Clintonomics 101: What Is MLS Overcompensating For?

How much did it cost again to get him in that gown?

How much did it cost again to get him in that gown?

Steve Fenn looks into Clintonomics 101

Clint Dempsey’s move to Seattle has been controversial.

Not strong enough? Fisticuffolous?

And the money involved has been no small part of grousing in Portland and elsewhere.

Fortunately, the MLS Players Union released their update to MLS salaries last week, which allows examination into the Dempsey deal within context of MLS as a whole.

The Seattle Sounders are paying Dempsey $5,038,566.50 this year.

Add those figures to the salary list released by the MLS Players Union in May and you’ll see that Deuce is earning 5.31% of the league’s $94.86mm total guaranteed wages. The top 1% of MLS salaries, Dempsey, Robbie Keane, Tim Cahill, Thierry Henry, and Landon Donovan (0.9% of the 568 players listed) combine for $19.85mm, which is 20.9% of that league salary total.

That closely mirrors the top 1% of Americans holding 19% of the nation’s wealth, but few want to get smacked in the face by reality amidst the escapism of professional sports. As it stands, it is easy to dwell on the fact that the 55 players pulling in the league minimum of $35,125 make only 0.7% of Dempsey’s wages.

Below is a visualization of every MLS player’s base salary, with a smaller graph approximating clubs’ salary cap usage by position.

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{MLS guaranteed salaried per August 1st MLSPU release. The Interactive version <click here> includes breakdowns of every player, included DP, Generation Adidas, or Homegrown status, and an estimation of retention funds.}

Clearly, Dempsey is not just the highest paid player in the league this year, but only the Galaxy, the Red Bulls, and the Impact are paying more for their entire rosters.

Salary disparity has long been a concern in MLS, but it has to be noted that there has been enormous progress since Beckham’s arrival in 2007.

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At that time 59 MLS players were earning a league minimum $12,900, which was 0.2% of Goldenball’s $6.5mm salary (15.4% of total MLS wages, which sat much lower at $42.2mm at the time). Say what you will about $35,125 but a person at least has a chance of living off of that much money, while those making less than $13k were probably living a lifestyle very similar to the one that Clint Irwin described recently in his account of rising up through the US lower divisions on his way to starting in goal for Colorado on the MLS minimum.

Expect the MLS Players Union to use the current rich-poor gap to push for changes when the new collective bargaining agreement is negotiated 17-20 months from now. Like the first post-Beckham CBA negotiation, MLSPU will certainly want to see significant boosts to both the minimum salary and the salary cap.

More immediately, it’s pretty clear that a lot of clubs, including the Sounders will be due for cost-cutting measures to make themselves cap-compliant before next season.

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Per all publicly available salary information, the Sounders guaranteed cap number should be $3,520,779, which means that if Seattle is even with the $2.95mm cap, the sum of their allocation money spending, and wages paid by other clubs post-trade should total at least $570,779. This is not an unreasonable assumption given that Seattle must have netted many allocation funds while loaning Fredy Montero around. All of that also skips over any inaccuracies within the MLSPU release itself, which have been alleged by Portland owner Merritt Paulson and others within the league and the mainstream media.

Also, don’t forget that while Shalrie Joseph renegotiated to allow the Sounders to sign Deuce, the Sounders certainly had to give him more long-term money to make that happen. Seattle GM Adrian Hanauer will be needing to get very creative this coming offseason. He won’t have room to give Eddie Johnson the raise that Obafemi Martins tweeted that EJ deserved. Hard to imagine that Martins realized at the time that another high-paid Sounder or two (perhaps including Obafemi himself) would need to be cut loose to make room for a well-deserved boost in pay for the Grown Ass Man.

Then there’s the matter of the league-payed transfer fee. Grant Wahl reported that Spurs $9mm fee was covered by MLS. Important to note that “a league official disputed that characterization without providing details.” Vague kinda-denial aside, this news obviously raises serious questions. Many have express concerns over whether this arrangement is fair to other MLS clubs. How could it be right for MLS to use opaque rules and league money to gift-wrap the USMNT captain to one club? Key factors to consider here:

» The clubs themselves don’t seem to be that mad. Michael Burn the GM of Dempsey’s old MLS team, New England Revolution talked about Seattle’s Dempsey acquisition in flattering terms

»   Even Merritt Paulson, outspoken owner of allocation-topping and Seattle-rivaling Portland tweeted, “One thing our fans should know: there was no anti-PDX MLS agenda. Internally I believe rules were fairly clear.” Perhaps they are taking that position because:

» In single entity MLS, any move that strengthens the league absolutely has a direct effect of strengthening every club. Theoretically, Dempsey will make the league more attractive to neutral viewers, and by extension to cable networks in the negotiations for the new MLS TV deals for 2015, to say nothing of attendance and merchandising effects.

» While it seems the Sounders aren’t paying the fee, they are ponying up somewhere between $24 and $32 million in salary through 2016. That’s an enormous cost that few in MLS could/would pay, and without that contract on offer Clint and his agent would right now probably be desperately seeking a competitive European team where he could start consistently.

