The Beauty of Labor Peace

Just over a year ago MLS fans were wondering whether the MLS season would start on time.  In a World Cup year, the league faced serious questions about player salaries, movement and more.  Yet after a prolonged mediation session with George Cohen, the owners and players were able to reach an agreement that made labor peace a certainty for five years.  In the context of the current sports labor environment, that peace (and the relatively drama free efforts that achieved that peace) looks pretty good.  The labor problems in the NFL are a front and center and the NBA is just months away from a similar issue.

The NFL and its players union have tried mediation and have now found their way to the Courts. Here is what we said last year about that process.

Most importantly, mediation is a non-binding process. Though often confused with arbitration, mediation is typically much less formal and more importantly, is not binding.  The parties simply engage the services of a non-party neutral (Mr. Cohen) and ask for his assistance in reaching a resolution.  Typically, the parties offer their positions either in written or oral form to the mediator in advance of the sessions to set the baseline for negotiations.

Once the parties stake out their position and address any issues that the mediator needs to be resolved with the entire group , the mediator will  typically engage in “shuttle diplomacy”  by separating the parties and moving from group to group trying to advance towards a resolution. Once this process starts, the parties typically no longer talk to each other, but address concerns and solutions through the mediator who has the power to determine the pitch and mechanism of the delivery.   Ideally, proposals and counter proposals go back and forth through the neutral until all issues resolved.  At the end of the process, none of the proposals are binding unless the parties have reached an agreement.  There is a truism about mediation that a successful mediation means that neither party is totally happy. The process forces compromise and seems like a perfect route for the stalled labor negotiations.

Mr. Cohen’s is an experienced and well thought of labor negotiatior, who spent much of his career as an attorney on the side of labor unions.  He has a high level of expertise in labor law and collective bargaining and will likely lend a fair amount of credibility to the process. Despite his pro-labor leanings, the non-binding nature of the process and the high level personnel involved in the negotiations should obviate any potential bias.   Before receiving a nomination from President Obama  to his current role, he was also an adjunct professor at Georgetown School of Law teaching “The Art of Collective Bargaining.  For more on Attorney Cohen, click here.

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Covering the Coverage: All RSL All the Time

With American soccer eyes all focused on Rio Tinto, we thought it worth taking a look at how some media outlets were covering the run up to the Champions League clash.  Ground Zero was the Salt Lake Tribune.  In the lead-up to the game, the front page of the Trib’s web site had multiple articles devoted to the match. Within the “preview” section are multiple feature stories, commentary and news covering aspects of the event relating to both the soccer and non-soccer aspects.  It is hard to imagine any other local paper giving this level of coverage to this match.

Espn.com coverage was almost impossible to find, with no stories on the front page of the site or on the front page of ESPNSoccernet.com.  The MLS focused page had some more focused stories including a piece by Jeff Bradley.

CNNSI.com offered more coverage with a front page story courtesy of the Associated Press.   The soccer page contained a link to the same story and included a link to a Grant Wahl piece that has rotated through the site over past days.  RSL also got coverage in the most recent edition of the magazine.

TheSportingNews provided coverage of the match courtesy of the newly hired Brian Strauss.  However, his piece was not evident on the front page, but only clicking through to the soccer page.

We took a look at some of the major newspapers in Monterrey and found little to no coverage of the match.  However, there were some stories about the NFL labor situation.  The same was true for some Mexico City papers, although we did find some mention of the match.

Soccer Business Bits: Crew Announce Sponsors, RSL Get Pub

In Columbus, the Crew have announced a local partnership with Panera Bread while confirming that previous sponsors Pepsi, Anheuser Busch, Ohio Department of Safety, Subway, Ohio Lottery, Sugardale and Value City Furniture.  The arrangement with Panera includes a retail promotion for family night, a poster giveaway and ad time on the Crew’s English radio broadcasts.  The deal is actually through an individual franchisee of  Panera. The Pepsi/Anheuser Busch deals are noteworthy because this is the first season that MLS teams are free to enter into agreements with this league sponsors on a team level.  As of this year, MLS teams are free to make deals with competitors of these companies for local sponsorship rights.

