I'm starting a new thread to continue the discussion of how the league may be structured to progress from this point forward. To frame the discussion, Bill Reese recently wrote an interesting piece in Empire of Soccer. He notes: "Jonathan Tannenwald at Philly.com reported that Fox and ESPN could pay up to $70 million for MLS’ American TV rights. Let’s assume the U.S. Spanish and Canadian rights add in another $8 million, bringing that total to $78 million. That figure — divided by the now-21 team MLS — would net each club $3.71 million annually beginning in 2015; a significant increase. What could an MLS franchise do with an extra $2.2 million a year? Maybe pay down some outstanding debts? Permanently eradicate the raccoons from your cavernous 50-year old stadium? Or maybe the team could invest in some new players? Look at it another way; the purported TV revenue share in 2015 would be larger than the league salary cap figure — an artificial figure, considering that DP contracts only account for $368k towards the cap. — but still, it means that a number of clubs could pay their players with TV revenue alone, regardless of how many tickets they sell or how much they bring in with shirt sponsorships. No matter what, the status quo for MLS’ salary cap and labor relations can not continue in 2015. The league’s economics — both lucrative and unequal — are changing too rapidly for things to keep on keepin’ on." http://www.empireofsoccer.com/look-income-inequality-22820/ Reese also notes that MLS now has five players -- five -- that take up a staggering 20% of the total league payroll. Is that a problem? Is there a need for more spending? Should MLS plow the new TV money into payroll, or even go deeper in order to improve and grow market share? Discuss.
There will always be a pendulum swinging back and forth between spending on high salary / marketing impact player that you hope delivers the impact on the field as well, versus building the solid team of above average performers. That's more a freedom to be handed off increasingly to the team themselves.
VERY rough math done on a phone shows me that the top 6 baseball teams (top 20%) spend $1.1 Billion on salaries while the remaining 24 teams spend $2.4 Billion. I realize comparing teams to players is a bit off but MLS' model isn't necessarily bad.
Yes, if they're choosing the Fox/ESPN money over better production, better announcing, better analysis and valuable EPL lead-ins on NBCSN. NBCSN is better all around, in just about very single aspect. The only issue is the money, the Fox/ESPN money is more. How much more? No one knows at this point, but as an entity if MLS is going away from the better product(NBCSN) for the purpose of getting a larger tv deal, then the only way IMO to off-set all the negatives surrounding Fox is to put that money into improving roster quality and depth. Does it make sense to go away from everything NBCSN offers to just turn around and use the new tv deal to pay off debt? It sure doesn't to me. I stand by my opinion that Fox is atrocious when it comes to footy. The only way going after that money makes sense is using it to improve the product on the pitch. Otherwise, I don't see where the improvement and step forward for the league comes from. Negatives with Fox out-weigh the positives of NBCSN. However, stay with NBCSN even for less money, and take advantage of the EPL lead-ins and NBCSN's professionalism in broadcasting the sport, I think MLS does continue to grow and benefit from it. Triplet, I'm curious of your opinion on this, Fox vs NBCSN. Do you see any benefit in going to Fox if that increased revenue is not spent on roster quality?
No, I don't. Fox Soccer Channel was an important milestone for the sport in this country IMO, but I've been tremendously impressed with the production value of MSNBC. Personally, I would find it very, very hard to go back to FS1, let alone FS2. But, while I hate to be crass, the money does matter. MLS could do a lot with another $40m.
It should go to payroll, mostly. I do think that the development avenues should get some as well. This league has exploded the last 5 years with the player development aspect and we're already seeing dividends (pun partially intended). ^ This though, I think there could be something too. If the league did that as a way to tell the owner/operators .... "it's time" ... then I wouldn't have an issue with it.
