Of Guest Posts and Mountaintops

Guest Post: I have Been to the Mountaintop: Rethinking Success for MLS

On the road tonight, so here is an encore of the most popular guest post in Footiebusiness history.  The original generated a significant amount of comments. Back live on Monday.

Once again, we are fortunate to have a guest post from Dave Laidig.  Dave is a contracts attorney for a large corporation who occasionally submits posts about soccer.  He resides in Minnesota, which is not an MLS market.  And he may be a little bitter about that.  Thanks to Dave for some great thoughts and insight.  Drop a comment below to continue the conversation. And yes, I will take any excuse to drop the Whalers logo into a post.
A unique cult exists, American in nature, that patiently awaits the day of revelation.  The day when the masses are converted to Soccer – the beautiful game.  That soccer incites global passions is a true as America’s relative ambivalence to the sport is puzzling.  For those accustomed to early morning pub crawls to catch global stars ply their trade on Europe’s pitches, talk often slurs toward the debate, “when will Soccer make it here.”  The bitter may wonder how soccer can ever make it in a land where the NFL is supreme, MLB owns nostalgia as America’s pastime, and NBA stars catch out attention with excessive locker room gunplay.  Others dreamily believe the next MLS star, or the next achievement for the national team, will yield soccer devotion similar to other countries.  But success is not a sporting achievement, or a marketing campaign.  Success is a self-sustaining league that is competitive with the top European leagues.  And the MLS can compete with the EPL, Serie A, La Liga, and the Bundesliga without replacing the NFL, MLB or the NBA.  In fact, it’s another domestic league – the National Hockey League (NHL) – that might provide a better benchmark for MLS to compare itself against.

An honest review of MLS should give hope for soccer, not a sense of futility.  First, it’s true, as soccer-haters point out, that American sports leagues are currently dominated by the National Football League (NFL), Major League Baseball (MLB), and the National Basketball Association (NBA).  However, league dominance does not last forever.  In 1967, baseball’s World Series was the pinnacle of American Sports, and the Superbowl was a blandly titled AFL-NFL championship game with tickets to spare.  Now, the World Series skips Mondays in order to avoid competing with a regular season NFL game.  Sport dominance does not necessarily last.

Second, Americans already support the best soccer players in the world.  Exhibition games with European teams – and often playing a significant number of reserves – typically average more than 30,000 fans, with Manchester United versus the MLS All-stars drawing 71,000 last summer.[1]  In fact, the 2010 World Cup final had higher TV ratings than the deciding game the World Series and game 7 of the NBA Finals.[2]  And importantly for comparison purposes, the World Cup finals did not involve American players and did not have an American centric time slot.  To argue that Americans do not support soccer is to ignore the facts.

Ultimately, if MLS had the resources of the NHL, America’s fourth-place sports league, then MLS can compete with European leagues for the best talent, leading to an American soccer boom.  The NHL institutes a salary cap of $59.4 Million, which if applied to a 23 man soccer club, would work out to about $2.5 Million per player.  While salary figures are notoriously sketchy for European soccer clubs, the average EPL salary has been reported as $2.3 Million per player. [3]  Thus, quick analysis supports the argument that the fourth best league in America could compete with top European leagues for players.

However, my salary daydream extends into hypothetical rosters available for $59 Million.  For starters, the combined guaranteed salary for last year’s MLS All-Star team was about $9.3 Million.[4]  The starting XI made up about $4.5 Million of the total.[5]  The fourteen alternates – including Bornstein who did not play due to injury – added another $4.8 Million.[6]  And who wouldn’t feel comfortable fielding the current MLS All-Stars, especially if they had time to develop into a cohesive unit.

And if the All-Stars were not appetizing enough, then we would still have $50 Million for players.  We could throw in Dimitar Berbetov ($6,700,000) and Diego Forlan ($7,169,746) for some attacking flavor.  We could then add Michael Essien ($5,500,000), Ji-Sung Park ($4,700,000) and Ryan Giggs ($6,300,000) to manage and spark the midfield.  And John O’Shea ($6,800,000) and Christian Chivu ($5,013,000) and keeper Petr Cech ($7,400,000) to back them up on defense.[7]  Similarly, my hypothetical also assumes that a Canadian team would acquire Nigel de Jong ($10,500,000) because Canadians’ respect the role of enforcer, and we could use someone to hate.  Of course, the reality of transfer fees would cut into the amount spent on player salaries.  But many would still watch a league that had these players scattered about.  And the key question is: how close are we to the day that these types of players play in MLS?

