The Catch All CBA (Collective Bargaining Agreement) Thread

In terms of international scouting, I was under the impression that most scouting was done through WyScout, the multi-platform tool that has video analysis on practically any soccer player world wide. Plus, the league centralizes scouting with individuals like Diego Guietierrez (used to work for Philly) who are based in Columbia and Argentina who do the vetting on whether the players are interested in coming to MLS, what will it take to work in the US/Canada, and if they would be willing to come at a certain price point given MLS' salary structure.

In addition, I agree that the academy costs are included above the EBITDA line; i.e., it's included with all other expenditures. Plus, Adidas through its large sponsorship with the league is essentially offering each team approximately $1mm a year through Generation Adidas funds for wages and other costs covered for the academies from Adidas.

 

Well, that doesn't really address his point though. Spending on player development is included in any EBITDA calculation and his point was that wages as a percentage of revenues had dropped 5% while EBITDA had increased markedly. He stated that he thought those funds were going in the pocket of the owners. I disagree with that, but The fact that the league is now spending $20 mln on player development doesn't change the fact that one way the league increased it's operating profit was by reducing player wages as a percentage of revenues. I'd imagine in an increasing revenue environment the league increased its spending on a lot of things.

As for the green card thing.... That's great for an established team, but you still have to bring them into the league as an international so they can establish residency and gain a green card. As a result, the league is still going to need 110 new domestic players who aren't currently playing 1st division soccer. If the league increases the cap they can go after US born players playing overseas, but a lot of the other guys are going to be hired away from USL and NASL.

 

I had a lot of stuff written in response to some of the posts about, but this debate is getting tiresome and far from my original point. Which was simply that as a league makes more revenue, it can devote a greater percentage to player salary. Which I still hold is true as a general point.

I guess I should have said this:

When MLS becomes increases revenues to the point where it would be clearly profitable, it can and I suspect will spend a greater percentage of revenue on player salary.

Because right now a lot of teams claim to still be losing money, and simultaneously there are still a ton of things the league wants to increase its investment in apart from just players. Things like refereeing, digital content, and yes, player development.

But over time, hopefully revenues will rise faster than those costs. And then the league will be clearly profitable. And then the union will have leverage to increase their share.

The league isn't going to need 110 new domestic players overnight. The expansion will be gradual. By the time Atlanta and Miami join (2017?), Orlando and NYC could already have gotten many of their players green cards.

And a lot of those 110 guys still won't be player 1st team soccer. A bunch will just be roster filler. Roster sizes have gotten bigger (and I'm glad they have) but you still only play 11 guys at a time.

 

Well, I'm not going to spend a ton of time on your first point. However, I will say that I do not believe that a lot of teams are losing money. They may be spending more cash than they are taking in, but IMO for most teams the appreciation in value or their teams is offsetting that "cash" loss. You don't seem to have a real strong grasp of finance so it isn't worth belaboring the point, however, I think if you look at just about any professional sports leagues you will see that most teams are in a situation where they are spending more cash than they are bringing in.

To point 2....... You do realize that 3 years isn't a lot of time.... Right? That's not gradual IMO. In addition, you do realize that there will be expansion drafts, right? Meaning plenty of first team players (I said 1st division BTW), will be taken from existing rosters to fill the new rosters. As a result, those rosters will have to replace the domestic players taken with (in all likelihood) lesser domestic players.

 

ok, mr. grasp of finance... but why do you think there's one thing called 'income statement' and another called 'cash flow statement?' you're kinda lumping them together, which is somewhat sloppy thinking.
on the cash front, limit yourself to saying that no team appears to be having a liquidity crisis. leave franchise appreciation out of it.
and i have no idea where you get the claim about 'most teams/just about any pro league.' source?

this is true. but the level of play in mls isn't that high, there's a huge supply of talent in the world to duplicate your average mls roster, and my impression is that an mls team can get working papers for a player they want to import (just don't go for the bar-room brawler type).
expansion is a little tricky roster-wise, certainly. whether it turns into a noticeable problem, remains to be seen. but since it doesn't appear like any kind of freight rain coming straight at you, i would guess there won't be changes made to foreign player rules, also because bringing in more foreigners has its own drawbacks (which i don't feel like spelling out).

 

I know you said 1st division. I'm saying that while a lot of those 110 promoted players will now be first division players, they won't actually play in many first division games. Back end of rosters tend to be filled with USL quality players.

Yes, I know how expansion works, I follow the league. It went from 10 teams to 19 in 8 years, all while quality of play rose. And the expansion is gradual enough that teams will lose on average one player in 2015, giving them enough time to replace that player with a player getting a green card, a returning American or a promising youngster before the next expansion draft in 2017.