Elsewhere, the publicity blitz to get recognition for RSL’s upcoming match in Rio Tinto for CONCACAF Champions League hardware has been nothing short of impressive.  The team has always done a great job of getting its players and staff onto local media outlets, but the team and league have expanded those efforts to national networks like CNN and additional coverage is expected on ESPN.  According to this article from The Sporting News, the team has also managed to parlay the increased interest generated revenue including two new long term sponsorships.  According to the same article the tournament has drawn more than 11 million total viewers.

One final business note.  The Revs defeated DC United before just under 2k in Maryland as part of the US Open Cup.  The game was carried only by internet radio and was not available on television.  The small crowd and the lack of coverage speaks to the relative unimportance of the Open Cup on the US soccer landscape. While the Champions League has enjoyed significantly increased importance, the Open Cup has fallen behind.

Guest Post: Money Can’t Buy Happines…Or Wins

Every so often, we are fortunate to have one of our readers provide some great content for the site.  Dave Laidig is an attorney in Minnesota, currently supporting a multi-national corporation as contracts counsel.  Dave coordinates sales, marketing, finance and technical departments for an information content provider in the pursuit of business opportunities, and serves as the authorized negotiator for contracts with government entities.  He earned a Master’s degree in Psychology with an emphasis on research methods and statistics; and undergraduate degrees in Psychology and Sociology.  He has presented seminars and published articles in the field of government contracts, but prefers to discuss the inner workings of the business of sports to those who will listen.  Thanks to Dave for his great insights….we are listening!

“You cannot say you are happy when you didn’t win.” Arsene Wenger

On pitches across America, and across the globe, the implicit assumption is that the purpose of taking the field is to win.  Otherwise, why compete?  And the universal desire to win creates a demand for the best players, raising their salaries.  With an additional assumption of an efficient labor market, team salaries should reflect the relative talent levels on each team.  Consequently, teams with larger payrolls should have more wins than those with lesser payrolls. 

However, over the last four years, MLS team salaries have not been related to regular-season wins (or points for that matter).[1]  Specifically, the correlation between team salary and wins is a tiny .09 and is not statistically significant.[2]  Viewed another way, team salaries explain only 1% of the variation in wins, leaving the other 99% to other unidentified factors.  Using the same data to create a regression equation, we learn that a team gets an additional win for every $10 Million in team salary.[3]  Interestingly, although still not significant in a statistical sense, the number of salaried players has a greater influence on wins than the teams’ salaries (correlation of .14).  Regardless of method, increased spending by MLS teams on salaries has not lead to a corresponding increase in league wins.

Hopefully, one recent trend worth noting is that the correlation between salaries and wins has been increasing (-.199, -.283, .000, .560 over the last four years).   Because of the small sample sizes, one should not place too much emphasis on the 2010 data as it easily could be a fluke year.  It is possible that teams may be making better choices, but verifying this would require a few more years with similar results.  But analyzed in isolation, the 2010 salaries were significantly related to wins and accounted for about 30% of the variance in wins.  For 2010, an additional win cost $2.5 Million in salary, an increase in efficiency over the historical trend. 

Because the overall weight of the data does not show a relationship between team salaries and increased wins, perhaps a more useful tool for management is a much simpler concept than a regression equation.  Over the last four years, MLS teams average about $334,000 per win, or about $87,000 per point.   For those teams spending more per win, one should be able to justify the added expense through increased revenue. 

The big question is why MLS salaries were not related to victories over the last several years.  One could simply assert it’s an artifact of a relatively new and growing league with resources directed to capital investments and marketing.  One can identify the salary cap, even with designated player exemptions, as inducing teams to adopt similar labor acquisition strategies due to equally limited resources.[4]  Alternately, as an ironic twist, perhaps the high-priced players are called away to international duty so frequently that they do not make the impact they should.  Or perhaps, at the salary range that MLS teams look for, the talent is relatively uniform.  But because the increase in salaries has not necessarily lead to a competitive advantage, rational team managers must have other justifications for exceeding league averages for salary; higher ticket sales, attracting more business partners, or as a last resort – a novel approach to player valuation.  Failure to obtain a sufficient return may start to affect front-office employment rates.