For that, we can look at our benchmark league, the NHL:

NHLMLS
Teams in League (2011)
30/18
U.S. Metro Areas in
Top 10/Top 30/10/17/8/12
Number of League Games
1,230/306
Avg game attendance (year)
17,151 (2010-2011)16,677 (2010)
Avg ticket price (year)
$54.25 (2010-2011)$22.47 (2007)
TV Deal
Versus-NBC
$70 M/year
(+ team specific deals)FSC
$6.25 M/year (est. 2011)
Looking at our benchmark league, the NHL and MLS have similar per game attendance levels.  But the NHL has four times as many games, at twice the average ticket price, and a better geographic footprint.  Further, the NHL has more revenue from its TV deals.

MLS may be able to leverage cup and champion’s league competitions to add more sports content, but more TV exposure and revenue will certainly affect the viability of the league.  And this leads to the chicken and egg metaphor in a sports context: what comes first, the audience or TV coverage?  Perhaps the answer is neither.  Solid investors/team owners and expansion could lead to greater exposure in more markets and greater TV value, just by geography alone.  With more TV revenue – and perhaps a few more games – revenue could justify higher player salaries.

Instead of chasing fans, the league should be chasing committed owners with expansion of the mind.  And the sales pitch to the moneyed investors?  MLS is close to becoming a world-class league; a league with the added benefit of a financially sustainable model.  As the increased fees for new franchises show, investors are interested in the last, great entrepreneurial opportunity in sports – getting value out of an underdeveloped global sport in the world’s largest consumer of sports entertainment.[8]  As an added incentive, MLS may be even more competitive over the next five years as UEFA’s financial fair play regulations attempt to drive down salaries in Europe.  Further, once MLS begins poaching players, the price of adding follow-on talent will drop as others will see that they can make money, challenge themselves, remain visible internationally, and know they will not be discriminated against come time for World Cup play.

I wouldn’t expect the MLS to announce an aggressive expansion strategy, as that might reduce potential fees for new teams, but I do hope the league focuses on identifying and supporting new investment groups.  If the league can find itself squarely set up with a handful of new markets in the next 7-8 years (as UEFA’s rules start to hurt European acquisitions), we might have Saturday afternoon pub crawls with slurred discussions of what is was like before soccer made it in America.

[1]  Murray, K., Cass to Keep City on Soccer Kick, Balt. Sun, Aug. 2, 2010 at 1D (52,000 for Manchester United v. Kansas City; 44,000 for Manchester United v.  Philadelphia; 33,000 for Manchester City v. Mexico’s Club America; 32,000 for Celtic v. Sporting Lisbon; and 27,000 for Club America v. San Luis FC).
[2]  Grathoff, P., MLS wants to capitalize on America’s interest in the World Cup, Kan. City Star, Jul. 13, 2010.
[3]  Premier League Salaries Skyrocket!, Apr. 10, 2010, available at http://soccer365.com/english_premiership/story_28410191410.php
[4]  MLS salaries are from the MLS Players Union.
[5]  The MLS All-Star staring XI consists of Donovan Ricketts ($160,000), Omar Gonzalez ($157,000), Chad Marshall ($320,000), Jamison Olave ($240,000), Kyle Beckerman ($250,000), Dwayne De Rosario ($443,750), Javier Morales ($252,500), Marco Pappa ($108,000), Guillermo Barros Schelotto ($241,250), Edson Buddle ($188,448), and Landon Donovan ($2,127,777.78).
[6]  The MLS All-Star reserves are Nick Rimando ($131,000), Kevin Alston ($124,000), Jonathan Bornstein ($100,000), Heath Pearce ($207,500), Wilman Conde ($200,000), Sebastien Le Toux ($122,000), David Ferreira ($300,000), Brad Davis ($258,062.54), Shalrie Joseph ($475,000), Jeff Larentowicz ($150,000), Bobby Convey ($307,500), Juan Pablo Angel ($1,918,000), Brian Ching ($350,000), and Jaime Moreno ($185,000).
[7]  All of these international players are the highest paid athletes in their country as reported by ESPN Magazine.  Best Paid Athletes from 181 Countries, ESPN Magazine, May 2, 2011 at 60-61.
[8]  The same arguments apply to the sports networks.  As demonstrated by the ratings for the last World Cup, a network that significantly invests in the MLS, and commits to promoting the sport, can find itself holding a top-shelf, internationally-recognized sports property.

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