Fourteen years of having Major League Soccer’s league office monopolize all player negotiations and signings is enough.
Fourteen years of depriving the LA Galaxy, DC United, Colorado Rapids, Kansas City Wizards, and other MLS teams from freely having the chance to at least attempt to acquire world class players in their prime like Cristiano Ronaldo, Kaka, or Lionel Messi, is enough. New York Red Bulls fans, Chicago Fire fans, Houston Dynamo fans, Chivas USA fans, FC Dallas fans, Sounders FC fans, Toronto FC fans, San Jose Earthquakes fans, Real Salt Lake fans, all fans want their teams to have a fighting chance, to have the freedom to do all they can to sign any player in the world that they want.
Like Commissioner Don Garber likes to say, MLS is an American league managed in an American way.
Freedom is the American way.
Since its inception in 1996, MLS, the U.S.'s first division men’s outdoor professional league, instituted a single-entity setup allowing the league office to negotiate and sign all players and to impose a salary cap.
The initial reasoning spouted by the league was the single-entity structure provides stability by imposing cost control, preventing the clubs from engaging in bidding wars to sign the best players leading to high-dollar player contracts, ballooning expenses, debt, and eventually, bankruptcy.
Bankruptcy was indeed the eventual fate of the defunct North American Soccer League (NASL), a league that featured legendary world class players like Pele, Beckenbauer and Cruyff and operated in the '70s and early '80s. The NASL was and continues to be held up as the “poster child” of what not to do by MLS executives and its ownership group.
Slow, steady growth was prescribed. "Slow and steady" wins the race was, and continues to be the philosophy at MLS Headquarters.
But how long should the single-entity structure continue?
Fifteen years? Thirty years? Sixty years? One hundred and twenty years?
As long as the League can get away with it is the pragmatic answer.
The League’s single-entity setup is currently being challenged on two fronts, the MLS players’ union collective bargaining negotiations and by the potential competition from a second division faction of team owners supported by a major international marketing company.
The collective bargaining negotiations between MLS and the MLS players’ union are currently at an impasse. American soccer star Landon Donovan of the LA Galaxy said:
“The league shutting down MLS in February would do real damage to the development of the game in the United States and to our efforts to prepare for South Africa. It is difficult to understand why the owners would take this course, when all we are asking for are the same rights enjoyed by other players around the world, not just in the biggest leagues, but in leagues of all sizes.”
FIFPro, the international organization working in conjunction with the MLS players’ union, asserted that MLS refuses to abide by FIFA’s regulations on the status and transfer of players.
FIFPro charges player contracts are routinely terminated by the MLS League Office during its term, almost 80 percent of players in MLS do not have guaranteed contracts; MLS operates as a cartel in that every player’s contract must be entered into with the league instead of his club; the contract of virtually every player in the league contains multiple, unilateral one-year options that may only be exercised by the league; virtually any player in the league can be transferred to another club within the league without his consent even if such transfer is international, such as a transfer from an MLS club in the United States to or from an MLS club in Canada; and that there is no freedom of movement for any MLS player to any other MLS clubs when his contract expires.
In fact, even if a player’s contract is unilaterally terminated by a club during its term, that club continues to hold such player’s rights and he is prohibited from signing with another club in the league.
The current collective bargaining agreement is set to expire on February 1, 2010.
FIFA, the world’s soccer governing body, is not eager to pressure the US Soccer Federation, and in turn MLS, because it wants to do all it can to foster the growth of professional soccer in the United States and it believes that this will be achieved by siding with the league’s management group.
By supporting the MLS management over the MLS players’ union, FIFA believes it is acting in the best interests of American soccer. In other words, FIFA believes the League’s claim that, if the MLS single-entity setup is dissolved, the League will eventually go bankrupt.
There are no good guys and bad guys in this equation. It’s not personal, it's business.
From a business perspective, both parties, the League and the players, must realize that the single-entity structure cannot and should not last much longer.
The League has reached stability. With its 14 years of existence, MLS no longer can claim to be a startup. Its a mature business with a solid business model ready to join the world's international community and play by the same rules.
It is time to allow the clubs to set their own courses. It is time for each club and its ownership group to individually and independently compete and find creative ways to sign the best players they can with the budgets they can afford. MLS needs to trust its club teams and realize that they will not make the same mistakes that the NASL committed. They are too smart to repeat the same mistakes of the past.
The MLS league office will try to pacify the MLS players’ union at least for this year and buy time to live and negotiate the single-entity structure another day. A short-term deal with the understanding that the single-entity setup will be dissolved would be a good compromise for now just to ensure there is no player lockout.
That is, in essence, what the U.S. Soccer Federation recently did with two second division factions, the USL and a new entity also called the NASL (not related or affiliated with the old NASL). The USSF brokered a one-year deal whereby the competing factions decided to cooperate, play in a unified tournament, and resolve their differences later.
The New York Times reports that USSF and MLS officials were concerned that the new NASL, backed by a major international soccer marketing company, “would import players from South America and in essence become the anti-M.L.S. by allowing teams to sign players without worrying about a salary cap or a single-entity setup."
Here, again, we see MLS—with the support of the USSF—doing all it can to protect its single-entity structure.
Savvy, knowledgeable and astute USSF President Sunil Gulati will surely find a way to make everything work. The Columbia University professor of economics is the only American soccer executive who wears all possible “soccer hats”—he is also affiliated with MLS as president of Kraft Soccer for the New England Revolution, serves on the FIFA organizing committee for the Confederations Cup, and on the CONCACAF executive committee.
As usual, Sunil will find a way to work with all stakeholders, find common ground, secure compromises, and make things work.
The single-entity setup cannot and should not last much longer, Sunil.
The league is no longer a start-up. It has reached stability. It is ready to run.
As an economist, Sunil lectures about the virtues of supply-side economics, but he does not practice it in MLS. Supply Cristiano Ronaldo and Lionel Messi and you will see MLS demand surge.
MLS fans are tired of waiting until all the teams have built their own stadiums and for the entire structure to be in place, all the eyes dotted and the tees crossed. MLS fans are tired of waiting until the ownership group begins to see their club franchise values escalate and to salivate profusely at the prospect of selling the clubs to foreign buyers at very handsome profits. That process takes much too long.
Break up the single-entity setup now, ultimately, because MLS fans deserve soccer of much better quality than what we are getting.
The time is now.