Aspirations of the Premiership? Those Would Be Eyes of Disillusionment, MLS

John Nyen on illusions of the Euro game

The guy on left easily carries the American Express Black card...and nothing can dent it.

“I am a fan of the American model. The European model cannot be sustained without new parameters, commercial parameters that allow competition, that allow revenue distribution, and that will allow talent to continue to prosper.”  – Manchester City chairman Khaldoon Al Mubarak

The massive hypocrisy of Al Mubarak’s statement aside, the following argument continues to drone on:

“MLS isn’t as good as the Premier League in England or La Liga in Spain.”

On the base of looking at players and teams this can be considered mostly true.

Rodgers, a fan favorite at English powerhouse....Port Vale?

MLS doesn’t have Silva, Balotelli, Messi or Suarez.  The “named” players that European fans may recognize could be said to be middle of the Euro talent pool or sliding down the backside of their careers. You have former Shrewsbury Town and Port Vale striker Luke Rodgers–Rodgers’ two career stops don’t really pop off your monitor with glitz–paired up top with Thierry Henry on Red Bull New York. The LA Galaxy come at you with David Beckham playing with former Coventry City player and Trinidad & Tobago national Chris Birchall.

However, I would argue the worst possible fate to befall MLS would be turning into the Barclay’s Premier League. Hold the snickering

The Premier League in its current form is an absolute cash cow.

Revenue from the 2009-2010 season of the BPL was £$2.03B–have to call it the Barclays if we’re talking revenue, right?

Those digits outstrip any other European soccer league in terms of income. The big problem here is that this also must be evaluated alongside the debt of the Premier League during that time which was a not-so-tiday £$2.6B.

There is little doubt that when allowed to spend as much money as possible to obtain talent, any club can buy beautiful play, trophies and a world wide audience. However, the repercussions of this kind of wholesale fiscal debauchery are felt negatively up and down the tables and leagues in England to the detriment of the overall product.

Sixty percent (60%) of teams in League One have been in administration recently with almost 40% of the teams in the Championship teetering on the same fate.

Portsmouth's FO deserved a red...

During the 2009-2010 season Portsmouth was not only relegated from the Premier League but donned the dunce cap of administration with the very existence of the club in doubt.

This in and of itself can lead to disillusionment of the fan. Without a solvent team, or even a team at all… how do can can you support it? Or better, with the historical revolutions of fandom of a club building up its strength like rings of bark on a Redwood, just how easy it is for spiraling debt costs to hatchet it down is, well, scary.

Detachment at profligate spending doesn’t even address rising ticket prices. An excellent article written by David Conn illustrates the increases in ticket prices across the breadth of the Barclay’s Premier League.

“The figures from 1989-90, collated for the Labour government’s Football Task Force, show the cheapest season ticket at Anfield was just £60 and £96 at United – the equivalent prices with inflation would be £106 and £170 now – but the actual lowest-priced season tickets this season are £725 at Liverpool and £532 at Old Trafford (1,108% and 454% inflation respectively).” David Conn – The Guardian 16th August 2011

MLS must strive against such rampant financial misuse and expansion even if this means that the play that you and I see isn’t the best 11 versus best 11 in the world. MLS does have a record of financial prudence, but as the notions of increasing DPs per side and what seems like an understated push for a “Cosmos-like” franchise in the Big Apple.

The league must operate within the world of appropriate fiscal management and controlled growth to avoid pricing out fans that are (in the USA) just starting to get a feel for the beautiful game. If this means that the quality of soccer is lower than that in England or Spain than so be it. The reality is the reality and a day of reckoning is on the horizon to the East.

After the formation of the Premier League, the League Championship has only been won by a team outside of the “Big Four” once, and during that 1994-95 season Blackburn wasn’t exactly shy about spreading the money about.

Blackburn was also relegated from the Premier League four years later.

In the last seven years of the Barclay’s Premier League, the title has been won by only two teams.

During the last seven seasons for the American domestic league, the MLS Cup has been won by 6 different teams with the Supporters Shield being won by 4 different teams.

