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Should The MLS Become More European?



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When American soccer players discover they have the athletic prowess to play overseas, they go, and we encourage their choice. But when American soccer fans choose to ignore MLS, its considered to be detrimental to the success of American soccer.

As has been stated before in the New York Times, the biggest hurdle MLS has right now is that better quality soccer is incredibly accessible to existing American soccer fans, making MLS even less desirable. Soccer certainly has an uphill battle to fight here in the States, and while lack of a strong fan base may be part of the problem, MLS really wasn’t helping their plight by creating a league that is incredibly anti-competitive.

To begin, Major League Soccer legally owns every single MLS team. The teams are not members of the league; rather, they are products that are still largely controlled by the league. While each team has investors and co-owners, it is the league that makes the biggest and final choices.

Structurally, Major League Soccer is unique in that it is a limited liability company (LLC), retaining significant centralized control over league and team operations, including the intellectual property rights of the teams (logos, etc.), tickets, equipment, and negotiates all stadium leases. The league assumes all related liabilities, pays the salaries of the referees and other league personnel, and controls player employment at a premium.

MLS’ choice to organize itself as a LLC is also different from most soccer leagues, like the Premier League, which is organized as a corporation. Jason Kilborn, professor of law at the John Marshall Law School in Chicago, Illinois, states that MLS’s choice in the LLC form allows for more flexibility with their business decisions. “My bottom line is that the business structure of this organization has little to do with what’s it’s trying to accomplish. One could have this odd reverse ownership structure with a corporation, too, though the LLC form makes governance a bit more flexible (and less expensive).”

MLS also recruits the players, negotiates their salaries, pays those salaries out of league funds, and determines largely who goes where, and when. The league has a draft where the eligible players are all corralled and portioned off which, while it may work for gridiron football, is entirely foreign to what American soccer players know and love about the global game. Further, the control that the operators and investors have in selecting the players for their teams from the draft, or otherwise, are negligible.

The operating agreements, as of 2002, provided that the operators and investors would not bid independently for players against the league to ensure league control. Also, no team may exceed the maximum player budget established by the MLS management committee, and MLS may terminate any operating agreement with an operator/investor of one of MLS’s teams on its own initiative, or by a two third vote of the board, if an operator/investor is deemed to have failed to act in the best interests of the league. In short, it feels like a monopoly, but legally, it isn’t.

This structure is not without its existing critics but the U.S. courts have already disposed of any legal criticism in 2002, where the First Circuit Court of US Appeals upheld a lower court finding that MLS was acting legally despite player complaints. Fraser v. MLS involved eight MLS players who filed a class action lawsuit, arguing that the league’s single entity ownership was as sham to suppress player salaries, and that MLS conspired with the U.S. Soccer Federation to eliminate competition.

According to the players, “MLS centrally establishes and administers rules for the acquisition, assignment, and drafting of players, and all player assignments are subject to guidelines set by the Management Committee. As a result, the league as a whole determines who plays where and how much they get paid.” The legal claims the players charged the MLS and its operators- investors were antitrust in nature, essentially arguing that the MLS monopolized or attempted to monopolize the market for professional soccer in the U.S. Both judge and jury disagreed with the players, in part because there was competition with the premier leagues in Europe and Latin America, and from the lower level leagues in the US like the USL, to make any sort of monopoly impossible.

But compare MLS with the Premier League, where the clubs owns the league, and not the reverse as in MLS. Per the Premier League’s official website, the league is owned by 20 shareholder member clubs, whose membership in the league depends on how well they do in the season play. The shareholder clubs meet quarterly, and are each entitled to one vote. The FA is a special shareholder, with veto rights in the areas of appointment of chairman and chief executive, and promotion and relegation, but otherwise have no say on other aspects of the league.

Any criticism or questions surrounding MLS’s business decisions often involves a harkening back to the NASL days, when soccer was not nearly as global. But to put some things in perspective, NASL largely failed because of over expansion to an otherwise uneducated American public, and more subtly, perhaps because it attempted to change the format of the game.

During the NASL years, a countdown clock was used for games (working its way back from 90 minutes to zero), any match that ended in a draw required a shoot out, and the league brought in imported, past their prime, but still major, players. There was not a lot of homegrown talent, and thus, not a lot of homegrown interest. Despite this, MLS is borrowing from some of the NASL’s biggest mistakes – attempting to Americanize a sport by making its league similar to other American sports leagues (read: the use of a draft, and the simple existence of the MLS Players Union due to the lack of player autonomy), seemingly forgetting that soccer has universally found a way to succeed without America’s input on how it should be run.

Even further, MLS has had an effect on how other new leagues are formed. The Australian A-League shares with MLS the same sort of franchising elements, lacks the competitive promotion and relegation system, and uses salary caps and marquee/designated player exemptions to control player wages.

To those that have problems with the sky-high salaries of most top footballers, and the amount of money that is utilized in other leagues, MLS is a dream, but maybe not the best option for the state of the global game as it is today. Platini can talk all he wants about the error in paying such high transfer fees for players like Kaka and Cristiano Ronaldo, but those major leagues reflect an economical confidence in the game to make such expenditures possible.

As stated on NPR last week by Steven Goff, Real Madrid likely doesn’t have the $220 million dollars on hand that it paid to acquire Kaka and Ronaldo, but Real Madrid is good for it. Goff argued that clubs like Real Madrid are institutions, and no bank wants to let it collapse no matter how much debt it has. Real Madrid will likely recoup its investment via its TV rights, jerseys, and team sponsorships.

As stated before, there are some criticisms that some “American style” measures are needed, like revenue sharing and salary caps. While that might seem prudent in our troubled economic times, it’s probably not needed. Real Madrid did this sort of astronomical purchase spree once before with the first round of Galacticos, and they’re doing it again now. Their first foray didn’t seem push the club to insolvency, but it has perpetuated the culture that, whether greedy or not, tends to create competitive and fascinating soccer.

Time will tell if major clubs with loads of debt collapse American bank style or not, but MLS has not given itself or its teams the ability to catch up with the global market they participate. Regardless of how the NASL tried to do American soccer before, soccer has changed. It has become more of a global game, and allowing the teams that compose MLS more autonomy does not mean that it will doom American soccer as it once did.

MLS and its teams should have been given the chance to remedy the mistakes of America’s younger soccer years independently, instead of being boxed into such a paternal league that makes decisions for its teams, and its fans, so unilaterally.