VEVO5 catch-all thread on how to improve MLS

I'm not sure he really cares -- MLS has seldom taken a hard line on salaries only to radically better them in a CBA. My only point is that I really don't see any evidence MLS is looking at a significant increase.

I drank the Kook Aid in the last CBA cycle. In late 2007, Sports Business Journal reported that some owners lead by RBNY were pushing for a faster increase in the salary cap number, even trying to push it up prior to the expiration of the CBA to about $2.5m instead of $2.3m.

http://www.sportsbusinessdaily.com/...s/Debate-Highlights-MLS-Salary-Cap-Split.aspx

The effort failed, but undaunted, a little over a year later, then managing director of RBNY Erik Stover told a supporters group in January, 2009 that he expected big changes from the new CBA:

“I think our world changes a lot with this collective bargaining agreement. I don’t think we jump to a $10 million salary cap, but I think it goes up pretty significantly. I think it’s unfair that developmental players make less than our part time ticket sales people. It’s ridicules. We’re on the side of pushing the league in that direction. I don’t know where we’re going to end up. I think it’s silly to be overly aggressive. I’d like to see something closer to $5 million. That would give us a little more flexibility and some room to grow.”

Of course, we all know what happened. The cap did jump a bit in 2010 after the new CBA was signed, but only to about the same number RBNY had pushed for as an interim adjustment back in 2008 -- $2.55m. The new CBA didn't usher in anything close to the $5m salary budget Stover was talking about -- which probably explains why he's now working for the Cosmos. They bumped the base up a bit, and we've been chugging along at 5% increases each year just like they modeled before the league was even formed.

Incidentally, that youtube video is still up today, a reminder to everyone not to expect too much from these deals IMO. You'll find his remarks at the 7 minute mark:



Which is why when I read Garber saying what Garber says before these deals, I really don't think he's posturing. I don't think they intend to jump the base salary budget number significantly.

Again, in 2009, Stover (and presumably Red Bull) believed that increasing the salary budget to $5m per team in 2010 would be a significant change for the better. What MLS did fell far short of that. Jond (and others) have called for a $5m - $6m salary budget with this CBA, and to me that would still represent a significant change.

To bring this full circle, in 2007 when the players started releasing their salary data, total payroll (guaranteed comp) was about $42.2m. If the original Forbes estimates are correct, revenue was about $166m, meaning MLS was spending about 25% of its revenue on payroll.

http://www.sbnation.com/mls/2013/5/16/4327752/mls-player-salary-release-may-2012
http://www.forbes.com/fdc/welcome_mjx.shtml

Keep in mind the players update their salary data during the year to reflect summer signings, but whether you use the salaries from early 2012 ($90.1m in the link at the bottom of the post) or later 2012 ($99.2m in the link above), in 2012, MLS was spending about 18 - 20% of its revenue on payrolls.

Which means as a percentage of revenue, payroll spending actually declined between 2007 and 2012.

Had the percentage of revenue devoted to payrolls remained at 25%, in 2012 MLS would have spent about $125m on payrolls -- about $25m more than it did compared to the highest estimate. In 2012, it would have cost just under $42m to move the salary budget from $2.81m per team to the 5m per team RBNY had wanted. It wasn't that big a reach. Total payroll would still have "only" been about 29% of revenues, but of course, the losses would have been worse -- $42m would have exceeded the positive cash flow league wide.

But with a new TV deal perhaps netting an additional $35m - $65m and a couple years of growth in the salary budgets, team revenues, that $5m budget number would appear to be reachable with a lot less pain now -- unless the struggling owners are determined to apply that new money to reduce their operating losses.

Let's see how ambitious they are.


* Alternate 2012 payroll analysis from May, 2012:

http://www.sbnation.com/soccer/2012/5/30/3050995/mls-player-salary-analysis-2012

 

Yeah, there's no way TFC would be able to become successful under the current structure, right?

(And that's kind of the point. TFC were shit for the last few seasons, but under the Garber Plan they have the methods to get good over one offseason. Under the Vevo plan, we lock teams into "Haves" and "Have Nots" and hope people in DC are okay with it.

 

He's got a revenue sharing piece too so I don't think they would lose this amount of money -- see his post number 43. Basically, Seattle would give up $16.8m and get back $9.1m for a net reduction of $7.7m under his plan. That would reduce the Sounders EBITDA from $18.2m to $10.5m. He'd give them a cap of $9.2m, so they'd still have EBITDA of $1.3m if they spent it all.

Of course, that assumes Seattle would want to reduce its earnings from $18.2m to $1.3m, but hey.

What the plan does do though is make DP heavy teams like TFC, RBNY and LA reduce their spending.