While one opinion may be the lack of dominant sides in MLS, what the reality is quite the opposite: the league’s ensurance that–almost–any team can have a chance on any given day.

What this means is that in places with good advertising, strong local connections and a good front office the support can steadily grow. In some cases this is essential, because you are not talking about a passion that is ritualistically passed down by fathers, mothers, and siblings; many times they are new fan communities that are being cultivated.

Contrast.

During England’s FA Cup final last season, the narrative was of a team with a lengthy history of failing to win trophies against a scrappy team that fought their way to the end–except that the narrative only works without the acknowledgment of financial numbers.

Stoke City versus Manchester City was just one of the staggering financial mismatches of the year.

Certainly it is worthwhile watching the celebrations of the long suffering City fans, finally able to watch their team lift a trophy. However, this was in reality the battle of one team which has spent £537,670,000 over the last 5 years (Manchester City) versus one team that has spent £72,725,000 over five years (Stoke). The game of soccer being what it is, Stoke was able to give City a game; but in the end, money usually wins out. TSG even acknowledged as much in their Twitter review:

Yes, it may be hard to deny that City has made many correct purchases and hires, given the lack of regulation (at the time) and the profligacy of those before them.

They managed to find good talent and an intriguing manager without an astronomical amount of failures (Robinho and Tevez aside).

However, looking at the organization as an outsider to the city, this team seems like a pleasantly distant alien that is slightly divorced from the Manchester City of old and rewriting the identity (for better and worse) of what City means.

For all of the issues with the Premier League, La Liga is in worse straits.

With the hegemonic financial domination of Barcelona and Madrid the league has settled into a big two…. and everyone else. Before you object with Malaga, just realize how they got to where they are today. It may be three in a year or so, but for now it’s two.

In the last 10 years of La Liga play only one team has cracked the Barcelona and Real Madrid domination, that team Valencia. This year all three promoted teams in La Liga came up in administration. Are we shaking the UEFA tree yet?

At one point there were 11, pause,…. 11! different teams between the two Spanish divisions in administration. With the free to negotiate, every team for itself rules control of La Lika, the revenue has become so lopsided as to be laughable. Real Madrid and Barcelona got about half of the €650 million television rights while teams like Getafe received about €6 million.

Solidifying the theme, take a gander at the knockout round play in the UEFA champions league. It’s a celebration financial well-being as much as talent.

2003: A special year for Porto....look at that handsome youngster on the right.

The last outlier final in that competition was seven years ago, Porto versus Monaco. Winning the Champions league that year essentially doomed Porto the next year as they were raided again by teams with money for players (Paulo Ferreira, Ricardo Carvalho, Deco) and their coach (Jose Mourinho). The following year they finished second, were knocked out of all sanctioned competitions and scored only 39 league goals on the season.

Soccer has existed in North America for well over a hundred years in many different organizational varieties, from the semi-pro and journeyman teams such as New York Thistle (founded 1895), and Kearny AC (1897) to the ever popular Bethleham Steel FC (1917) and the Harrison Alley Boys (1915).

However, the nadir of many peoples popular thought is the NASL of 1968 to 1984.

During the height of the NASL the Cosmos sold over 73,000 tickets to their championship game. The league was untenable though and due to high wages, over expansion and financial mismanagement the NASL eventually folded with the 1984 title ensconced in the hands of the Chicago Sting.

This lesson in financial misappropriation has lead to strict controls of finances in North America for MLS.

These controls have attempted to ensure that the league is still around rather than giving free reign to some team to spend themselves out of the league. As well as controlling the level of spending, the financial controls have dictated a slower growth in the style and essence of the league.

Teams are having to scout for less expensive talent in South America, Africa, Europe, Canada, and the United States leading to a meld of different kinds of playing styles. This consistency and growth over 15 years of league play combined with financial controls on teams has lead to a parity that gives almost any team with decent management and good luck a chance at winning. Now all of this isn’t to say that MLS is a perfect organization or that it is above reproach. This is also not to say that there aren’t cheap soccer front offices–Chivas USA–who use the salary cap and financial constraints as an excuse to put out an inferior product.

