symptom rather than the disease.

    There is something fundamentally unfair, however, about allowing some rich guy to pull a Hoffenheim and spend millions of whatever currency to lift a club above its ability to sustain itself. Back in the days when TV money didn't amount to much, a club's fortunes depended on its supporters. There was a direct correlation between that support and the club's (at least financial) success. Now, not so much. I'm not sure that's a genie we can get back into the bottle, though.

    By itself, sure. But I don't really see a downside to allowing clubs to not rack up debt that it cannot pay just to compete with another club that has a wealthy benefactor.

    I do believe that, unless they can find a way to distribute resources more equitably, radical changes in the structure of European club soccer will come about sooner or later. That is, unless they can pry UCL TV money out of the hands of the Big Boys, a SuperLeague will be all but inevitable.

    The interesting thing is, that will likely feature some sort of revenue-sharing apparatus, of the kind that would help avoid the thing in the first place.
     
  7. triplet1

    triplet1 BigSoccer Supporter

    Jul 25, 2006
    There are, and honestly I don't have a clue how they'd sort all the details, although when a lot money is involved, people can be very creative. FWIW, Wenger thinks they'll turn the CL into a true "league", with the big clubs leaving behind a "B" team to compete domestically.​
    Here's where I think it gets interesting. I agree with your comment that with a true super league, those who want to watch only the "best" will have little time for the other Euro leagues. They may divide it up into serveral packages, but someone is going to be left out.​
    And there's the opportunity.​
    People forget that the NFL teams use to TV markets rights individually, and in the 1950s some of those teams were with NBC. As CBS got more entrenched with the NFL and a national deal throughout the early 1960s, NBC agreed to a huge new deal with Lamar Hunt and the AFL in 1965. And the money from that deal gave the AFL the cash they needed to really compete toe to toe for players with the NFL. Plans for a league merger were announced soon afterward. It's the only example I know of where an upstart professional league turned back a much bigger, entrenched challenger, and it's the only case in U.S. pro sports where one league was forced to absorb every team from another. ​
    The analogy isn't perfect, but it shows what happens when a network is left out of the "big league" package. It promoted NBC to invest a huge sum of money to effectively create another big league. ​
    There's a lot of media money chasing soccer right now. And if a Euro league comes to pass, MLS may just have the chance to cut a very nice deal with the disappointed suitors left out of the broadcast packages. (Indeed, that could happen anyway depending on how the EPL goes, but a Euro League would be even bigger IMO.)​
     
  8. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    As has been mentioned, though, collective selling of rights has a history of running afoul in various European courts.

    I've just started reading a book about Sky's attempted takeover of ManUtd at the time that he Media Partners efforts at forming a Super League were coming to fruition in 1999/2000.

    The type of revenue and cost sharing that the big four American leagues engage in to varying degrees may not be legal in Europe.

    I'm pretty sure that a set Salary Budget like MLS has would be flat out illegal (restraint of trade, cartel, monopoly).

    While FFP is a team by team cap based on turnover or revenues. It is possible that a similar league based one (like the NFL/NBA/NHL have) where player costs are in a fixed percentage of turnover range for all teams in the same competition might pass legal muster - but it breaks down at the top end (how do you handle extra revenues for European play) and the bottom end (transitioning between D1/D2 caps would be mindbogglingly difficult and entail all sorts of legal issues of its own.)

    In an effort to appear to be doing "something", FFP seems to be the only easy thing to do. In a "good" sense, I think it only hastens the day in which the real issues will have to be addressed.

    The workaround is that it gets watered down so much as to be meaningless.
     
  9. footballfantatic

    Mar 27, 2008
    Ontario, California
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    I really feel that European leagues are more concerned with how well their particular country fairs in the UCL than how fair their domestic league is(i.e. Leagues with 20+ point difference between 2nd and 3rd). This is European nationalism at its' finest.
     