At this point though, I am going to say we should agree to disagree. I understand your concern but I think the player pool is expanding fast enough to mitigate the problems.

 

Yawn.

Same old argument/concerns about expansion as usual.

Been there, done that....much to do about nothing.

Yawn...back to sleep.

 

Why would you leave franchise appreciation out of it?? An MLS team is an investment like anything else. An investment that owners hope will appreciate in value and clearly the teams have appreciated. Chivas is a perfect example. The franchise was bought in 2005 for a reported $7.5 mln and sold in 2014 for, reportedly, around $70 mln. That is around a 30% year over year appreciation in value. That gain is income for the owner. That income is unrealized until a team is sold, but it is income.... Though you won't find it on an income starement.

However, I am glad you mentioned income statements and cash flow statements because I think that is really where this negotiation will play out. The players are going to say that they want a larger piece of a growing pie and the owners will claim that they can't afford it because they are losing money. A few teams might legitimately be losing money. However, others are going to be pointing to a book loss. Given that many teams have recently invested heavily to purchase their franchise and build new stadiums that is pretty easy to do. For example, say you have a team that was purchased for $50 mln, then the owner spent $100 mln on a new stadium, $80 mln of which was financed. The team is performing pretty well and generating $5 mln in EBITDA. However, they are paying 5% interest on their debt and they've chosen to amortize the goodwill generated from the purchase over 15 years and depreciate the stadium over 15 years as well. That's $4 mln in interest expense, $3.33 mln in amortization expense and $6.67 mln in depreciation expense. So, you now have a team that is generating $5 mln in operating profit and $1 mln in positive cash flow and they are showing a $9 mln income statement loss. [Side note: all of the owners also own others businesses (that's how they got the money to buy a team), so it isn't the worst thing in the world to have an entity in your portfolio that is showing a sizable loss for tax purposes].

Anyway, I'm guessing that is the number that Garber is throwing out when he says that MLS is losing $75 mln and that is what is going to be trumpeted during these negotiations. Bank on it. However, if the union is going to negotiate a decent deal it MUST put the cash statement and balance sheet on the table..... Otherwise it is gonna get shafted.

As for citing examples, I can point to a ton. The NHL, the NBA, the Florida Marlins, the Jacksonville Jaguars, the Minnesota Twins, the English Championship, etc, etc, etc. Hell, during his divorce Frank McCourt claimed the Dodgers were losing their asses and then turned around and sold the team for $2 bln. Professional sports leagues regularly cry poverty and show losses. Usually right before a CBA negotiation or when they are asking for public funds for a stadium.

 

Yes, I know how expansion works, I follow the league. It went from 10 teams to 19 in 8 years, all while quality of play rose. And the expansion is gradual enough that teams will lose on average one player in 2015, giving them enough time to replace that player with a player getting a green card, a returning American or a promising youngster before the next expansion draft in 2017.

At this point though, I am going to say we should agree to disagree. I understand your concern but I think the player pool is expanding fast enough to mitigate the problems.[/quote]

Hopefully you're right. I think the academies/homegrown player initiative has definitely helped.

 

Academies have helped a little, but the main difference is that as each year goes by, more younger kids have been receiving better coaching. The key period of a players development takes place long before kids get into the academy environment. A lot of the top freshman in college spent little to no time in the academy programs.

 

For my region it's pretty clear what to do. You find a good local club who will do bi or tri-weekly training all year round from age 6 up to 12. If you're good enough you go to the local USSF academy where you train 4 times a week all year round until you're 18. This is pretty close to what European countries do. At this point the system should have generated a few thousand pro prospects. This is where the disconnect happens. The great majority of players go to college where by NCAA rules they can't get the year round training. I believe only about 4 months of training happen. However they do get to play a fair amount of competitive games. The other option is HGP where they get year round training but won't see meaningful games for a few years. LA Galaxy now have the best solution with that LA2 team of theirs.

 

No offense - our kids have been limited far before you feel there is a disconnect. In the rare cases we produce kids with real potential, teams from around the world are quite willing to sign them. Not claiming that the lack of good year round training and playing opportunity for U18 - U21 doesn't hurt, just that it is not the reason we fail to turn out players like South American countries our size do.

In theory the Academy program and 10 month training was going to change everything. Yet despite having completely free training that attracts most of the best talent, some of the better college Freshman out of the west coast last year were non-academy players that played dreaded HS soccer. Not claiming that HS makes for better players either, but instead that people place unwarranted expectations on the difference these programs will make. Diego Fagundez and Andy Najar came out of the same academies as their peers but started from a vastly different place. Just like it has been the case going back to guys like Perez, Ramos and Reyna. Its not just Hispanic kids either, Joe Max-Moore's dad owned a soccer team and was around good players from a young age as was certain bald guy that patrols the center of the field for the US national team.