 

MLS Fantasy Insider ‏@Ben_Jata
Jason Kreis: "I strongly believe that you could take [Messi], put him on the worst team in [MLS] and they'd still be the worst team [MLS]."

 

SO just from gleaming and remembering some of Professor Triplets mumblings in previous threads........

Until revenues increase through some source, we cannot expect MAJOR salary cap changes.

It's troubling, is the league always doomed to writhe in the shadows? I remember arguing that if quality is so important, why not import it from the region "i.e. Central America" but I think Triplet explained that it still wouldn't move the needle enough, and likely would alienate loyal fans if left unchecked. Mind you this is fuzzy recollection.

Frankly, the only thing I can see is brand synergy. If MLS gets to be a league where big time and biggish time foreign clubs come shopping often and consistently (namely top 4-5 premier league clubs) and they make names for themselves on starting lineups, THEN I could see a real bump. It would sort of mirror the NCAA-NBA or NCAA-NFL fan interest, seeing who the "hot new stars" will be,

Don't ask me how feasible it is, it just seems like the only real game changer scenario to really move MLS's needle media wise IMO.

 

First subtract your $7.7m revenue sharing payment from the $18.2m income to get an adjusted $10.5m EBITDA.

Next, subtract the additional salary dollars you want to spend, but remember the EBITDA is already net of the Sounders $3.98m 2012 payroll. You used a $12m salary budget in your chart in post 43 based on 25% of revenues, but your using, what, $9.6m now based on 20%? I used the bigger number, but I see I made a mistake. Anyway, I took $12m, subtracted the Sounders $3.98m 2012 payroll and got $8.02m of additional player costs. Subtract $8.02m from $10.5m and you get a $2.3m EBITDA, not $1.3m as I posted -- again, my mistake.

If the cap under your plan is $9.6m, again subtract the $3.98m actual payroll costs (so you don't double count it) and now you only get $5.62m of additional spending. Take that from the $10.5m and you get an EBITDA of $4.9m.

 

I'll leave this with this glimmer of hope for you then. Schachd1 is right, nothing says the additional revenue has to first go to cover the losses of the teams that are struggling. Again, even if the new MLS TV deal is worth $70m (and not the $100m first suggested by some reports), that would be an additional $43m for MLS. To move the salary budget from $3.1m to $5m requires an additional $1.9m per team -- $38m for all 20 teams. The new TV deal may well cover the cost so each and every team could get a nice bump in their salary budget.

Yes, the stragglers will still be losing money because they can't apply these new found TV dollars to cover their operating losses, but the others aren't going to lose money as a result, nor would it impact DP spending.

I'm not sure a $5m salary budget is a game changer in terms of driving revenue, but it certainly gives teams some room to develop a better "middle class" pay scale for players 4 - 11 on the roster.

 

I admit I was doing a selective number piece ..... but I was trying to be as simple as possible and only use one variable You, I, and the vast majority of the others in this thread can/have connected many of the other various dots.

 

At the levels of revenue the clubs have the moment, even Seattle as the highest earning team will see their actual money all but eliminated. They already are a "top dog" in the league. They can already approach 50K if they wanted too (they cap it at 38,500 right now for business reasons) ...

But you're directly taking money they could have to do what you say ... and giving it away and leaving them with less available actual monies to do what you want.

Why is that hard to understand ?

If that were the case, the Spurs would be the biggest team in the NBA ... but they're 10th by these metrics.

You really don't understand what overspending is.

Take a look at the Seattle example and the TRUE match that has been done for you. Your model puts Seattle significantly closer to overspending.

Theoretically yes. That doesn't just happen though.

No, it's so they can compete on the field despite not being able to compete off of it. It keeps teams viable and able to put out a product that will at least look like it belongs on the same field as the big clubs.

You know, preventing Derby County.

How would that erase the fact that the club was run worse than the U-6 team my son is on ?

Nothing about the MLS structure is to blame for the FO sucking at life.

Yeah, and all of this vision was done in the last 12 months ... with a new FO. Guess what's the same ?

Explain, exactly, how it was the structure of the MLS and not the FO that put TFC in the shitter.

It was the exact reason they sucked. The FO sucked ... period.

Really ? Every American Major League has "enforced parity" and every single one of them has a pretty significant rank and file when looking at playoff teams and non-playoff teams.

Spending and Parity are not mutually exclusive. You really need to figure that out.

Except that isn't the case at all. If there was no DP, then you'd have a much better case of things. Even with all of these "measures" it is up to the FO and the club itself to take advantage of the opportunities given. I mean, if you and I were given the exact same opportunity and depending on our performance one of us would get 1m$ ... I'd feel pretty damned good about my likelihood of getting 1m$, just saying.