You could make a case that the extra TV revenue could be used to pay off existing stadium debt to produce free cash flow in future years, which ideally would be spent on better players. Conversely, you could make the case that the TV revenue should be spent now on better players (DPs, deeper roster, etc.) which in turn would produce a better team that would generate team-wide revenues. This subsequent revenues could then be used to pay-off existing debt loads on a go-forward basis. It really depends on a club-specific basis, as they all have their own unique situations regarding ownership of stadiums, or in rental lease agreements with their local municipalities. While the clubs have ideally modeled out the cash flows for servicing the debt over the lifetime of the loan (mortgage for stadiums), plus agreed upon interest (fixed or variable), I would imagine any greater revenue intake would have a specific portion kept in reserve to pay off interest + principal earlier than anticipated; unless there were pre-payment penalties. It's the unfortunate growing pains period we are in currently regarding the league. Most fans forget that the Big 4 leagues in Europe at one point had to build their arenas and had to generate the finances to pay them off before the era of oligarch owners and rising TV revenues due to global exposure and brand expansion just grew revenues to a whole new scale. The deviations in revenue we see today between the top clubs within the leagues at one point decades ago were far less. IMO, I would rather spend the extra TV money on payroll. Albeit, spread the dollars more around roster spots 4-20, assuming you have 3 DPs.
What could you do with the money? 1) Reduce losses/increase profit 2) Target specific activities centrally 3) Increase the salary budget My guess is that you'll see all three so that everyone gets thrown a bone. My hope is that we'll see a negotiated compromise where the rich teams are allowed to spend more of their own money in exchange for the poor teams getting cash. I'm going to be a bit of contrarian and argue for not exclusively focusing on (3), but stupid work is getting in the way of my soccer posting.
I don't think it's a problem. It's been a smart strategy so far. A slightly stronger 'middle class' of players would help a bit of course, but it's an expensive and I suspect low return way to boost crowds and ratings. Part of that money would just end up raising salaries across the boards for current players, I guess there would be some imports, a bit more player retention, but it's not like mid-tier Americans are all in Europe. Between foreigner restrictions and people just wanting to stay home, MLS retains plenty of them at below market price. In the end, adding a couple mil per team would help game quality a bit but I doubt fans would actually notice a big difference and TV ratings would go up to justify that spending. People who think that MLS quality stinks would still most likely think the same. MLS focuses on other ways -- stars, parity and unpredictability, stadium experience, TV production quality, and it seems to work ok so far. Also, I think saying that 5 stars take up 20% of total payroll misses the full picture. For example, academy spending may not be "payroll" but in effect MLS is spending that money exactly to improve that middle and lower class. How much does MLS spend on academies? Google tells me a total of 20 mil in 2012 but I also seem to remember that Garber said that it's now 2 mil per team not long ago. Either way, it's quite substantial. And it's the same with scouting costs, I don't know MLS numbers in that area, but whatever they are, that's also in large part an investment into non-star talent. Those 5 players that get 20% didn't require much scouting. From a player's perspective, it might be all about his salary, but from fans perspective and MLS perspective, there are more ways to work on depth than just pumping more money into salaries. In the end, who knows, 30 years from now MLS hopefully gets to a point where they got as far as they can using current strategies. They'll have star power as good as other world's top leagues, great stadiums, great media production, great marketing, great player development and scouting, etc. At that point, a more expensive mediocre player with no star power might become the best way to spend new money and a priority. Until then, it would help, but I don't see a reason to think it's a priority. Small incremental growth seems good enough. I suspect MLS can find plenty of ways to spend that extra 40 50 mil from TV.
I think you have to start the discussion with the question of what makes a team entertaining to watch. Once you have an understanding of that, how you spend the money should fall out naturally. We probably all agree that back-and-forth games are good, technical players are fun to watch and we like stories. How does this play out in MLS? For me, the big stories at the start of the season were the Toronto reboot with Defoe and Bradley and Dempsey coming to Seattle. Who do I like to watch? Mauro Diaz at Dallas is doing some really great things. DP’s and exciting Young DP’s drive stories. What was the best game to watch this weekend? Seattle vs. Portland. Which tells us that the true secret of success is to have bad defenses! And I’m only half kidding. Offense is more fun to watch than defense so we should work the rules (what fouls to call) and the budget (who we spend money on) to favor it. One of the analysts on MLS this week said that red cards are having a bigger effect now since forwards are now skillful enough to take advantage of the man difference. You can see it with Dempsey and DiVaio and Defoe. When they have the ball one-on-one with the keeper they’ll score. It cuts down on the "se la perdio" moments. The bottom line is not really about being good and bad. As the bible says, the poor(ly-managed teams) will always be with us. Giving them more money won’t help; DC and NE would just squander the money anyway. But on the other side, giving a little money to KC and RSL doesn’t really help that much either. They’ll be responsible and build up a competent side that will contend for the championship. You’ll always have winners and losers. In the end, it goes back to Rodriguez’s 9’s and 10’s. Design the rules to reward the teams that spend money on those kinds of players and put your thumb on the scale if you need to.