 

because you can't have your cake and eat it too. either you run your franchise or you sell. the two options are not complementary. if an owner wants to keep his business, it's cash flow that matters. what knocks an owner out is a liquidity crisis.

i didn't ask you for a few examples. you said 'most teams in just about any pro league.' and you didn't say 'cry poverty and show losses.' you said 'spend more cash than they bring in.'

 

Friend, I lived in South America until I was thirty. When I lived there I would routinely run out to the street right after school and find a empty lot to play soccer with other kids. So we got our 8 or so hours of the week with the ball. You won't find that here because every kid has a television and a computer. Nowadays, even in South America you will find a lot less street ball so even the small countries have started academies. Even back then the one kid I knew who became a pro was in an academy. Also, NT players from Brazil and Argentina are typically in some type of formalized training by the time their 8 or 10. When I was friends with various pro players they would tell me about soccer development in Brazil or Argentina and they would explain that every single town or neighborhood had a very serious program. This was back in the 90's so I expect it's even more serious now. Certainly in Bolivia it is. We only had two serious academies during the 80's and 90's. Once television became a common thing in the late 80's our production of players fell tremendously. Although that might also have been due to bad club economies in the early 2000's. Now, there are a lot more academies and this new generation of players is quite a bit better.

USSF academies are in their infancy. They were founded in 2007. Even then many of them still didn't have good training levels until a couple of years later. Second, we're only just now getting a large enough group of coaches with pro experience. Frankly, I don't expect to see a true difference for another five years.

 

...and finally, even shitty US television is the best produced shit in the world. U-S-A! U-S-A! U-S-A!

 

In terms of your first point, we might have to agree to disagree, because I just.... disagree with this. You do not have to sell a team to benefit from an appreciation in value just like you don't have to sell your home or a stock.

As for the 2nd point. I'm going to narrow it to soccer because that is what we are really talking about. Plus, I think American sports, in general, are healthier because owners don't run the risk of relegation (and the enormous loss of revenues that goes with it) and because American sports generally employ a salary cap. Plus, I don't have the time to research all four leagues at the moment.... LOL.

That said, there is no question in my mind that most of the major soccer leagues around the world are cash flow deficient and that is backed up by just about everything I've read on the matter and also by the fact that UEFA (home of the largest leagues) was forced to enact the financial fair play rules. I also linked an article from the LA times below. It is a little bit dated, but in looking over the first 5 or 6 articles I found via google, it provided the best summary of the situation. A few highlights:

1. A UEFA survey found that more than half the 655 European clubs it surveyed in 2010 had lost a combined $10.9 billion.
2. A University of Barcelona study in 2010 found the combined debt load carried by the 20 teams in La Liga was $4.8 billion, with 85% of total operating revenue going to payroll.
3. Italy: For the 2010-2011 season (from Seria A to Division 2), the total debt load rose 14% to $3.26 billion and only 19 of the top 107 pro clubs turned a profit.
4. Even in Germany, which has the top attendance of any league in the world, 7 of 18 teams lost money.
5. The EPL, the richest league in the world, accounts for 56% of total debt for all of Europe's top division teams. Since the Premier League was formed, more than half the clubs in England have fallen into insolvency. During that period player salaries have jumped more than 1500% to $2.6 billion and during the 2010-11 season EPL clubs spent more than 70% of their revenue on player salaries.

http://articles.latimes.com/2012/aug/25/sports/la-sp-baxter-soccer-20120826

 

Good training at a young age is critical. That we agree. But my point is that Foreign kids face the same training problems as native US kids, but managed to over come this limitation for years due to a vastly different home environment which has provided them this training.

Don't disagree here either. Our coaching is further behind than are our players. A lot of Spain's success has more to do with their coaching programs than their style of play. Germany too has heavily invested in their coaching and their teams are starting to see broad success as well despite a different style of play than Spain.

 

does anyone know when the next round of preliminary CBA talks will be?
I know most teams are focused on the summer transfer window and winning MLS Cup, but since my team is officially in "there is always next year" mode, i'm wondering when this really takes off.

 

We are far from there is always next year mode. Half the season left and a few points out right now. The transfer window is about open and someone is coming here, let's not give up so easy.

 

You do realize that once MLS gets their cut, if they put every penny into the cap they could only increase it by a couple million, right?

 

So I'm guessing red text indicates sarcasm?

 

Who can tell?

 

I'm partial to /s. Not as subtle, but guaranteed to work.