The Szymanski Rebuttal

I've always told triplet he really puts way to much time and effort into this.

He isn't a soccer genius wanna be who posts incessantly for his own ego and need to be seen as important/knowledgeable.

Let's face it, this isn't the place for even handed/quality analysis, no matter how many want to pretend it is.

A few exceptions aside of course.

He has done a lot of thankless, labor of love work.
Those guys get appreciated in my division because I respect what it is and who they are.

Will be missed, but like I have told many of my quality people.....time to move on To better and thanks.j

 

I would add these are odd mistakes to make, and indicate someone who doesn't and hasn't actually attended MLS games. On comp tickets, the difference between 2006 and today is visible. I remember them being passed out, and tossed aside, in mass numbers, a decade ago. In KC, there was no real value to most Wizards tickets because the stadium capacity was so far beyond what they could sell that those buying tickets were doing so primarily as an expression of support. Today, the demand exceeds the supply and people scramble. When the comment was made about league was handing out comps in mass numbers in 2006, there were four SSS (and Chicago's was opening so the numbers were reflecting the previous year so really 3) while today there are 12 (and Seattle has proven that they can support an enormodome) with others underway.
SSS make a massive impact on revenue because the clubs control all small revenue streams, from parking to concessions, instead of sharing that with the primary tenant as part of the rental deal (may not be the deal for NE as Kraft is the primary tenant and I would assume holds rights, though in KC with Hunt (who held most of the revenue stream rights) there was a paper transfer).
But, as noted, even without a single number, the evidence is strong that the original piece is wildly off. The games are appearing on national television more often (that means there is more of a market). New owners are scrambling to get the right to pay the franchise fees (making the assumption that folks with enough cash to plunk down ~$100m are all idiots is never a good starting point for an argument). And attendance is increasing, more stadiums are being built, all indicating growth.
Great thread, spectacular pieces, btw, thanks triplet.

 

I watch probably 2/3 of MLS matches, and highlights of the rest. You're watching the wrong teams. They stink so far this year. Try the Revs or TFC. THe Crew play some nice stuff.

 

Agreed.

This is going to be the problem with expansion. The league only has 160 (more when green-cards come into play) international slots.

400 is a mighty big number--at 20 teams--to fill rosters with using the current crop of domestic players. What happens when the next three teams begin play in 2017-18?

Which means more money will be pumped into the academies and the USL sides MLS has/will establish(ed). They need a place for the 18/19 academy player to progress into so development is great than if they would play college soccer. When they're 20/21 these players willl be better MLS players then if they went the college route.

Don't expect the salary cap to rise, substantially, any time soon. But expect more money to be pumped into the academies and USL teams.

 

Yup. We say the players got hosed in the CBA, which they sort of did, but in general the top domestic performers do pretty well. Total budget for players in 2007 was 2.1m times 13 teams. Now it's 3.49 times 20. So 27m versus 69m.
Sure it's more players but long time guys are finding plenty of starter positions and only minimal pressure from the new players.

Who suffers in all this though? The fans. Quality overall is only somewhat improved in spite of there being way over double the money in the league.

 

The talent is being stretched thin. It's becoming diluted through expansion and while overall league investment has risen, as you've pointed out, it's not nearly concentrated enough to have much of an effect on most rosters. Our top prospects increasingly are looking to avoid MLS at all costs and only use it as a fallback option.

Product is getting dulled down IMO. MLS hopes a few big name DP's will offset that but it generally won't.Its filtered over into too much marketing over substance.

One of the biggest issues MLS is creating for itself is development isn't keeping pace with expansion and with the low salary cap/top heavy model, there's little ability to counteract that issue by bringing in better foreign talent.

 

I do need to point out that while I pointed out that the fans suffer that doesn't mean that I am necessarily against expansion. Yes, for a fan of a current MLS team there is no reason to get excited about further expansion. However, as long as it makes sense for the business owners then there will be expansion.

 

I don't know if that is true yet. How many starters did NYC and OC draft in the expansion draft?

 

@dark knight permanent sticky please. In all MLS forums.

 

I mostly watch local teams and local players. Galaxy (even had partial season tickets for a while before conflicts with games were simply way too often), then MLS and local college teams. I agree with New England - have a lot of good young attacking talent, but so do Vancouver. Haven't really seen the Crew, but they do appear to be playing well.

 

This makes it a very honest, if often wrong, profession. I like arguing with other economists because they are explicit about their assumptions, where other people make claims that are more difficult to evaluate.

The reason we are able to dissect Szymanski's conclusion so thoroughly is that he was honest and spelled out exactly how he came to his conclusion. Bravo to him for being so open- and less so for being so wrong. He responded to my pointed correspondance, so I also appreciate his faithfulness to the academic standard for debate.

