In “Investment Mode”: A Primer Made Possible by Way of New England

“Profitability is a function of what you spend, not necessarily of what you make. Our revenues are growing, but we are investing massive amounts of money in building the league. We are in an investment mode; it’s the best way to describe it.”

That came out of Q & A the Houston Chronicle ran with Major League Soccer (MLS) Commissioner, Don Garber, in this morning’s paper. Count it among the several items out today that (I’m enormously flattering myself, but…) follow-up on my shrill rant about MLS players being treated like rented mules. In a curious coincidence, a slew of articles out of New England describe the pitfalls facing MLS as it moves into what Garber calls, in the same interview, “the sort of second year of the relaunching of the league.”

Let me pause to chuckle. I’m just getting to a spot in Simon Schama’s excellent history of the French Revolution, Citizens, where the regular calendar gave way to the revolutionary. Ahem…tee hee hee….”year two.”

Getting back to the task at hand, that same piece saw Garber provide a kind of explanation of the logic behind MLS’s investment strategy:

“It’s all about, can we compete financially? If we have a stadium in Houston, we have stadiums coming on line in Salt Lake City and New York, more revenue will come into the league and allow owners to purchase players from overseas, and that ultimately attract new audiences.”

The idea of the league building its own facilities in order to obtain greater access to, and therefore more, revenue is familiar to anyone who has followed MLS over the past five, stadium-booming years. A little further up, Garber mentions another piece of the revenue-boosting puzzle – e.g. increasing exposure of the MLS brand through tournaments of varying relevance, a process that somewhat necessarily begins with CONCACAF. And, without question, both concepts are perfectly defensible – especially barring alternatives.

I covered what isn’t so defensible in yesterday’s post – the practice of stiffing the talent. For whatever reason – maybe they all got the same assignment in school or something – the New England media exploded with stories about the mechanics of how MLS trades and, as it happens, fails to retain a certain kind of player. Goal.com’s Kyle McCarthy, in a barely-related article, dubs this group “mid-range players,” while I called them “good” players in an ode I wrote way back when, but these are basically the guys who make a team better without making the team…if you catch my meaning. Now, a couple stories are useful curiosities – here I’m thinking of an almost abstract piece in the Cape Cod Times on the steps a team takes to acquire a player – but a couple strike fairly directly at the roots of the dilemma.

First among them is Frank Dell’Appa’s Boston Globe article that offered new (new-to-me, anyway) details on the off-season departures of Andy Dorman and Pat Noonan. Behold, the horror stories:

“Dorman’s contract had expired, and the Revolution offered him slightly more than double his $30,000 annual salary; instead, Dorman took an offer of more than $350,000 (including signing bonus) with St. Mirren in Scotland.”

Now, Noonan’s:

“Noonan, 27, had three years left on a $225,000 annual deal, the Revolution declining to pick up the option, instead offering a new contract at $115,000 annually. Noonan, who signed a three-year deal with Norway’s Aalesund FK worth more than $400,000 annually, appears to have recovered from the injuries that stymied him in 2006.”

The “Noonan situation,” in particular, amounts to telling employees that this year’s Christmas bonus will be a punch to the kidneys. I mean, the guy finished fairly strong, he was pivotal in earning the Revolution their first-ever trophy (U.S. Open Cup) and, for this, he gets a $100K pay-cut? Norway would look like Shangri-fucking-La after that…even above the Arctic Circle. The details on what happened with Chris Albright – available here – demonstrate this isn’t a Revs-only phenomenon.

None of this is to say that MLS can compete with Europe on a purely financial level, not even for “middling” players like Noonan, Joseph Ngwenya, or Nate Jaqua. The earlier portions of RevsNet’s interview with New England assistant coach, Paul Mariner (hat-tip for that piece: Du Nord) gets at the kinds of money that even modest European teams can throw at MLS players with itchy feet…or crappy contracts. But as much as that excuses some of MLS’s issues, it doesn’t add up where the Revs are concerned. $225 isn’t crazy money, even on an MLS roster – and that goes double at the forward position. And who’s to say Andy Dorman didn’t just play on the maxim of “Minimum wage, minimum effort”? The man had a career year in 2006, so he’s certainly justified in thinking he paid his dues.