Looking from a purely product quality point of a view. I'd have to say that the most urgent problem is the quality of player once we get past the best 8 or so players in a given team. It's a lot better than it used to be but I think it's still noticeable. In addition, it might get a little worse during the next expansion phase. The short term solution is to make more money available to the salary cap. The question is if this money is not better used in having U-23 teams or div 3 teams for the reserve players, that also has the effect of improving player quality.
I've been thinking about that quite a bit of late. I'm spending my second season with the good guys over in the Scandinavia forum watching the Swedish Allsvenskan. Now, I don't have a drop of Swedish blood in me, I haven't been near the place in 30 years and, aside from watching an occasional Wallender I didn't know much about the place. So why, my wife asked, have I watched something like 50 matches from a league most people have never heard of? (Even matches from prior years?) Why indeed? So I started to take an inventory: It's an easy league to learn. There are three traditional big clubs that are well supported with bigger budgets, one from each of the three largest cities, with another three clubs with pretty good support. Collectively, these clubs seem to get most of the attention. Unless people have home town interest, the other clubs are really fillers. And the big clubs market their "bigness" in a clever way: The facilities are nice. The big three and a couple other clubs play in new, or relatively new stadiums -- the old stadiums and athletic tracks are gone, at least for the bigger clubs. Spending is comparable. Again, the top six or so clubs have payrolls in the $7m - $10m range, so the top of the table is reasonably balanced, and the title race is usually close. It drops off fast from there, but this isn't a one or two club race. It's a physical league like MLS. Not a lot of flopping on minimal contact. I realize some of this may be cultural, but personally I think a more physical game transfers better to the U.S. The Crowds are Energetic. When the big clubs play each other, the crowds are usually very energetic and the TV production is pretty good (at least as far as I can tell from the pictures since I don't understand a word of Swedish). When the big clubs don't play each other, I just don't bother with those games. The Big Clubs Can Handle High Pressure. Quality is somewhat subjective, but to me a key indicator is whether a team has enough skill to pass through high pressure. A fair number of MLS teams struggle to beat high pressure consistently because they still have a couple guys who really shouldn't be out there, and you get a lot of errors in mid field, forced or otherwise which can strangle a game. Once the payrolls approach $8m or so, at least in Sweden those guys aren't on the field. And so I watch. Now, money isn't a key ingredient here. Many, many leagues spend more. But it's not irrelevant either. A bad, poorly paid team is a bad, poorly paid team in any country. Still, when the top clubs play, the show is good: There are certainly a lot of common threads to Portland v. Seattle last weekend, but that experience isn't typical MLS either.
If the money is only going to be 3-4 million per team, I would go with a 4th DP. Our goal has to be to get the TV ratings up, so maybe a few more interesting players would help. AND I would require all teams to use all 4 DP slots within the realm of the particular budgets. 1 or 2 of the 4 should be American players. We have to show there is a pathway to higher salaries. Or my other thought and it relates directly to our continued failure in CCL, is to use the extra TV money spread among the whole roster in an attempt to build up the depth of the teams to compete.
Lots of interesting things to talk about . I agree, the ability to play out of pressure seems like a big deal in avoiding the ugly games. What would it take to get there from here? Given their budgets, I would expect most starters to make $500k or more. From a quick look at a few wikipedia pages, most of the players seem to be Swedish. I don't know that we could fill MLS with American players who are worth 500k or more. It's a reminder of how far we have to go. And I don't think we're getting close either. I've been watching some USL games recently because of the Galaxy II and the quality I've seen is dreadful. The stereotypic American style of play. But it works, precisely because teams can't play out of pressure. The funny thing is that I've watched the Galaxy academy play and it's a more enjoyable style to watch because the academies make a point of emphasizing that approach. So we're building the base, but it's a long ways away. Now if we added all international players it would be closer. Taking the DPs off budget would allow the Galaxy to add 2 $500k players and another million to the salary budget would be an additional 2 players. That fixes the midfield right there. The current midfielders would now be decent reserves, leaving the defense to fix. But as I argued before, bad defense is OK for the league as long as they don't resort to fouling. The question is, how do you get teams to do this without having too much "leakage" from the budget, i.e., overpaying american players, defenders or reserves. It seems to me that our best source of players would be Argentina. I don't know it well but my understanding is that it's a technical league but relatively physical by Latin American standards and the players are not especially highly paid. MLS should set up an "embassy" down in B.A. and have it act as a league clearing house. Make it easy for teams to get the right foreign players.
