Sometimes even a word as simple as “the” can show that a report can have deep, foundational flaws owing to a complete absence of effort.
Closer to home, the MLS generated c.46% of the transfer income earned by Mexico’s Liga MX in 2015/16. Sweden’s 16 team domestic top-tier (Allsvenkan), represents the closest competitor to MLS by transfer income in the chart above.
I mean...for crying out loud. Deloitte switches from “the MLS” to plain “MLS” in the same paragraph.
Section 5.3, “Player related implications,” covers, in order, (1) transfer fees, (2) player salaries, and (3) player development. The argument is that promotion and relegation inspires better (3) player development, which lets clubs in promotion/relegation leagues receive higher (1) transfer fees when they sell players, despite the downside of having to pay higher (2) player salaries.
So DeloitteUK decided to arrange its argument in nearly reverse order. I assume second drafts cost extra.
If someday you find yourself working for a giant accounting firm and a media billionaire asks you to prove something that you assume is true but is resisting facts? Here’s a handy tip. If the topic is, “European leagues spend a lot more on transfer fees than MLS, and it’s because of promotion and relegation” - no one’s really going to argue about the first part.
But these reports don’t pad themselves. In order to prove that European clubs sell more players than MLS, Deloitte takes a difficult chart from the seventh UEFA benchmarking report:
And converts it into, one assumes, a proprietary .garbage format:
And we are now dazzled by how much Portuguese teams made in player sales in fiscal year 2014. How does Portugal do it?
Currently the US club soccer pyramid system does not appear to be achieving meaningful success in this area, potentially suggesting that in the context of the global soccer player market, the MLS/NASL/USL are not developing players to a standard in keeping with the US’s ambitions. Equally this lack of player development (explored from a sporting perspective later) means that the US club business model is missing out.
Well, 185 million euros is a lot of money. Of course, if we scroll down one page in the UEFA report, we learn that 85 million of that came from one club - Benfica.
It’s at this point one must turn to Wikipedia, for convenience if nothing else. If you want to laugh at my laziness, well, I’m still putting in a lot more work than Deloitte did. Here are the relevant winter and summer 2014 charts.
Out of that 85 million, 81.5 million was due to Benfica selling selling all of six players. (Liverpool fans may want to skip ahead a few paragraphs, there might be some unpleasant memories dredged up.) Nemanja Matić completed his Portuguese holiday and returned to Chelsea for 25 million donuts. Jan Oblak left for Atletico for 16 million. Ezekiel Garay was exiled to Russia for 6 million. Oscar Cardozo was sold to Trabzonspor for 5 million. Alan Kardec returned to Brazil for 4.5 million. And Lazar Marković ended up at Hull City for 25 million.
Meanwhile that fiscal year, Porto hauled in 51 million from cashing out Fernando, Juan Iturbe, Nicolás Otamendi, Steven Defour and Castro. Sporting received 20 million for Marcos Rojo, and 12 million for Elias, Eric Deier and Fabián Rinaudo.
That brings us up to 164,500,000 euros.
One of those players is Portuguese - Castro. Porto got 3 million for him.
Just for perspective, also that fiscal year, Seattle sold Fredy Montero to Sporting for 2.5 million euros.
Call me a stickler, but I don’t see a lot of that occurring because of player development. Rojo spent two seasons at Sporting. Marković spent one season at Benfica. We can - and brothers and sisters, we shall - debate whether promotion and relegation helps player development. But even assuming that wacky transfer fun is a benefit or a detriment, there’s nothing that says promotion and relegation have to be involved.
Maybe Benfica, Porto and Sporting take these raw, unfinished youths and hone them in the pressure cooker of European high-stakes pro/rel death matches...but, um, Liverpool and Manchester City play in a pro/rel league, too. It’s almost as if Portuguese teams that go to the Champions League are able to exploit flaws in the transfer system that over-value youth.
But apparently it’s promotion and relegation that prevents MLS from taking part in such day-trading. MLS players, we are told, are hot sweaty garbage because they don’t play with the same kind of intensity as a Marković or an Iturbe. Deloitte proves this by...quoting an offhand remark on team salaries.
An argument could be made that a comparative lack of player sales is representative of successful retention of talent rather than being indicative of limited amount of internationally appealing quality players. However the global nature of the player labour markets and the salary constraints of US club soccer (i.e. salary cap), makes this unlikely, "there are twenty leagues in Europe that pay higher average salaries than the MLS, including the Romanian league. Globally there are probably more than thirty professional leagues that pay more."