... like they did in our current system, because they sucked.

 

Fair enough -- the numbers are swimming so much with his cut and paste, I understand. (He's changed his proposal from the earlier post I directed you to, it seems). Either way, in the end, it also doesn't do very much IMO. Seattle would have gotten to spend an additional $5.6m, but (1) a number of teams would have to reduce payrolls and cut their big DPs to fit under his cap -- with Dempsey even Seattle's payroll is probably too high now for his cap number -- depriving the league of its biggest stars, (2) because there is no guarantee the teams losing money will spend the additional funds he allows them, the additional payroll spending is going to be modest I think, (3) by replacing DP dollars with dollars spread throughout the roster, the unequalized nature of the payroll spending is destabilizing IMO, and (4), even with a $9.62m payroll, I'd be surprised if Seattle would be better than the big Mexican clubs, which was his aim.

With that, I'm going to bow out of this one. I think his proposal has gotten enough discussion -- at least from me -- and other threads are more topical for proposals that might actually succeed.

 

You must be new here if you think "enforced parity" is going to be a successful argument for me. There is no human being on the planet who likes parity more than I do.

Yes they would have. 100% they would have been shit. Because if you're shit in a parity league, and you take away the parity...(see where I'm going here).

They can expand their stadium to accommodate those 15,000 season ticket waiting list. Because they know success off the field gives them a very good chance at success on the field.[/quote]
This is where your argument falls of the rails. TFC were among the top revenue generators in MLS, and they were still shit. If they wanted to spend money, then they would have. But they didn't

Here's a quote I like, from your inner monologue:

"Hey, I know everyone gets super upset when I post the same things over and over again because it's my way of saying that everyone who disagrees with me is too stupid to have read my brilliant arguments, but I'm going to keep doing it anyway."

This is a perfectly reasonable argument, iff Toronto were using every mechanism that MLS had to allow themselves to be good. But I don't think anyone here believes that they did.

 

Please define "best" and "worst."

 

I'm very curious what the league's intent would be when using the money from the next tv deal. I ask, because Fox is a terrible move(would be) on numerous levels if that's what MLS ultimately decides to do. Poor production, poor announcing, poor analysis and with the increasing programming on FS1, considerably less visibility on FS2.

So Fox is not about increased tv ratings to me, which IMO are an essential part of growing the league. So if the decision is not about increasing tv ratings and pulling in more viewers, it's purely about the money. Only way the money attempts to counteract the negatives of going to Fox is to turn around and dump most of that money into roster improvement. If that money instead is used to pay off debts and you combine that with the issues at Fox, that's quite a step back for the league.

It essentially would mean no money from this next tv deal going to improved roster quality/depth and less visibility/worse production/lower tv ratings.

The only way going to Fox helps the league is if the money from an increased deal goes mostly into improving quality. Otherwise we find ourselves in a position 3-4 years from now where debt is helped paid off but quality hasn't been improved that much and fewer people are watching the league as FS1 isn't impressive and FS2 is flat out terrible. And how would that position really help with the following tv deal? We either need to go for more visibility and better production with valuable EPL lead-ins on NBCSN while getting less money in the tv deal(my clear choice), or take the larger deal with Fox and use it bump up quality, not pay off debt. Just my opinion.

 

My recollection is that actually, he was a squad rotation-type player in MLS. His wikipedia page says he had 84 appearances (not starts, appearances) in 4 MLS seasons.

So, your facts are wrong. I wonder if that will cause you to change the conclusion that you draw from your facts?

 

That's very stupid. All it would take is clubs spending 41% of revenues on stuff outside of players salaries.

Right now, MLS clubs spend way more than that.

Your facts are wrong here. I wonder if that will cause you to change the conclusion that you are drawing from those "facts?"

 

What about stealing underpants? Couldn't they increase revenue by stealing underpants?

 

Actually, they did. I'm so old I remember when TFC had 3 DPs. Unfortunately for them, 2 of them were defensive midfielders, and they were coached by a moronic Dutchman.

 

In fairness, its a combination of both. If you are only allowed to take a couple shots at a DP and you miss, it is easy to lose. Of course an organization like Knicks proves that even if you give a big market team a big payroll advantage, incompetence can still rule the day. While Vevo's mechanisms might be problematic and his philosophy of allowing big market teams to use their market advantage to be overall more successful in order to grow the league might be very unappealing to a fan of a small market team, conceptually the philosophy is pretty sound. If having even odds were important, Vegas would be another place in the desert. Instead all people need is a belief they have a reasonable shot even if the odds are against them. Meanwhile the league gets to showcase a lot of big market teams that have the potential of a lot of casual bandwagon support.