The Angle

Defense of MLS Ambition – Part 2

by on 10 April 2015

In Part 1, we looked at the heart of the argument that MLS is destined to be a “minor” league. The arguments of the naysayers do not withstand scrutiny. But dismissing negativity is not the same thing and proving MLS can be a globally competitive league. Here, we review why soccer in the US, and MLS, has cause for optimism. Specifically, MLS has not yet reached its peak, and the dynamic sports history of the US foreshadows more growth to come.

US Sports Dominance Often Realigns With New Technologies

Those that believe MLS has no chance in the global soccer scene share the implicit belief that the US sports hierarchy is static. It’s true that the NFL is king in the US, and has been for a few decades. But historically, the top sports change over time – often in conjunction with new media technology.

The dominant US sports in the 1920s were boxing, college football and baseball. In the 30s, millions of Americans tuned their radios to weekly races involving Seabiscuit. Baseball was a localized, regional sport – with the entire league located between Kansas City and Boston, and the Canadian border. While still around and somewhat popular, these sports no longer drive the marketplace.

According to conventional wisdom, football has been the primary sport in Europe since man began walking upright. However, in the United States, for whatever reason, we have seen an ebb and flow of popularity between pugilism, animal racing, college sports, baseball, and football. Along the way we have seen other sports ebb and flow as well: including basketball, hockey and even NASCAR. America’s history suggests the popularity of sports (or leagues) is dynamic. This doesn’t necessarily mean MLS will rise, but that in a dynamic environment opportunities exist. And evidence exists of MLS having disproportionate success (for its revenue, spend, and television ratings) on social media, technology investment and digital platforms. While early, this could be seen as the lower tier league – with less to lose and more to gain – embracing a disruptive technology. And this embrace, seen through US sporting history, has often led to a reshuffling of the sporting landscape; no different than baseball finally exploiting radio after WWII and football conquering TV after the 50s. Soccer’s success with delivering its content via new platforms suggests the sport will rise as these technologies become dominant.

Small Changes in US Sports Preferences Can Disproportionately Influence Global Soccer Rankings

The size of the US and its sports economy means that relatively small changes in the US sports hierarchy can drastically change MLS’s relationship with European leagues. For example, the Global Sports Survey (GSS) reports the top 4 European leagues spend £4.78 Billion on player salaries. The top 4 US sports spend a combined £10.5 Billion on player salaries. If MLS could eat away just 10% of that figure, then it would enter the realm of La Liga, Serie A and the Bundesliga. If MLS had NFL player budgets right now, they would spend on average $6.4M per player, or double EPL rates (the highest league average in Europe). Perhaps more realistic as a goal, if MLS had an NHL budget it would spend on average $3.5M per player, which would also exceed the EPL average salary by about $200k per player.

While the gap between where MLS is – and where MLS needs to be – is not large in terms of US sports, we’re still spending hypothetical money we don’t have. How does MLS actually get there? Showing that additional revenues could make a difference helps set the goal, but does not identify the path. Szymanski argues for trashing the current structure and copying Europe. However, such drastic efforts are not necessary.

MLS Could Reasonably Increase Salary Expenditures With Current Revenues

Evidence suggests MLS could increase revenue even with current revenue figures. Jared Young reports that MLS spends 20% of revenue on salaries, while the top leagues in Europe spend between 50% and 75% of their revenue on player salaries. For comparison, other US sports leagues spend between 39% (NFL) and 52% (NBA). If MLS felt comfortable scaling back its capital investments, it would not be unreasonable to double or triple current salary expenditures – all without any significant increase in revenue. Of course, Young also reports that MLS is not scheduled to increase its salaries at a high enough rate to catch Euro leagues by Garber’s 2022 goal (a point confirmed by the recent CBA). But that does not mean it is impossible for MLS to significantly increase salaries over the next decade or two.

Using the GSS as a guide, tripling MLS salary expenditures would place the league among the bottom two teams for La Liga and Serie A. Not world beaters for sure, but having an entire league averaging better than a couple teams from top European leagues is not evidence that MLS is doomed to inferiority either. And let’s address the range of salaries. Toronto currently owns the league’s top salary. If Toronto was able to triple its’ average spend, then they would be in the Swansea and Southampton range.

And keep in mind, these increases are due to a hypothetical realignment of salary spend to a percentage of revenues common in other soccer leagues. Sure other investments would be lost. But if each team already has its own soccer specific stadium and academies, why not just buy players like you are Swansea or Southampton?

MLS Is Growing (Still)

This simplest counter argument to the assertion MLS has peaked is its current expansion phase; four more teams are likely to join in the next couple years. The league will look different in 2018 than it does today, and it will also have an additional 20% of content to sell in its TV packages. Currently, MLS is in roughly half the US markets of other major US sports.  MLS will likely grow to the American standard of 30-32 teams. This is the league size needed to generate and sustain continued presence in the US sporting landscape. Of course, it will take billions in investment to get that far. And this needed investment is why teams should work together on long term growth.

Change, American Resources, and League Growth Support MLS Optimism

Obviously, MLS is not competing with the top European leagues yet. Currently, the wage discrepancy is vast. And European leagues have over 100 years of history and traditions (and infrastructure). In contrast, with another dozen teams and billions of dollars in infrastructure  still needed, MLS will not compete with Europe in the next decade or so. But to achieve the goal of a globally competitively league, MLS will need to retain its collective mission and mutual investment.

In an ultra-competitive league, why should the Galaxy support DC United getting a stadium? Devoting league resources to lobby for a soccer specific stadium means less revenue for the Galaxy. And if DC gets a stadium, its revenues may increase allowing the club to bring in better players. All this makes it more difficult for the Galaxy to win the league. But if MLS is to ever compete with top European leagues for talent and global attention, the teams need to work together to grow the sport further in the United States.

American history is rife with failures (the original NASL) and devastating instability (74 Second Division teams since 1994). Only when the league worked collectively has United States soccer begun to approach respectability. And with the size of the US, the amount of money involved in sports leagues, and its history of changing the sporting landscape; choosing to aim for a top international league is reasonable for MLS. It’s ok to keep dreaming big for MLS.