  10. barroldinho

    barroldinho Member+

    Man Utd and LA Galaxy
    England
    Aug 13, 2007
    US/UK dual citizen in HB, CA
    Club:
    Manchester United FC
    Nat'l Team:
    England
    I don't think we'll see a "true" Superleague, at least technically-speaking.

    FFP, Market Pool and the extension of entrants to more teams in the bigger leagues have all been measures taken to preclude such a thing.

    However, more cynically, UEFA does seem to be moving (or being pushed) towards the Champions League becoming a de facto Superleague, where nothing short of total ineptitude and financial collapse could keep the biggest guns away from the table - at which point those names would probably become less useful to UEFA and the Champions League anyway.

    And while I know some of you don't by the fact that the bigger clubs might not want a true superleague, I beg to differ. Right now, they've got the position of power, a lot of bargaining chips and a lot of influence. They also have the prestige of national titles on a regular basis to distract from the seasons in which they don't do so well in continental competition.

    What looks better? An iffy showing in the UCL, alongside a domestic title push, or one closed-format league competition that is the prime focus (even with a B team in the domestic league), where a period of mediocrity or indifferent performance is highlighted by mid or lowertable rankings?
     
  11. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    Yeah... I don't see the whole "B side in the domestic competition thing".

    I see an all or nothing endgame. Teams in the SuperLeague would be in that league. The financial stakes of being in that league would paper over any concerns about not actually winning.

    David Glass doesn't seem too terribly bothered by the fate of the Royals - and fans do still show up to games. Fans of the Maple Leafs pack the coffers of MLSE despite any real success for decades.

    If a SuperLeague happens, it'll be a real league, and not just another ancillary competition. And the money involved would separate the ins from the outs.

    Obviously, we're years away. And UEFA bent like a reed in the wind to appease the G-14/18/20 the last time there was real impetus behind a breakaway super league, I'm sure we'll see plenty of twists and turns in the future.
     
  12. triplet1

    triplet1 BigSoccer Supporter

    Jul 25, 2006
    Alas, addressing the issues is going to be just as legally problematic, with far less motivation for the big clubs.

    I think they could do a workaround. They have smarter legal minds than mine, but there are two keys IMO: they need to be able to collective TV deals and distribute that money in equal shares. I believe there are other Euro Leagues (Rugby?) and UEFA itself doing that now -- I may be wrong, but I think they can get that far.

    Next, rather than a hard cap that is identical for all, which probably won't pass muster, peg salaries to revenues, but adjust the scale so that essentially most of the revenue they can spend is really the shared TV revenue. Essentially, that's what the NFL does. Boiled down, NFL the salaries are very lose to the shared TV money, with the teams keeping the money they generate for themselves. I'd try and emulate that as much as possible.

    Say each club is getting $100 million from the TV deal. I suggested in another thread that the "solvency" cap could restrict them to paying 50% of their first $200 million on wages, dropping the percentage to 40% of the next $100 million, 30% of the next $100 million, etc. A team with $200 million in revenue would have a $100 million cap, while a team with $300 million in revenue would have a $170 million cap and $400 million would provide a $190 million cap. You won't have exactly the same cap, but it will keep spending reasonably close -- again, hopefully not more than 3:1 and more likely 2:1 from high to low. That could work IMO.

    But yes, I don't think there's any going back. Wenger's idea of "B" teams is just dressing for the wound for those who hate the idea.
     
  13. triplet1

    triplet1 BigSoccer Supporter

    Jul 25, 2006
    Sure, but the money is potentially huge. Wenger makes a key point in the article -- UEFA controls the CL money. Sure, they're giving ever bigger slices to the big clubs, but a lot still goes to the smaller clubs and UEFA itself.

    Consider the NFL TV deals are worth nearly 3 billion a year.

    http://www.forbes.com/sites/kurtbadenhausen/2011/12/14/the-nfl-signs-tv-deals-worth-26-billion/

    Now, what are the worldwide TV rights worth for the 30 biggest European soccer clubs worth?