Having spent several hours that ought to have been devoted to my actual life diving into some of these issues, I am fairly confident that this is mostly a case of Szymanski just being a little out of his depth. He doesn't have the familiarity with the American model of sports or the particuloar knowledge of MLS to know when he's getting a snow job from his source. I mean, that source essentially dictates the overly simple financial model he employs- it certainly isn't one that you would create if you knew most teams own the rights to their various stadium revenue streams, for example. He hadn't even seen the DC United stadium report that is basically the gold standard of league finances (replacing the Timbers study).

The true test will be what happens next. An open-minded person will embrace feedback and more data. Your post rubbed me the wrong way, inevitable perhaps given my own training, because it felt like you were attributing closed mindedness to the entire profession. Szymanski's next public comments on MLS will determine whether he fits that description or not.

 

Well, as a guy fairly high up the corporate land I have gotten used to entities wanting a result, and then fnding the individual who will give it to them. I am sure you have gone through the financial rags and have seen dozens of different contrasting, many times extreme scenarios every damn few weeks. All put forth adamantly.
Reminds me of BS where someone will make dozens of proclamations, and when one comes through they champion themselves, while ignoring all of the misfires. Goverment, and their shills are even worse. It gets tiring.

I can't afford to let criticism affect me, or I would never be able to make a decisions. I also have no illusions about how companies like mine function, and why for the most part, for better or for worse. I am very hard on myself, or anyone for that matter, who states a point, only to find out they have not done their due diligence.

I immediatley question them. Are they lazy, trying make a name for themselves, inexperienced, or just plain not up to the job? While it may be honest....it is still at the very best lazy, and at worst manipulative, bias or dumb.

No insult intended, but his article is the type of " honesty" I see regularly. Not impressed by it.

TBF....I can't be "honest" about my job, or I would be out of one, but you better damn believe I will have done the busy work, and be fully prepared to state, defend, and counter point my biewpoint or implementation.

That "half assed honesty" rubs me the wrong way. Again, TBF, that seems to be the type of homesty we get 90% of the time now from almost everyone.

 

Ok, this is a broader response than I was expecting, but let's see if there's some common ground here. (I apologize if I mischaracterized your earlier post.)

Lazy or uninformed work, even if no deception is involved, is inherently short of true honesty, because it doesn't show enough respect for what the truth may be.

The economists who do cost-benefit analyses for regional planning entities or at the behest of builders are often not doing the Lord's work. Those models are flimsy and, to use an overly harsh term, rigged.

To go on a little bit of a tangent, a long time ago I used to work for an economic consulting firm that, among other things, specialized in expert testimony in anti-trust issues. Of course, there would always be an economist on the other side of those lawsuits as well, not unlike how lawyers find themselves. I remain fully behind my work and that of my colleagues, but it would be foolish to pretend there were not powerful incentives to "stack the deck" if we had been so inclined. A lot of money is at stake, after all. That's one of the reasons I left the job very quickly - it's not at all what I got into the field to do, though I maintain that it's essential that someone honest and competent do it.

My original point is that, when someone I disagree with has an explicit model to underpin their findings, I am able to pinpoint exactly why I disagree. It's a useful professional standard, and it is inherently honest even if the practitioners themselves are no more honest or competent than the human species at large.

In that vein, Szymanski did us a favor by attempting to back up why he thought MLS was a failed business model. It allowed knowledgable, diligent people like triplet to falsify that hypothesis.

 

Response appreciated.

My issues with guys like Szymanski is that many do this purposely IMO.

The first read is scientifically proven to be the one that sticks, lends bias, drives a person conciously or sub consciously to a deciosion/conclusion. It is incredibly hard to overcome the original message with regards to the average audience member. The above average member can be swayed, but it takes time and effort. I know, because we have payed hundreds of thousands for the info over the years.

At this point in my life I assume bias, whether emotional or monetarily driven. I have little tolerance for people who do it since the overwleming majority partake in it....knowing the affects on the general populace, and in this case the general reader. It is a lazy, manipulative approach. While a small minority will be willing to point out the flaws in one's model, and a small number will research the rebuttal....the message has already been delivered for the most part. Sure, it is a flawed model, and it can be responed to concisely, but IMO it's hardly truthful.


Hell, our Nat team coach has made a career out of it.

Would have this thought process if I was 10-15 years younger? Probably now.

Now....well....you can guess.

 

Bad information and poor inferences are never welcome, but I appreciate the process of showing your work. My respect only goes that far.

 

Szymanski has given us plenty of feedback and data for us to confidently point out that he's a huckster and a troll on the topic of MLS business.

Szymanski has been doing the same "MLS is doomed" garbage for years now using incomplete and/or inaccurate assumptions to cook the model to fit his eurosnob viewpoint. He's already given us more than enough feedback and data for years for us to call us a huckster and a troll on this particular topic. Real life events have been proving his "MLS is doomed" narrative for years now and he never says, "maybe the assumption in my model were not right," or "maybe there's some information that I can't access that prevents me from properly modeling MLS business." Instead, he lurches from failure to failure, always saying how MLS is "doomed" and should just go out of business preemptively. His biggest howler last year was that MLS should convert into farm teams for EPL teams because it's "better for the customer."