By way of pulling all this together, I am sympathetic to the logic of MLS’s investment strategy, as well as its weakness vis-a-vis the European leagues. But surely the league must invest in talent at some point – especially those “good” players. As Martek (of Nutmegged fame) commented to yesterday’s bitter rant, cutting out these players moves MLS toward being “an under-23 and over-32 league.” Great players passing to rookies equals broken play in any league; we all owe those occasions when MLS games look good and flow reasonably well to those good players.

The real tragedy is MLS doesn’t have to break the bank to go after and retain these players. Because we have stability, playing time, proximity to home, familiar culture, etc. – MLS doesn’t need to match Europe’s offers dollar-for-dollar. That’s what I found a little irksome in the Mariner interview. Pony up offers that look both serious and appreciative of a given player’s services and he might stick around; with Dell’Appa’s article suggesting both Dorman and Noonan wanted to stay in New England, you have to assume it wouldn’t have taken much. As it happened, however, the offers extended to both players seemed inspired by front office wagers on how little pay a soccer player will take.

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5 Responses

  1. Another brilliant post on this subject Jeff.

    It brings to mind the difference between price takers and price setters. As far as paying great or even middling players what the world market for their skills can bear, we, and the players, are being asked by MLS to believe that the league is merely a price taker in the world market, unable to compete with the packages offered to players by the price setters (i.e. Europe) in the world player labor market.

    (Quickie economics lesson: Price setters are the big boys, while price takers are the small fry. A price setter is a big player in the market, loaded with influence and can thus more or less set or pay whatever price makes sense for itself. A price taker, on the other hand, has limited or low influence and must accept whatever price the price setters set.)

    Looking at the Dell’Appa piece and the paltry offers made to Noonan and Dorman in relation to their new salaries (tax free to Noonan by the way, as a US citizen working abroad), one is left to conclude that either MLS really IS a truly paltry price taker or is somehow faking it.

    Why would they fake it? Actually, this is not as wild or unprecedented an idea as it might at first seem. This could be an effort to drive salaries lower artificially (artificially meaning lower than what a free labor market would otherwise establish) heading into the new collective bargaining period in 2009. This practice has been seen before many, many times in ML Baseball, as well as the NFL and NBA, so MLS would not be the first to try this route. Though that doesn’t make it any less silly, and in the long run counterproductive to the ideals of continued growth. MLS’ single-entity structure makes it something of an odd bird, and I wonder, as I am not an antitrust lawyer or specialist, just how legal it is in relation to both antitrust and labor law. Hence, while MLB’s collusion fiascos of the 1980s were indeed a violation of both antitrust and labor laws not to mention the then-prevailing collective bargaining agreement, MLS’ efforts to drive down pay artificially in a similar way might or might not be legal.

    You are veery correct in pointing out, I believe, that MLS does not have to break the bank. “Hometown discounts” abound and MLS — not to mention us fan-type people — could easily be the beneficiary of same when it comes to contract deals and pay. However, in order for that to happen, MLS must be a fair and consistent negotiating partner with its signature independent contractors, i.e. the players. Looking at the Chris Albright situation, not to mention the Taylor Twellman saga and many other past statements from players about the dangers of signing long-term deals with the league, can we really say that MLS has upheld their end of that bargain? It is with a real sense of foreboding that I, and you if I read your posts correctly, must conclude that the answer to that question is “No.”

    The truth of the matter is that free agency has never (and I truly mean that word, never) bankrupted a single team or league or sport. Exactly the opposite has happened. A properly regulated free agent player market actually has produced some of the healthiest and most robust economics sports leagues and teams have ever seen. (Free agency and bidding wars did not kill NASL, remember. Poor management did that.) Salary caps are nice words, but they are as nothing compared to complete revenue sharing (especially local AND national TV revenue), mandated player salary spending ranges (the NFL’s No. 1 contribution here) and a fair, open and transparent contract, grievance and CBA negotiation process. These are the three elements that a truly forward-thinking league would have. But right now, I see almost none of this in MLS, and it makes me sad and more than a little scared about the long term viability of the league as a top flight world football enterprise.

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