Currency fluctuations have great effect on MLS, American players
If there's a silver lining in the economic crisis, it's that the U.S. dollar has recovered somewhat. This is good news for all those shaggy-haired backpackers swarming over the Acropolis and puffing away in Amsterdam's coffee shops, but it turns out the dollar's bounceback has poignant ramifications for American soccer players hoping to make the leap to Europe.
It could be bad news for some players, but it might also be a boon for MLS as it continues to try to lure decent foreign talent to the league. It all depends on what currency you think in.
Like with language, people's minds tend to process in their native currency. I think in dollars. My friend in Rome thinks in euros. Brits think in pounds.
We assign value based on the currency we think in. So, for me, the $178 prix fixe at Restaurant Gordon Ramsay in London is too rich for my (non-blue) blood. But for a Brit, the £120 price tag might seem like a nice night out.
This past summer, New York City teemed with Europeans taking advantage of the weak dollar. I cursed their smiling faces as they did the math at the shops in SoHo. "These I heart N.Y. T-shirts are $10? That's only ... six euros and 30 eurocents! I'll take two."
Today, though, those $10 shirts would be 7.80 euros apiece. Not quite the same bargain. Which means the Euro-shopper might only buy one shirt or keep shopping until he finds a shirt for $8, which would be equivalent to €6.30.
How does this play out in the soccer world? Well, in short, the currency shifts mean American players are more costly now than they were six months ago. "A player is like any widget, really," a currency trader friend of mine in New York told me. "They cost more for the team in Europe to import them now than they did six months ago."
Six months ago, of course,
So what is Jozy worth now, $10 million or €6.3 million? Well, it depends who's buying and who's selling. If Villarreal were to sell him within Europe, it would probably charge €6.3 million. (I am ignoring any performance-based value shifts. He started again this weekend, by the way.) But if Villarreal were to sell him back to the New York Red Bulls, it might ask for the original $10 million it paid, in which case it would get the equivalent of €7.8 million. That would mean a tidy profit, actually.
On the other side, New York could say it only wants to pay the €6.3 million rate, which would mean forking over only $8 million. That would mean the Red Bulls would have made a tidy profit of their own, somewhere in the $2 million range.
This is all hypothetical, of course. But here's another, more plausible example. FC Dallas striker
Let's say Eintracht, which does its books in euros, started looking into Cooper last summer. Back then, the club was probably willing to pay €2.5 million for him. But now it will have to pay €3.1 million. Is Frankfurt willing to raise its offer by €600,000 euros or even financially capable of it? I guess time will tell. But it's a perfect example of how the exchange rate could wind up affecting a player's movement to Europe.
"Of course, the reverse logic is that European players are cheaper for MLS," the currency trader said. "Maybe the Red Bulls could go get
MLS is not often in the practice of buying players. But the fact that people think and assign value based on their native currencies means that the exchange rate can affect salary decisions.
"Why do you think Argentina is such a player exporter?" one MLS general manager told me recently. "It's not only because of their talent pool. Their currency has been in the tank for the past few years, so their players are cheap as hell."
The MLS salary cap is roughly $2.3 million. Last summer, that was equal to about €1.45 million or 6.9 million Argentine pesos. Today, it's equal to about €1.79 million or 8 million Argentine pesos.
Think about the additional talent a team can get with that extra million pesos. It could mean the difference between a magician like Real Salt Lake's