[1] Team Salary information was obtained from the MLS players union, which available from links found on the footiebusiness.com homepage.

[2]  Correlations are reported on a scale of -1 to 1, with zero meaning no relationship and 1 and -1 meaning a perfect relationship.  A positive number means that as the predictor variable increases, the result increases (i.e., the variable move in the same direction).  A negative number means that as the predictor variable increases, the result decreases and vice versa.  Thus, a correlation of .6 and -.6 are equally strong, but show different types of connections between variables.   

[3] And what’s a designated player or two between friends? 

[4]  About two-thirds of the teams have total salaries that fall within +/- 15% of the league’s median, not a whole lot of variation. 

The Monday After: World Malaria Day Event, Revs’ Sponsor and Attendance Numbers

Lots to talk about from a busy business weekend, but we’ll start with a charitable effort spearheaded by OnlineSoccerAcademy.com.  The site is running a “juggle-a-thon” as part of World Malaria Day.  Per materials from the site, the OSA World Juggle-a-thon was created by tech start up OnlineSoccerAcademy.com, a team of husband and wife entrepreneurs, he a former pro soccer player, she with a background in advertising and non-profit work.  With a limited budget, and a lot of hard work, this event has attracted the participation of 28 pro soccer players across the world including Jay DeMerit and Carli Lloyd of the US National Soccer teams along with youth soccer clubs, Major League Soccer Supporter’s Groups, players, fans and coaches who will all juggle to save lives on April 25.  Click through the link above to see how you can participate in this event.  Click here for a video about the event.  They are requesting a minimum donation of $30 which gets you a shirt in return.

On Friday, the New England Revolution announced a partnership with United Healthcare that will see the insurer become the team’s first jersey sponsor.  In addition to having their name on the Revs’ jersey, UNH will work with the team to provide a variety of community events related to health.  Revs players will be actively involved in outreach efforts to promote some of the health initiatives that are part of the arrangement.

Finally, here is our quick look at attendance for the weekend that was.  DC United’s Thursday night match against the Red Bulls brought more than 18k to RFK for a nationally televised match. The Rapids followed with more than 14k for their Friday Night match against Seattle on FSC.  San Jose saw just over 10,400 for their home loss, while TFC had just over 20k for their draw.  The Revs and their newest signing played in front of 11,400, while only 12,400 made the trip to Toyota Park on Saturday night.  Vancouver reported 21k, while the Galaxy finished the weekend with 23,700.

Footiebusiness Vault: Marketing in Portland

On the road tonight, so we thought it worth re-posting an interview with Timbers’ VP Cory Dolich.  We did this interview on February 1, and since that time, the Timbers have become  possibly the biggest business story of the young MLS season.  Here is what Mr. Dolich said about the team’s marketing efforts and more.

Over the last couple of years, we have conducted interviews with a number of marketing professionals throughout MLS.  These Q&As have provided great insight into the marketing strategies and goals of various franchises.  Within the league, the Portland Timbers are one of the most exciting marketing stories of 2011.  The expansion team has made waves with its billboard campaign, downtown store and robust season ticket sales.  Cory Dolich is the Timbers’ Vice President of Marketing and he was kind enough to answer a few questions about the Timber’s 2011 marketing efforts.  Thanks to Mr. Dolich.

Footiebusiness.com: The Timbers have launched a memorable billboard campaign featuring real Timbers’ fans and plastered them all over the City.  What was the inspiration for the ads?   Who is the team trying to attract with the campaign?  How effective have the ads been in generating buzz?