However, the history of soccer in North America has slowly indicated that stability and viability of a league is far more important than having the highest paid players. The greatest team in the world is nothing if it doesn’t have a league in which to play.

MLS should not be abandoned to the staid formulaic consistency of La Liga or the Barclay’s Premier League just to allow high wages and “beautiful play”. The growth of MLS has shown that soccer fans here do not only need “The Best” or “The Elite”, but instead they need a team to call their own.  Hopefully, MLS shall remain first and foremost a league for the fans. Soccer in North America cannot afford reckless financial abandon, teams in bankruptcy and the detachment of fans.

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26 responses to this post.

  1. Posted by Kay20 on 2011/11/08 at 12:50 AM

    Very good points in this article. It will be fascinating to watch this league grow – where will we end up?

    Reply

  2. Posted by SamT on 2011/11/08 at 5:00 AM

    Agree entirely that MLS has shown a remarkable knack for growing the sport in a fiscally responsible way, and we should not look to the BPL as a model to emulate. The Don deserves a great deal of credit for knowing what parts of the NFL model should be replicated (competitive parity) and what should be different (single entity) for our still very young league.

    A couple additional points to consider:

    Anfield season tickets are still a bargain compared with season tickets of a well-supported NFL team. Take the Patriots. A 2008 season ticket (easiest data I could find quickly on Google, but I’m guessing prices have only gone up even further from there) was $89 per game. And you had to go in for the two useless preseason games as well. There’s a waiting list for the privilege. Compare to that GBP 725 Anfield season ticket — a relative bargain at $61 (converted to dollars) when spread over 19 regular season games.

    The way I tend to analyze debt load in my day job is to compare not against revenue but against the cash flows that enable a company to pay off that debt, or earnings before interest, taxes, depreciation, and amortization (EBITDA). I could only find one good example in the BPL, and they are arguably not a “typical” club. But here it is… Man U’s reported annual EBITDA in the fiscal year ending June 2011 was GBP 111M. Compare against their GBP 308M debt load, and you have a 2.8x multiple on EBITDA. This is on the high end of “responsible” for most corporations, but it’s in the range. Strikes me as a leveraged but well run business.

    The big caveat is for the Chelsea’s and Man City’s of the world. The only measure that matters in those cases is the personal whim of the deep-pocket owner. Personally, I’d rather have the discipline that come with a professional ownership group even if it means 2.8x leverage and the risks that come along with it.

    Reply

    • Posted by matthewsf on 2011/11/08 at 5:05 AM

      I think Manchester United’s purchase by the Glazers has always been about that. With a sports club, there is an added call in “hyper local interest” to not see it become insolvent.

      I would think this factors into financing discussions.

      Thoughts on that Sam?

      Reply

      • Posted by GeorgeCross on 2011/11/08 at 9:24 AM

        I think it was more to do with the level of debt and interest payments that pissed off a lot of fans. That, and syphoning funds from United to pay for their other business vetures that aren’t in good fiscal shape.

        It is a little cultural too. Most Brits in general have a very different attitude towards debt.

        Reply

      • Posted by SamT on 2011/11/10 at 5:53 AM

        Sorry for the lagged reply, Matt, but I assume you’ll get a notification and can find this now-buried reply…

        Agree completely that you can’t just say “it’s a business” and leave it at that (but it’s a useful starting point). Ways it’s clearly different than a typical business:

        +The Brand of the club (capital B brand) is rooted in multi-generational tradition, and this in a country where tradition and history are revered; in a way this creates wonderful stability for the long term viability of the club because the fans in the end care more about the club than about the owners. The green and yellow scarves send a message — and honestly, I think the message is more about an American ownership group than about debt — but at the end of the day those fans are still paying their money to show up for the games.
        -The rules of the game are defined not just by capitalism but also by an FA organization that may or may not respect an owner’s profit-making intent.
        -The influx of the ultra rich owner does not appear to be slowing as the global economy continues to generate elite levels of wealth, and those individuals turn their attention and competitive natures toward the sport.

        Those last two things that would keep me up at night if I were an owner.