    Potentially they could get a much bigger payday from a league they control, even if they aren't winning titles with the same frequency.
     
  14. SYoshonis

    SYoshonis Member+

    Jun 8, 2000
    Lafayette, Louisiana
    Club:
    Michigan Bucks
    Nat'l Team:
    United States
    One thing that stands in the way of a Super League as we're discussing it here is that UEFA does have a nuclear option: Cutting the clubs loose from their national FA's (which make up UEFA's membership), effectively kicking them out of FIFA and their players from the World Cup. Their access to the best players in the world would be limited to those who didn't care about never playing for their nations again, or never being a part of a World Cup.

    It would be up to the individual FA's to do this, but if they're facing the loss of their best clubs from their domestic league, why wouldn't they?
     
  15. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    And by "World Cup", you mean "FIFA World Cup".

    The sums of money we're talking about are game-changing amounts.

    FIFA's hold may not be as tight as you suspect.

    At some point, Barcelona can offer Messi enough money that playing for Argentina isn't even a question.

    Or, at a certain point, you're talking about enough players that they set up a competing "national team" competition.

    Is the World Baseball Classic or the Baseball World Cup the more prestigious tournament? Hands down, the World Baseball Classic blows away the Baseball World Cup. And it does it under the tight fist of Major League Baseball, and to a more limited extent the other major professional leagues.

    If teams in a Super League broke away, you're likely talking about 30-60 players (including developmental players) each. You quickly reach a point where most of the major soccer nations in the world will have a minimum of 20 players in said Super League. The Super League would be able to hold its own "World Football Classic" without the messiness of qualifiers at whatever intervals it chooses.

    It would lack the majesty and mystery of the current 3 year, 700+ game tournament, but can anyone doubt the level of play and the potential ratings compared to the FIFA World Cup - especially if the FIFA World Cup is missing the blackballed players?

    I'm not sure the "nuclear option" is ever going to happen. FIFA has too much to lose. Just like UEFA has bent, but not broken, every time the Super League idea starts making the rounds, I expect that FIFA will do the same.
     
  16. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    Another complicating factor is the way that most international leagues don't depreciate transfer fees in and out when talking about player costs.

    In U.S. leagues most player costs are organic with minor league player development on entry and player for player trades of players under contract. Very rarely are players in the big American leagues bought or sold for cash. I do recall the Red Sox paying some tens of millions in a transfer fee for a Japanese pitcher a number of years ago, but that's a rarity, and MLB doesn't really fit into the mold that the Salary Capped NFL/NBA/NHL follow. (As an aside, I do wonder how that expense fed into the Red Sox's luxury tax calculations).

    Most lists I've seen showing that this soccer team (ManUtd) or that one (Barca) have a more expensive roster than the Yankees have made horrible mistakes of counting transfer fees paid as a lump sum and ignoring transfer fees received (not to mention how to calculate players sent out on loan).

    Of course, any financial agreements like FFP will have to address all of this, I'm just bringing it up as yet another bit of complexity worth considering.
     
  17. SYoshonis

    SYoshonis Member+

    Jun 8, 2000
    Lafayette, Louisiana
    Club:
    Michigan Bucks
    Nat'l Team:
    United States
    Maybe. Maybe not. But, can they offer what amounts to the entire Spanish national team enough more than anyone else to do the same? If not, Barcelona isn't Barcelona any more, Messi or no Messi.

    Messi and the rest (and, of course, every other top player on the clubs in this scenario) could command a bunch of money elsewhere and still play in the World Cup. I think that the teams taking a significant hit, and thereby driving down the value of their new "rogue" league, is a lot more likely than the possibility that they will stay intact.

    And, even if they do, what about the next generation of players? Will they be willing to jettison their international careers before they begin just for a few extra bucks? It's not like nobody else will be able to pay them a really nice wage. Some will, probably, and some won't.