Cory Dolich: We’ve been very pleased with the feedback that we’ve received thus far on the campaign. There’s obviously been a lot of exciting events and announcements surrounding the team this offseason, from player signings to our kit launch, and the campaign has certainly helped complement the existing buzz and further galvanized our overall message.

As it relates to the inspiration or genesis of the campaign, we were fortunate enough to partner with Jelly Helm Studio on the campaign. In conjunction with them, we wanted to expand upon some of the previous Portland and Timbers fan-centric messaging we’d used during the previous six-month period, but be a little less explicit about it. We wanted to embrace more of a “be it, don’t say it” approach. We have an amazing fan base that creates such a tremendous in-game experience – it was about showcasing that…at its core, showcasing the authenticity of Timbers fans and the faces of that make up our community. Plus, the icons, the chainsaws, axes, etc. are embedded in the heritage of our team, and using them was critical to further cement the authenticity of the campaign – they’re such strong visual pieces with great significance to our fans and organization.  Ultimately, it was about highlighting what makes us the Timbers – strong and striking icons, great fans, an authentic in-match experience, being Portland’s soccer team.

From a demographic standpoint, we took what might be perceived as a counter intuitive approach – it wasn’t so much about a targeting a specific age range, gender, etc. but more about sharing the message with all of Portland. We wanted to live the mantra of “being by, for and about Portland” and as such, make it inclusive of all Portlanders, rather than excluding specific targets. We recognize that in a lot of cases you can’t create an “all-inclusive” campaign, but felt the messaging did well to speak to both young and old, families and singles and existing fans, and those that might not be as familiar with our product.

FB: How do the Timbers plan to utilize online avenues such as social networking sites, SUM’s online ad network, etc… to market the team?  What is the goal of such online marketing efforts?  How do you measure the success of these efforts?

CD: We put a great deal of value on digital media, specifically social networking tools; it’s certainly going to be a significant part of our marketing strategy moving forward. We try and diversify our digital approach and be more targeted (as opposed to the billboard campaign) using this media – whether it’s Facebook, Twitter, national ad servers, local websites or search-optimization tools, we’ll layer messaging throughout these different mediums when activating on a campaign.

Our goal is simple – create engaging and unique content to develop and grow fan interest. And hopefully…if all goes well, that interest turns into ticket sales. At the foundation though is content, and providing it is key. Telling the team’s stories, by sharing the access we have to all facets of the organization is pivotal.

From a measurement standpoint, it’s a combination of a lot of elements. There’s certainly a lot of statistical evidence that we can use, be it click-thrus, number of impressions, Facebook “likes,” resulting ticket sales, etc., but there’s also a level of anecdotal measures to mix in as well. Are people talking about it? Have they seen it? The current billboard campaign is a great example of that; we’ve received a ton of unsolicited feedback which shows people are taking notice. There’s also some web reporting tools, like Radian 6, that we use at times. They can track the degree in which the club is being “talked about” on the web, from articles to blogs to social media posts, and if all goes as planned, those measures spike during a campaign.

FB:  What lessons can the Timbers take from the marketing success of Seattle and Toronto?  Similarly, what lessons can the Timbers take from some of the marketing mis-steps of the early years in the League?

CD: Seattle, Toronto and Philly (last season) have been great case studies of how to launch a team. Each club has been very generous in sharing their experiences, and we’ve learned from their respective launches. Where they’ve succeeded, and where others might have struggled, can be traced, in my opinion, to how each club has approached how they view the sport. They’ve embraced the authenticity of the game. They hold true to the game’s traditions, culture and heritage. Each of those clubs has built a strong level of trust between the organization and the fan base. You don’t need to change the dynamics of the sport or the in-match experience just because it’s played in North America, as opposed to Europe or South America. The fans are savvy – don’t try and fake it – be authentic.

Plus, I think they’ve done a tremendous job of customizing their launches to the culture and attitude of those cities, while, simultaneously, not over-complicating the message. Seattle and Toronto’s use of the scarf was really strong – it helped galvanize those cities around a soccer specific icon that really resonated for the fan base.