It’s hard to think of a more unanimously cherished belief, or one with as much glorious potential for proof, as “MLS players suck.” Deloitte decided to defend this, and screwed it up.
England, Spain, Italy, France, Germany and several others pay much, much higher salaries than MLS, and field much, much better teams. So do Mexico, Argentina and Brazil.
And so do Saudi Arabia and Qatar, which examples take the premise that salaries equal quality, and launches it into the sun. Only the least charitable would claim MLS had worse teams than those leagues. The Chinese Super League hasn’t completed its journey from powerhouse to punchline, so it’s probably unfair to include them in this particular disproof. But if you didn’t have the CSL pegged as the NASL of the new millennium early on, that’s on you, pal.
In any case, accepting the implied premise of salary equalling quality is not necessary. There are not twenty leagues in Europe which pay more than MLS, and Romania is not among them. Deloitte does not cite the easily available MLS Player Union salaries, nor does it refer back to the UEFA benchmarking report it used for Portuguese transfer storytelling. Instead, their source was soccernomician Stefan Szymanski in a book published in 2015 called “Money and Soccer” or “Money and Football,” depending on your fetish.
Had they checked with Szymanski, he would have informed Deloitte that, despite the 2015 publishing date and the present tense of the quote, he was not using 2015 figures to make that conclusion. Or 2014 figures. Or 2013 figures. The last authoritative, more or less, study of European league wages was for fiscal year 2012, where UEFA compiled revenues and percentage of revenue spent on wages, and invited math to draw conclusions.
So, naturally, Szymanski used 2012 MLS wage data, rather than more up-to-date figures. To be fair.
The sixth UEFA report gave Szymanski, and us, the knowledge that the clubs in the Romanian league made 6 million euros in revenue, paid 60% of that in wages, leaving us with an average per Romanian club salary of 3,600,000 euros.
Lamentably, the MLSPU site no longer goes back to 2012, but this very site does! Thank you, site!
Through dividing $90 million whatever with 20 teams, $4,499,976.85. (I didn’t count the pool players.)
Dividing the MLS figure by the Romanian figure gives us 1.25 rounding up - which is almost exactly the exchange rate of dollars to euros on August 1, 2012.
So we might conclude that whether Szymanski was right about 2012 salary comparisons depends literally on the exchange rate day-to-day. If the dollar was weaker than 1.25 to the Euro, Romania paid more. If not, not.
I think, since Szymanski clearly implied that Romania paid more, and not nearly the damn same, this puts him slightly in the wrong. However, he’s actually slightly more wrong. On page 66 of the UEFA report, we learn that UEFA counted wages as “total employee benefit expense. This includes all wages, salaries, bonuses and social charges paid by the club.” Also on page 66, we see a little box telling us that “79% of wages were attributable to players and 21% to technical staff and other employees.”
Before one smugly breaks out the calculator, we don’t know whether that exact percentage applies to the Romanian league. Maybe every coach, director and ticket agent is a volunteer. Or pays to work there. We simply don’t have the information. So Szymanski didn’t take any percentage off his calculations. Undoubtedly he wanted to be fair.
Which is why he included all personnel salary in Europe vs. player-only salary in MLS, but didn’t go beyond 2012. Was that a fair decision? I can’t decide for Szymanski. All I can do is use data that was available to Szymanski and point out that MLS salaries per club went up to $5.57 million per club in 2014.
Szymanski’s book, despite the 2015 publishing date, was sent to press in 2014. So it’s unfair to use 2015 and 2016 figures against him.
But it’s not unfair to use 2015 and 2016 figures against Deloitte. The seventh UEFA benchmarking report downgraded Romania’s per club salary to 3,200,000 Euros. Oh, and you really gotta squint to see it on page 64, but that whole wages including coaches, administrators, mascots and sergeants-at-arms? Still applicable.
Did Deloitte have this information? Since they used the transfer information for Portugal from that same report, I’m gonna go with “probably.”
MLS salaries per club, by the way, went up to $7.59 million per club in 2015.
And then up to $8.21 million per club in 2016. Which is a mere 6.90 million in UEFA bucks. That’s only double what Romania pays...every single employee...plus a half million euros for walking-around money.
You’d think an accounting firm would be a little less cavalier about being off by 217%. But Deloitte obviously wasn’t being paid to think.
“But wait,” you may be saying to yourself at this point, “doesn’t MLS go out of their way to keep salaries low?”
Sure - just read in the next section. MLS keeps salaries low by not having promotion and relegation.