None of that is to say that debate over the way this went down is unwarranted. MLS rules, particularly in regard to acquisitions and allocations, are as clear as mud, presumably in part because the league likes the ability to mold regulations in whatever ways suit their current purposes. This can be justifiably frustrating to some fans, to the point where some may give up on following the league.

Overall, is MLS better off than they were before the Dempsey signing? The amount of talk over the last couple weeks in media both here and across the pond suggest the answer yes. But MLS has to weigh not just the cost in terms of salary and fees, but also the judgments of their fans in the court of public opinion. The whole affair tested the patience of many who follow soccer in the US, and Don Garber and company would be wise to think carefully about high-profile rule-bending in the future.

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18 responses to this post.

  1. Posted by Crow on 2013/08/12 at 3:07 PM

    If the Union signed Dempsey as a DP I’m convinced he’d be sitting on the bench.

    Reply

    • Posted by slogbeast on 2013/08/13 at 8:56 AM

      With the way things have gone since his injury I don’t think Kleberson was acquired with any intention to play him regularly. It’s nice to have the pain of Adu’s contract reduced but I’d much rather have Kleberson playing even if he’s not part of the long term plan.

      Reply

  2. Posted by Golkipa on 2013/08/12 at 3:17 PM

    I have no data to back this up, but intuitively it seems to me that the salary distribution, both between players and between clubs, mirrors other sports more or less. Undrafted rookies and journeymen in other sports make far less than the superstars and a very few superteams drastically outspend regional minnows by huge amounts. There’s a big difference in the individual numbers relative to other sports but the spread is similar. No?

    Reply

    • The disparity is not nearly as large in other major NA sports. Minimum Baseball, Basketball, and Football salaries are in the ~300k range. MLS is in the ~30k range. Big difference.

      Reply

      • Posted by Golkipa on 2013/08/12 at 3:57 PM

        But the top salaries in those sports are in the tens of millions of dollars yearly. Clint’s salary would make him a bench guy on most NBA teams. I’m thinking less of the dollars involved than of the ratio of lowest to highest.

        Reply

        • Posted by Crow on 2013/08/12 at 4:42 PM

          You do have a point. If you look at minor league baseball and other sports, guys are scraping by- I remember reading RA Dickey’s book about working other jobs etc. But this is the top professional league in the USA, so guys shouldnt have to work a 2nd job to provide for their family.

          Reply

    • Posted by Steve Fenn @SoccerStatHunt on 2013/08/12 at 3:58 PM

      I’ve taken a cursory glance at NBA and NFL before. Yes, there’s always a spread, but you never see the top players making more than 100x the minimum salary. Mainly that’s because both of those leagues have minimum salaries over $400k. In other words, every NBA or NFL contract would be a DP contract in MLS.

      Reply

      • Right. You don’t see $40M annual salaries in ANY sport, which is what you would need to get that 100+X minimum salary.

        Reply

        • Posted by Jon on 2013/08/13 at 6:30 AM

          Sure, but in baseball top players can make $30 mill, which is over 60 times the league minimum. That’s still a huge spread and MLB has been around forever. Clearly the MLS league min will jump a fair amount in the next CBA, totally changing these ratios.

          Reply

  3. There are some ownership groups that can afford to support a larger wage bill and others who aren’t (only a few I think). But I don’t think the CD deal economics was built on who can pay. Rather I think it was on who has already paid in, and that is Seattle. MLS takes a skim of gate revenues, some % I believe. With SSFC’s huge gate for years now, I wouldn’t be surprised if Hanauer or Roth or someone raised the “what are we getting for all this extra funding we’ve been sending to the league” argument. The league picking up the transfer fee may not have been altruism, it may have been an equity consideration. Just throwing that out there, who knows for sure.

    Reply

    • Posted by Mike McCann on 2013/08/13 at 10:05 AM

      Great point few seem to be talking about. We all know Seattle rakes in the cash at the gates & through merchandise sales, but how much of that money have they been allowed to put directly back into the talent on the team? Now they’re finally doing it.

      Reply

  4. The whole Dempsey move has NOT “tested the patience” of *many* MLS fans… maybe a few conflicting personalities… but the adjective “many” better describes the ones who are now aware of the now through all the media exposure, “many” also describes the ones who have expressed excitement… the fact that you even have to ask if dempsey is good for the league (-suggests- the answer is yes haha) just shows how out of touch this article is to the “public opinion court” … Otherwise I really did enjoy the article thanks!

    Reply

  5. The whole Dempsey move has NOT “tested the patience” of *many* MLS fans… maybe a few conflicting personalities… but the adjective “many” better describes the ones who are now aware of the league through all the media exposure, “many” also describes the ones who have expressed excitement… the fact that you even have to ask if Dempsey is good for the league (-suggests- the answer is yes haha) just shows how out of touch this article is to the “public opinion court” … Otherwise I really did enjoy the article thanks!