    If it gets to that point, and the new Super League does decide to "go rogue," the teams will simply not be the same. To what extent is anybody's guess, but I would guess that there would be enough doubt that the clubs would back down before the FA's and UEFA do.
     
  18. triplet1

    triplet1 BigSoccer Supporter

    Jul 25, 2006
    We're speculating that there won't be a grand compromise, and I think that's far more likely. After all, FIFA itself makes much of its money off of the world cup. If this league is willing to release its players -- presumably some of the best in the world -- for the tournament, why does FIFA care?

    UEFA is another matter. They'll lose their cash cow. But the Euros are profitable too, and some payment for sanctioning may remove any hesitation -- again this league could be worth billions in annual TV rights alone.

    Get those two, they'll jam the FAs, IMO.
     
  19. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    Definitely. It might screw up a cycle or two, but in the end nobody wants to be on the outside looking in.

    Of course the PDC/BDO split is now 20 years on, and how long did the CART and IndyCar war last? Of course those are both infinitesimal compared to what we're talking about.
     
  20. revsrock

    revsrock Member+

    Jul 24, 1999
    Boston Ma
    Club:
    New England Revolution
    Nat'l Team:
    United States
    It doesn't. Posting fees are not included in Luxury tax calculations
     
  21. superdave

    superdave Member+

    Jul 14, 1999
    VB, VA
    Club:
    DC United
    Nat'l Team:
    United States
    In the short run or in the long run? I know that there's minimal incentive to think about the long run, but whether the clubs involve think about it a teeny tiny bit, or a small amount, or whatever, will have an impact on whether or not we get a SuperLeague.

    I'll make the same point I always make when this comes up. It's American fans, not European fans, who think it will happen. Whether that's because European fans have a better understanding of the issue than we do, or whether that's because European fans are thinking emotionally rather than logically, time will tell.
     
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  22. ceezmad

    ceezmad Member+

    Mar 4, 2010
    Chicago
    Club:
    Chicago Red Stars
    Nat'l Team:
    United States
    Same thing in the Central American/Concacaf forums.

    To me and other non Central Americans, it seems logical that a Central American League with the top 3 teams from each country is the only way for the CA team to stay competitive with MLS and Liga MX, but the Central American fans almost in unison oppose the idea, a lot of history, National rivalry and other issues.

    The league would be a jr Liga MX with 30 million potential fans in C.A. and millions more in the USA/Canada.
     
  23. SYoshonis

    SYoshonis Member+

    Jun 8, 2000
    Lafayette, Louisiana
    Club:
    Michigan Bucks
    Nat'l Team:
    United States
    This is another reason why I think that a European Super League won't happen any time soon. Remember a couple of years back, when Manchester United dropped out of the FA Cup to compete in the World Club Cup instead? The English fans, including what seemed like a solid majority of their own, went Absolutely Freaking Ape Shit. They would burn Old Trafford down and piss on the ashes if they pulled out of the English league.

    Come to think of it, maybe it isn't such a bad idea after all..... ;)
     
  24. triplet1

    triplet1 BigSoccer Supporter

    Jul 25, 2006
    I agree it's a great idea and I think fans would adjust very quickly -- and favorably.

    I simply don't take these comments very seriously.

    Look at the comment section of any English paper or message board and you'll find people who decry that the Premiership has ruined English football. Well, I was there in the early 1980s, and English football as I remember it was played in dark and dank and often violent venues without the flair foreign players have brought to the game. For my money, its so much better today I can't begin to describe it -- and based on the revenue the EPL generates, many agree. They just don't post comments on internet boards.

    And a Super League would quickly win fans over too, IMO.
     
  25. AndyMead

    AndyMead Homo Sapien

    Nov 2, 1999
    Seat 12A
    Club:
    Sporting Kansas City
    Bingo
     

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