In several threads I come across the assumption that certain leagues and the clubs in there have the development of players acquired cheaply and then sell them expensively as the means to run the whole business. They really think it is the on purpose MO of clubs. Some even think it should be implemented in the States. But they all assume things about clubs without having any real knowledge of the clubs themselves. The mere fact that a club made a profit from selling a player isnot the same as that's the club's MO, let alone it's a viable way to operate a club. Some even call BVB a feeder club. So do they have a document with being a feeder club is the club's strategy? Of course not. But the simple fact their players pool sometimes is raided by Bayern or Real makes them call it so. But the weird thing is that this magical thinking now even makes people think it should be part of the development of soccer in the USA. Why do people believe this kind of things?
Let me try to address your concern. Anytime a large business is behaving in means counter to the overall betterment of its growth or perpetuation, one of the aspects of the business that must be evaluated is its cost allocation system. When people are demanding the implementation of a “selling club” structure, I think they are asking for the cost incentive structure to be better aligned with the overall betterment of soccer in the United States. I don’t think anywhere you go, you will find a club that solely relies on selling as its primary means of revenue. Dortmund, for example, a club known for buying low and selling high (notice the investments reference), has an 80k stadium that they sell out probably 40-50 times a year. While selling players on for profit is a source of revenue for them, they have many other sources of revenue. It’s iust that in the US, the incentive structure is not set up for clubs to be selling clubs. In other words, the incentives do not exist for them, like in other countries, to buy low and sell high. The result of this matter of fact is that, despite all the hoopla about player development in the US, until the incentive structure is better established to actually financially incentive clubs to develop players, the development hoopla is just going to be hoopla. It will just be a cover up to make all of the USMNT fans feel better and feel like we are making progress, when in reality we are not doing anything. To list some of the barriers to a system that better incentivizes selling: -profit sharing between youth clubs and MLS clubs when a player is sold for big money (this issue is currently being litigated) -the college system that bars entry if you sign a professional contract. This disincentivizes players from wanting to turn pro even if they have the opportunity -mls clubs only retaining 1/3 of the revenue from any player they sell -mls having to approve the selling of a player -schedule being misaligned with the international calendar, thus preventing clubs wanting to sell during the summer transfer market (the time when most transfers take place)
Also, the college system and players holding out until they are 18 to sign, results in good players signing with European clubs when they are 18 and MLS clubs not getting any financial reward for their development.
You know this isn't true, right? https://www.mlssoccer.com/league/official-rules/mls-roster-rules-and-regulations
Newcastle United: Mike Ashley's Business Plan and the Futility of Fan Action Mike Ashley's [Newcastle United owner] tactic is to buy cheap, undiscovered foreign talent like Cheik Tiote, while also recruiting the best youngsters from at home and abroad. This is classic stock market speculation, investing in cheap upcoming stocks and hoping that they pay dividends (on the pitch) in the short term, before selling them at a huge profit when they fulfill their potential. If a player fails, the loss is minimal due to the small purchase and wage cost. If they succeed then the club can make a huge profit—£35 million for Andy Carroll is a classic example. Imagine how much will rising stars like Tiote and Cabaye be worth next summer. While this tactic makes a lot of sense from a business point of view, it does little for the fans who are faced with the reality of never being able to compete at the top of the league, while having to repeatedly watch new stars and heroes emerge only to be sold on for profit and be replaced by cheap imports. - Bleacher Report The Trade Secrets Behind Lyon's Rise Player trading has played an important role in Lyon’s financial success with transfer fees making up a significant portion of the club’s revenue every year except the last, when the profit from player sales only reached a paltry €3 million, as no big transfer was made in the period. In the previous four years, the sale of players generated enormous proceeds of €220 million, resulting in considerable capital gains of €164 million. This is part of what the club describes as an “innovative business model”, whereby Aulas has excelled at acquiring players and selling them on for exuberant fees to more renowned clubs abroad. The list of his hugely profitable transfers is almost endless, including Mahamadou Diarra and Karim Benzema to Real Madrid, Michael Essien and Florent Malouda to Chelsea, Eric Abidal to Barcelona and Tiago Mendes to Juventus. His skill in negotiating large transfer fees won him the grudging admiration of Sir Alex Ferguson, when the great Scot was asked about Benzema possibly moving to United, “Lyon’s president is a sharp man. He sold Essien for €38 million, Diarra for €26 million, Malouda for €19 million, Abidal for €16 million. And I congratulate him for that.” The profits on such sales have been boosted by an increasing number of the players being sold coming up through Lyon’s training academy. In 2009 over 70% of the sales proceeds came from players trained at the academy, most notably Benzema whose transfer was alone worth €35 million. This has been assisted by the club investing €5 million in state-of-the-art training facilities, which were completed in 2008, with graduates such as Hatem Ben Arfa and Loïc Rémy being other prominent examples of the young talent graduating from the academy. - The Swiss Ramble
The incentive should be to have youth that develop into players that make the difference for you in competition with other clubs. Especially when you havenot got the cash to buy high priced players it's the only way to get a competitive team. The draw back for mls clubs is that they donot have the urge to do so as they lack international competition like in a UCL or UEL. Donot know how much of a challenge there's in the cup fights with the Mexican teams in the regional CL. So to stay competitive with the rest in mls it's easier to shop in South America, I guess.