        Reply

  3. Posted by WatertownMA on 2011/11/08 at 5:30 AM

    I’m looking forward to a comparative analysis w/ Bundesliga, which has been argued is the most competitive in Europe or w/ Campeonato, the overlooked league in Brazil.

    Reply

    • Posted by GeorgeCross on 2011/11/08 at 9:19 AM

      When the FFP kicks in, I think it will be very interesting. The question is whether UEFA are as strict as the German FA re. financial regulation. The likes of Barcelona and Real Madrid are broke. And the same can be said with many of the European leagues. Will be watching with curiosity to see whether this translates to more German success in Europe.

      Look up Simon Chadwick and Stefan Szymanski, both respected sports economist.

      Reply

  4. “The league must operate within the world of appropriate fiscal management and controlled growth to avoid pricing out fans that are (in the USA) just starting to get a feel for the beautiful game.”

    I’m not sure I understand this. Who increases prices without an increase in demand, or at least an expected increase in demand?

    “MLS should not be abandoned to the staid formulaic consistency of La Liga or the Barclay’s Premier League just to allow high wages and ‘beautiful play’.”

    Meh. This is nearly a religious belief among Americans at this point. I really don’t think this is a danger. Any time anyone ever suggests the MLS become a little less safe, it’s “THE COSMOS!!!”.

    Reply

    • My point was there is a way to have growth in both demand and price without wholesale pricing out the fans. IE the Bundesliga has had tremendous growth and yet their ticket prices are still some of the lowest in Europe.

      They have managed to balance growth and fan stability (IMHO) better than the Premier League.

      I also think that the “Cosmos effect” is relevant, simply for the fact that if we look teams from that era “Timbers, Sounders, Whitecaps, Earthquakes” you can see the passion it built from that simple amount of time being in the collective psyche. If you could imagine that the NASL was better controlled and less financially unstable the USA would have been building inroads into soccer 40 years ago with most areas, rather than 15 or 6 or even 3 years ago. The loss of the NASL and the perception it created amongst people set the foundation of USA soccer back years.

      Thanks for your points though and thanks for commenting.

      Reply

      • Posted by Jared on 2011/11/08 at 7:58 AM

        The Bundesliga prices are so low because the fans own 51% of every club. Also, several of the clubs have standing sections (in domestic competition only) that greatly increase the capacity of the stadiums. It’s not going to be easy to pass huge ticket price increases when the club is owned by the fans.

        Reply

        • Posted by John on 2011/11/08 at 8:19 AM

          Correct. I would enjoy having this as an organizational structure for clubs in MLS as well.

          Reply

        • Posted by GeorgeCross on 2011/11/08 at 8:37 AM

          Not quite true, Sir. Wolfsburg and Leverkusen are owned 100% by VW and Bayer respectively. But the ownership rules in Germany are strict and prevents somebody with no ties to football or the community buying into a club. I think there is a minimum of 20 years that you have to be involved with club / community to either be considered.
          Re. Structure, you also need to look at stadium ownership vs. Leasing from local govt.

          Reply

    • Posted by Jared on 2011/11/08 at 7:54 AM

      Seriously, the NASL is such a boogeyman that MLS keeps touting in order to keep its structure even when it comes to negotiating with the players. It’s a bit ridiculous at this point.

      Reply

      • Posted by John on 2011/11/09 at 6:02 PM

        it’s the truth though…a fine line must be navigated between expanding money spent and ensuring that clubs don’t self destruct spending to keep up with the richer ones.

        Reply

  5. Posted by GeorgeCross on 2011/11/08 at 7:26 AM

    Wouldn’t you say the play-offs in MLS make it seem like it’s competitive? If you had the same format as the European leagues, who would be crown champions? At least in the Euro leagues, the best team wins.

    That said, I wouldn’t copy the PL blueprint. Some stuff they have right (collective TV rights) others not so (redistribution to the lower league, tribunals). They are trying to correct this, but as usual with England, it’s at least a decade too late and the damage is done… MLS and USSF must work together so that growing the sport / league doesn’t harm the USMNT.