    Reply

  6. Posted by Mike McCann on 2013/08/13 at 10:03 AM

    The bulk of the teeth-gnashing from fans has been due to the lack of transparency in the process, but the “rules” that allowed this to happen have been explained ad naseum by this point. I can accept that a DP isn’t subject to allocation or discovery, and vice-versa. I just wish that was in print in advance.

    Anyone who still complains about the Dempsey move and “fairness” probably hasn’t taken the time to read about it, listen to the GMs publicly discuss it, or even consider the fact that as an elite American player, Clint can pretty much pick where he wants to play (picturing RVP going back to Holland after Man U and having no say over his destination makes me laugh).

    The media reported the only teams even in the running were TFC, LAG, and SEA. I’m not a fan of any of those teams, but of the 3 I’m glad he went to Seattle. In Toronto, the American captain playing for a Canadian team does seem ironic – but more importantly, being mired on one of the worst teams in the league would not help his sharpness and would probably bog down his career goals of winning silverware. LA was unlikely with no DP spots available (Omar), and to be fair LA is already top-heavy with talent. It would be the rich getting richer to the highest degree. Seattle is an intriguing option as they don’t have a Keane, Henry, Cahill, or Donovan – but they have an attractive, attacking style, are perennial contenders, and you know Dempsey will flourish under Sigi. So as a neutral, I can’t complain TOO much. My team would never pony up the money for Dempsey.

    His presence in MLS is huge and will open the doors for other players (including American kids) to see that they can get paid. It raises the profile for the league. It shows MLS teams aren’t afraid to spend and now the world knows MLS is a player in negotiating for talent.

    As far as salary disparity in the league – there’s not much you can do about that. What happens in society happens in all sports. But if you don’t want the disparity, don’t sign expensive players. Of course if you do this, than you can’t complain about the league’s lower quality. To improve MLS quality, you have to pay to sign the best players. I’ve noticed fans like to complain both ways, the MLS can’t win here.

    “Raise the salary cap!”

    Would be nice, but how many teams turned a profit last year? 3? 4? Until more teams are in the black, it’s hard to argue with MLS about the miniscule raises to the cap. When the league can finally land that large TV deal and more teams start turning profits, I think you’ll see that salary cap increase more rapidly.

    But how big do we want MLS to get? Part of the draw over other major american sports is the low ticket cost. You start signing multiple $10m guys per roster, and suddenly ticket prices approach NBA/NFL levels. I love MLS, but I don’t know if I would like to see it reach that level of expense.

    Reply

    • Posted by Ron on 2013/08/26 at 9:01 PM

      You don’t need a salary cap in the first place. Let teams spend what they want as long as its not over revenues.

      Reply

  7. Posted by Chazcar2 on 2013/08/13 at 11:50 AM

    Below is a league revenue estimate for the future of the league based on the last NBC MLS TV Deal and what I would think the players should be looking at when they negotiate the CBA.

    A quick summary: new cap number of $5.65 million, Minimum Salary of $94K, roster of 30 players, 3 DPs per team with a cap number of $565K

    Published NBC Deal $10,000,000 per year
    I Estimated % of Deal breakdown to get values per game
    50% for 40 Regular MLS games equals $125,000 per game
    25% for 5 Play off equals $500,000 per game
    25% for 4 National team equals $625,000 per game

    So for a league it would work out something like this:
    Teams 20
    Games per team 38

    Attendance money
    Home Games 19
    Ave attendance 17000
    ave ticket price $25
    yearly revenue per team $8,075,000
    Total for all teams $161,500,000

    TV Money
    League Games 380
    ave price per game $125,000
    Total Regular Season $47,500,000
    Playoff games 24
    ave price per playoff $500,000
    Total Playoffs $12,000,000
    MLS Cup Final 1
    Price $5,000,000
    Total $64,500,000

    Total League Revenue $226,000,000
    Operating cost percentage 50%
    Leftover for salary $113,000,000

    Salary Cap per team $5,650,000
    Players per team 30
    Average pay per player $188,333
    Suggested minimum 50%
    Minimum dollars $94,167
    # of DPs per team 3
    DP Cap number $565,000

    Reply

  8. Posted by Joel on 2013/08/13 at 3:21 PM

    I think the MLS has been smart in some ways, as they don’t want to have the same fate as the NASL. Plus, comparing the league salaries with those of other leagues is like comparing apples to oranges. Those leagues have been around much longer. As such the salaries have enjoyed years of growth by the constant pushing of their player unions pushing the min. salary up. Additionally everytime one owner pays millions for a player, another player says “wait, I’m worth that amount too”, and so on and so forth. Owners want the biggest names, so they throw all this money on the table, which is one reason the NASL failed. MLS rules may be clear as mud, but it may be that mud that’s keeping growth slow and methodical.

    I think many of us in non-MLS cities are just happy to see the league grow and finally attract notible players in their prime. Now if they could just get off this damn archaic set TV schedule. I mean really…as the season comes to the end, they should be showing teams that are in contention fighting for spots.

    Reply

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