I've gone back and forth with Szymanski about that previously mentioned howler of a post. He assumed that a player who makes $400k in the EPL was automatically twice as good as one who makes $200k in MLS. I pointed out that his assumption was inaccurate due to the inherent arms race of wages in non-salary capped leagues as well as the salary cap being designed to control player wages. In the EPL and other non-salary capped leagues, you not only pay a player what he's worth on the open market, you also have to pay a premium to try prevent Chelsea/Man City/ManU/Arsenal signing him simply to prevent him from playing for you. The richest teams in unequal leagues will often buy a player from a lower table team with the intention of never playing him, just to prevent the other team from having his talents.

Anyway, Szymanski accused me of being rude to him in a private email after I made this point in the comment thread. He said how dare I question his modeling assumptions when I don't know anything about economics and he's a professor in the subject. I responded that I have a friggin' master's in the subject, so while I'm not as well educated as he, I'm far from a layperson. My interpretation is that he was whining and crying because he simply had no response to an argument that rendered his entire point moot. He's not a guy who we should give the benefit of the doubt to. He's just egotistical, close-minded, and disingenuous. I can't tell if he really believes his posts or if he's just trying to make money by tossing red meat to fellow eurosnobs.

I also don't trust a blogger who feels so insecure that they must defend themselves from every little dissenting comment in their own comment thread.

 

I had a more positive interaction, but fair enough.

I reject the 1-1 relationship between wages and quality as well, based on one axiom I share in common with Dr. Szymanski, and two that both he and many people here on BS reject or downplay.

1) Many teams, especially in Europe, are not designed as profit-maximizing entities, but instead have a different objective function.
2) There are significant labor market rigidities, not just on the league/country side, but also on the player side.
3) Players in a free market are not paid marginal product (skill), but marginal revenue product (something else).

Your comment to him about player quality stems from all three. I agree - all it takes is a sufficiently concave reward function for wins and you'll get this kind of behavior, based on 3). This drives up wages locally based on 2), and the whole thing doesn't collapse on itself because of 1).

 

Bump.

I read this again and it should be must reading for new Big Soccer members.

 

I wonder if Szymanski will have anything to say about how all the EPL teams lose money: http://www.espnfc.us/english-premie...ly-losing-an-average-of-876,000-per-day-study

Somehow, I think his thesis would be that MLS teams should imitate the EPL teams.

 

He obviously didn't do the slightest research into EPL restrictions on signing non-EU players. Very poor.

Only players from the top 50 FIFA nations will be considered [sorry Canada], with a sliding scale of appearances required — from 30 percent of [international] games over two years for the 1-10 teams to 75 percent for 31-50 teams.

This rule will also affect EU players post Brexit which no-one seems to have acknowledged.

 

Well, that was allegedly his thesis (really, it was the starting point, and he worked backwards from there).

His argument was that teams are supposed to be run so that they lose money. It was all a very perverse logic pretzel really. I think someone paraphrased it on one of these threads: "If you're out to lose money and you lose money, that's sustainable; if you're out to make money and you lose money, that's not."

I've been interested in this topic because I always wondered who would be the 'slowest guy in the room'--the last person with any following or perceived credibility at all to argue that the league might collapse. (Previous holder of the crown was Toronto columnist Cathal Kelly.) I was surprised it was a PhD economist, but I shouldn't have been. An economics PhD gives you the tools you can use, should you be of that bent, to argue just about anything, including premises that violate Economics 101.

What happened with Szymanski is he took a sentiment ("I like pro/rel"--which by the way I do too) and manipulated it into 'economic theory' (it's actually kind of the opposite, more competition is supposed to be good for the consumer. . . but oligopoly is better for the producers). Then he manipulated the data to fit the theory (essentially throwing out all the publicly available information that might have served as an ostensible reason why franchise values would be going up) and used the tools of economics to cover up his tracks.

I meant to address this earlier. How I would phrase this third point is that Szymanksi is really positing a 1:1:1 relationship--player pay equals quality of play . . . equals entertainment value. As dubious as the first half of this is for just the reasons you point out, it is worth noting that MLS has found a systematic way in which the third doesn't follow from the second. That is, they have found a way (generally) to avoid paying for the player quality that does not return revenue.

To be fair, everything is still kind of up in the air with Brexit. If it winds up being a 'soft Brexit', the Premier League may still benefit from a common market or something close to it. We shall see.

 

Brexit = xenophobia

 

If the losses are manageable and the toy is cool enough, it can hold some value. It won't be nearly as much as if it actually pays for itself, but it will exist.

Generally, sports teams which are something like self-sufficient or even profitable are worth about triple what a business with similar cash flow, capital investment, and profitability 'should' be, because it's really cool to own one, compared to a cement manufacturer or supermarket chain.

 

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2017 valuation of MLS by Forbes [/url]

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