The MLS Players Union probably could have suggested one or two other ways that MLS keeps player salaries low, but we’re on a trip that makes Willy Wonka’s boat ride look like the bus route from Des Moines to West Des Moines.
DeloitteUK did not invent the premise that promotion and relegation lead to higher wages than closed leagues. That was Roger Noll of Stanford back in 2002, which Deloitte did not link to but I will because I’m super-helpful.
Noll’s abstract addresses the question of whether teams in leagues with promotion and relegation pay higher wages than teams in leagues with stable membership.
EDIT - maybe I should be super-helpful and include Deloitte's Noll quote:
Looking specifically at the introduction of promotion and relegation, it has been suggested that this can have an upward effect on costs: "The adoption of a promotion/relegation system will increase the wages of players as long as the world supply of professional soccer players is not perfectly elastic. This effect is not due solely to the possibility that promotion/relegation may increase demand, but is a consequence of the fact that expenditures on players today are an investment in that they are a cost of gaining entry into a better league (or of avoiding demotion to a lower league), which causes this year’s players to have greater value than they would without promotion and relegation." With more at stake for owners in an open league, it follows that the importance (and therefore cost) of playing talent may likely also increase.
So Noll examined whether Real Madrid pays higher wages than otherwise because of the threat of Getafe being promoted. Whether Bayern Munich is forced to pay higher player salaries because 1860 faces relegation. Whether Celtic pays a premium due to the lingering desperation of St. Johnstone to make and attain first division status. Whether Juve pays monstrous wages to see off the threat of Lecce.
Because if Real, Bayern, and Celtic were in a closed league, then they would not face the pressure from lower level teams constantly moving up divisions. They would have a life of pressure-free, low-budget ease, like the Tampa Bay Buccaneers (2003 Super Bowl Champions), the Anaheim Angels (2002 World Series Champions), and the Los Angeles Lakers (2002 NBA Finals winners).
Sometimes to state the question is to answer it.
In total fairness, the 2001-2002 Premiership winners were Arsenal, who have since tumbled down to the ninth division (to hear their fans tell it) - and the last place team that year was Leicester City, who ended up putting their broken lives back together.
In equally total fairness, in the 2001-2002 NBA season, the Cleveland Cavaliers and the Golden State Warriors had fifty wins. Combined. They both finished fourteenth in their respective conferences. The Cavaliers were 23 games behind the New Jersey Nets. The Warriors were 40 games behind the Sacramento Kings. For those of you who don’t follow basketball particularly closely, this basically boils down to Matthew 20:16.
Noll didn’t consider the possibility that last place teams in what he calls “monopolistic” leagues are in a stronger position than new arrivals in first division soccer leagues.
Noll also didn’t consider - or didn’t care - that as late as 1961, English football had a maximum wage.
So the premise was disproven forty-one years before Noll’s paper was released, and fifty-six years before DeloitteUK extensively quoted him. There’s nothing about promotion and relegation that increases player power - something something Liga MX Gentleman’s Agreement - and there’s nothing about “monopolistic” leagues that depress wages - something something Brock Osweiler.
Should DeloitteUK have been so quick to cite as an authority an abstract that describes how the National Football League could establish promotion and relegation with the World League of American Football? Who can say. Oh, wait. I can. No. They should not have.
For some reason, after carefully crafting a section around Noll’s premise that promotion and relegation push wages ever upward, Deloitte sums up their argument by firing Chekhov’s Gun at Williams’ Glass Menagerie:
Also, if structured correctly, costs can be aligned with promotion and relegation. The inclusion of relegation and promotion clauses stipulating different salary levels according to what division the team is playing in within player contracts is an increasing part of clubs’ business planning, and there is no reason why this principle could not be effectively deployed or indeed mandated within the US club soccer pyramid.
Agree or disagree, “Promotion and relegation will inevitably force global wages up, unless some bureaucracy steps in” wasn’t exactly Noll’s point.
I also invite the reader to picture US Soccer forcing such a mandate on MLS, and the league then imposing this on the Players Union. Dozens of lawyers. Hundreds of boat payments.
There is, in fact, a handy real-world model of an extremely competitive and lucrative series of athletic competitions where wages are artificially depressed. It’s called college athletics. Leave it to Deloitte to propose combining the most useless aspects of international soccer with the worst American sports has to offer.
In part five, we learn that promotion and relegation lead to better players! We don’t learn how, mind you, we just learn it. It’s like a cargo cult without the island paradise.
EDIT - nothing important, some clarification cleanups, that's it, I promise.
EDIT EDIT - ugh, meant "paragraph" and not "sentence" in the cheap shot at the top.