    Reply

    • Posted by Jared on 2011/11/08 at 7:46 AM

      I’d say it’s fairly competitive even if you take into account a Euro format. By my count there have been 8 teams to have won the Supporters Shield. That’s much better than the Premier League in the same timeframe. Throw in the fact that even with the DP rule coming into play that hasn’t led to a huge gap between the rich (see NY Red Bulls) and the poor.

      MLS and USSF definitely need to work better together. They can’t even schedule MLS so that players can attend international friendlies without damaging the club team.

      Reply

  6. [...] Shin Guardian argues that MLS should be wary of adopting any aspects of the EPL model that eliminate [...]

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  7. Posted by Union on 2011/11/08 at 11:20 AM

    Admittedly, I have a lot more to learn when it comes to the economics/structure of the MLS as compared to other leagues around the world. That being said, I am fascinated by the debate, specifically with regard to how the MLS will continue to grow/shape itself in the shadow of the most competitive leagues around the world.

    My question is, and I’ve asked this forever, is what do we (or they, in reference to those shaping the MLS) want the MLS to become? I’ve never really heard of a distinct vision. People claim there is one, but I’m not sure that I can decipher it. From what Garber seems to say, he wants the MLS to grow into a top 5 league worldwide. Which is probably what he is supposed to say, but for a myriad of reasons I won’t get into, we all know how difficult that will be.

    Reply

    • Posted by Gazza on 2011/11/08 at 11:57 AM

      @Union

      Why would that be difficult? Given the structure of MLS, the business acumen of the Board of Governors, the North American demand for soccer, and the financial mess in all the Top 5 leagues save the Bundesliga – it seems to me the only missing ingredient is time.

      Reply

      • Posted by GeorgeCross on 2011/11/08 at 5:04 PM

        You mean “the North American demand for *European* soccer. I cannot remember the numbers or the source, but the biggest threat to MLS is not the 4 traditional US sports but European soccer…

        Changing this landscape in the long run is the challenge for MLS.

        Reply

      • Posted by fennsk1 on 2011/11/09 at 12:37 PM

        I wouldn’t say that top 5 is a given, but if they can maintain steady growth while proportionally raising salaries, economics should drive better players stateside. That’s also assuming the US economy in general stays healthy enough to make economic advantage possible, though.
        If they accomplish that growth, it does seem inevitable that the bubble eventually bursts on a large, fiscally irresponsible European league.

        Reply

    • Posted by Eric on 2011/11/08 at 11:59 AM

      Top 5? very difficult to do when you even just look at the top European leagues: Germany, Italy, Spain, England, France, etc… but I think being a top 10 league is certainly possible. Of course, it all depends on how the US continues to develop it’s own youth players since that, more than the signing of top foreign talent, will eventually decide MLS’ place in the world. With a population as large as the US, and the potential economic backing MLS could eventually gain, MLS could absolutely be a top 10 league in the world and maybe eventually push for the top 5. Keep in mind I’m not sugesting that this will happen anytime soon. Just saying eventually.

      Reply

  8. Posted by Union on 2011/11/08 at 2:05 PM

    @ Eric. I agree

    @Gazza, why do I think it will be difficult? Well first off, to be a top 5 league, you need to have owners willing to invest the type of money required to make a club relevant. When the club is relevant, the league will be relevant. Unless you know of any wealthy businessmen willing to invest huge resources in an asset (an MLS club) that won’t post any type of ROI for a long time, then I think it will be difficult. I think that it can happen, I just don’t think its a guarantee.

    Reply

  9. Posted by Excellency on 2011/11/09 at 7:09 AM

    I don’t know much about the MLS rules but I think there should be a rule requiring x number of players on the roster who were selected by the MLS team in the college draft.

    Eventually, we will have a better league with better players.

    Speaking of which, I wish there were more live college games on Fox Soccer channel instead of having to watch the 4th rerun of and EPL match that was played days ago.

    Reply

    • Posted by fennsk1 on 2011/11/09 at 12:32 PM

      Why mandate college alums? If MLS clubs operate their academies successfully, the “Superdraft” will continue to be marginalized as the best developed talent is hired homegrown in the first place.

      Reply

  10. [...] Shin Guardian: Aspirations of the Premiership? Those Would Be Eyes of Disillusionment, MLS [...]

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