That said, you have to be true to your own brand and your own fans. We are a different and unique culture that has a lot of history behind it and is quite distinct from Seattle, rivalry aside. We categorically need to keep things “Portland.”

FB: Is it inconsistent/challenging for teams to target “hard core” supporters, non-soccer sports fans and families?  How do you resolve those inconsistencies/challenges?  Will the Timbers target a particular group?

CD: Depends on the tactics you use to target those different entities. Some mediums, like the billboards, might have a more universal appeal and the medium is image-centric. Tailoring a specific message to a smaller demographic group isn’t as necessary with outdoor marketing. When using other mediums, be it digital or print for example, we are much more demographically and geographically targeted. Ultimately, the core message or spirit of the campaign, regardless of who you’re speaking to is fundamentally the same. For us, like I mentioned in question No. 1, we’re still talking about passionate fans, great in-match experience, being Portland’s soccer team…that doesn’t change whether you’re talking to our most ardent supporters or non-soccer fans alike. The difference lies in the nuances of how you tweak the tactics and imagery to reach the different demographic groups.

For us, we can’t be everything to everyone, but we definitely need to be smart in reaching out to multiple types of fan groups, including ardent soccer fans, non-soccer fans, families and the corporate community. We certainly have a significant, primarily young male (18-32) demo that makes up much of our core. For us to be truly a success and long-term fixture in the community though, we need to have an even larger appeal that reaches outside of this group.

FB: Will the team run day of game promotional events (e.g. giveaways, discounts, etc…) or will the Timbers rely on its season ticket base and face value seats to fill the stadium?

CD: We’ve been very fortunate to have close to 11,000 full-season tickets and are on pace to eclipse 12,000 by the start of the season. While I wouldn’t rule out offering some value-added ticket programs on a case-by-case basis, our emphasis has to remain on selling, servicing and building our season ticket base in both the short and long term. It’s all about retention for us. We feel we’ve affordably priced our tickets and cost isn’t a barrier for fans to attend games. Providing great fan service, a strong and exciting on-field product and a wonderful in-game experience is paramount to maintaining a full stadium.

We do have some giveaway nights planned in an effort to enhance the day-of-match experience for our fans. While still being finalized, we’re looking at doing about four premium giveaways throughout the course of the year.

Thanks again to Mr. Dolich.

Critical Mention Update

Over the last year or so, we have discussed MLS’ efforts to measure the value of its television exposure through various local and national broadcasts.  Through the website criticalmention.com, MLS tries to alert media  to the “value” of its presence on various television programs.  Since a few weeks have passed since we last checked in on this metric, we thought providing a snapshot of this metric of MLS media exposure. The most recent version of Critical Mention’s analysis includes 8 different video clips that reached just over 634,000 for only $26,450 in exposure.

By far, the clip with that reached the most viewers was a lengthy interview with Charlie Davies that aired on the Washington NBC affiliate.  The interview reached over 123,000 viewers for an estimated exposure value of almost $15k.  The interview aired on Tuesday at 5:44 in the afternoon in the nation’s 9th largest TV market.  The discussion was part of the ongoing Lunch with Lindsay series and included substantial backstory regarding his accident. The five minute interview touched on his return to the field, his recovery and his personal life.

In Salt Lake City, the local ABC affiliate provided coverage of the RSL/Monterry match as part of their 6:00 newscast.  According to Critical Mention, the report reached more than 37k viewers for an estimated $3390 in exposure. The report was more than 2 minutes and included interviews with an array of RSL players and brief well wishes from players like Beckham and Davies. The report was well produced and provided viewers with a good amount of background and highlights on the CONCACAF tournament.

Finally, the Portland ABC affiliate provided coverage of the Timbers’ recent run and upcoming schedule.  The program reached almost 60k viewers in the 22nd largest television market.  The report was part of the 6:30 news.  The 30 seconds worth of coverage included an interview with Jack Jewsbury and provided highlights in the background.