I like having American players, and we do need to hold out those opportunities, but do you think there are currently 20 American players worth being serious DPs? I'm just running through the national team in my head, and excluding foreign born players (who are working under a different system anyway) and defenders and keepers, I don't think there are enough.
That's fair. The "big three" are AIK, IFK and Malmo FF. When they show the starting lineup at the beginning of each match, they'll put a flag by each player's name so you can easily tell where they are from. Most rosters are indeed domestic, but each of the big three has a handful of foreign players, and off the top of my head typically two or three are starters for the best clubs. Sweden actually releases an audit that tells how much each club spends on payroll, so the numbers I posted are from that. Here are some of the top 2012 clubs: Club - Total Revenue/Payroll/% of Revenue/Profit (Loss) Malmö FF - $25m/$10.7m/43%/($2.1m)/ AIK - $20.1m/$8.1m/53%/($680,000)/ IF Elfsborg - $18.1m/$9.1m/50%/$350,000/ Helsingborgs IF - $17.8m/$8.8m/49%/$320,000/ IFK Göteborg - $16.6m/$8.1/49%/($610,000)/ Djurgården - $12.3m/$6.6m/54%/($800,000)/ I've omitted a couple, either because they had a big transfer fee or some other circumstance that seemed unsual. (Djurgården just moved into its beautiful new stadium in 2013, so it's revenue should be higher now). A couple things jump out. First, as a percentage of revenue, the payrolls are well below UEFA's 70% threshold, so it's about as close to MLS as a major European League gets. Second, the teams aren't making what MLS teams are making (or losing). They run much closer to break even. Those payrolls include all the senior players on the books, and, maybe, the manager as well. If the roster size is 24 - 30 as it appears, I'd guess average pay is around $350k.
tHighlights from last weekends class between two of the "big three", IFK and Malmo FF. Note the passing on the goals -- again, you're only getting a snip, but it will give you some sense of why to me they have the skills to defeat high pressure. Now, I don't offer this as the highest standard, but perhaps an obtainable standard. Malmo actually spent time at Bradenton this spring and scrimmaged against a number of MLS clubs. The certainly didn't blow the MLS teams out of the water. The drew with DC United and the Crew beat them on a scruffy goal that seemed against the run of play: http://www.mlssoccer.com/video/2014/02/05/highlights-columbus-crew-vs-malmo-ff-february-5-2014 As one of the comments notes, the Crew had one chance on goal and defended the rest of the time. Still, I don't think the talent gap is huge, but my sense is they do play a bit differently. As I said, the passing seems crisper and they can beat pressure because they don't have the obvious weak links. To me, that's what I hope MLS could achieve in the near future.
Excuse the long set up to get down to it -- but you're right. Ideally, the domestic player pool isn't good enough or MLS would be there now. Development helps, but it's not like this is an assembly line where you can predict MLS will develop suitable players by a date certain. But I still think MLS needs to work on pay. Much like college recruiting, I would hope MLS could make a serious effort to keep the domestic guys who it does develop and who do fit the bill home as long as possible. Pay has to move into that $350 - $500k range to do that IMO.
The biggest thing MLS owners should do is hire a bunch of Sweden's soccer executives. They are able to manage their teams so much better than their MLS counterparts that they can provide their fans with players worth close to double the average MLS payroll yet do so with a fraction of the Revenue.
From past discussions on the Scandinavia board, I believe they operate like the clubs in Germany -- the club members must retain 51% ownership. Because of that, they appear less concerned about ROI, but that model also limits their ability to raise capital to fund growth. While the percentage of revenue devoted to salaries is relatively low (for any league in the world not named MLS), note too that four of the six clubs I listed above did post an operating loss in 2012.