After MLS Cup battle, complex tug-of-war begins off field with CBA talks
Either the host LA Galaxy or the New England Revolution will be crowned MLS champion on Sunday. Desperate members of both teams will strive, fight and sweat in pursuit of the prize. They will play through each other or, if need be, run over each other, to claim it.
Then, two days later, they’ll be teammates. One of the StubHub Center locker rooms likely will still be reeking of stale champagne as select members of the Galaxy, Revs and the remaining 18 MLS clubs convene at a Las Vegas hotel. There, former foes will unite in pursuit of a goal that many will regard as fare more significant than an MLS Cup medal. The soul of their league may be at stake.
“We can’t be structured so drastically differently from every other league in the world and think somehow we’re going to compete with them,” Major League Soccer Players Union executive director Bob Foose told SI.com inside the organization’s Bethesda, Maryland, headquarters. “[MLS has] a system that’s unattractive for players. At the end of the day, we have to be able to attract the players or we can’t be at that level. So the system has to change.”
Foose, MLSPU general counsel Jon Newman and director of player relations Eddie Pope, the National Soccer Hall of Fame defender, will join a group of about 60 players in Vegas. They’ll be led by executive board members Todd Dunivant (LA), Brad Evans (Seattle Sounders), Jeff Larentowicz (Chicago Fire) and the men elected to replace the retiring Landon Donovan and Logan Pause. There will be two days of meetings and strategy sessions. Soon after, they’ll dive into negotiations with the league.
The collective bargaining agreement forged just five days before the start of the 2010 season, thanks in part to federal mediation, expires at the end of January. Over the past five years, MLS has added six clubs (and lost one) and promised to bring on four more.
Expansion fees have nearly tripled. Seven stadiums have been built or renovated and an eighth, in San Jose, is due to open in 2015.
MLS has contributed significantly to the U.S. national team, which is one of only eight to escape the group stage in each of the past two World Cups. Working in conjunction with the U.S. Soccer Federation, MLS signed a landmark U.S. television deal worth a reported $90 million annually over the next eight years. And it’s now the ninth best-attended soccer league in the world.
Times are relatively good, but they’re supposed to get better. Commissioner Don Garber has promised that MLS intends to be one of the world’s best circuits by 2022. Best, of course, is in the eye of the beholder. But Garber's colleague, Mark Abbott, has a good idea of what that will look like. The athletes play a key part, but only a part. There also must be competitive balance, an engaged and passionate fan base, top-notch infrastructure and a business that makes sense for the investors who’ve risked millions on pro soccer in the U.S. and Canada.
Abbott, the league’s president and deputy commissioner, wrote the novel single-entity business plan, under which MLS negotiates contracts and holds players’ rights, while working with founder Alan Rothenberg in the mid 1990s. Abbott has watched the league plant roots in ground that had failed to nourish soccer in the past, and he now sees little reason to alter the trajectory.
“We have a very firm belief, from the inception of the league, that it’s a sound structure and business model that has provided the foundation for the growth that we’ve seen today and the growth we anticipate in the future,” he told SI.com from the league's headquarters in Manhattan. “Our belief is that our structure and our set of rules with respect to players has allowed us to invest more in players, in stadiums and in all the things we need to do to grow the league. Without the structure, we wouldn’t be in position to make those kind of investments … This isn’t about a business structure for structure’s stake. This is about a structure that has allowed us to achieve our goals.”
Foose said he believes that the relatively low salaries earned by many MLS players, along with the lack of free agency enjoyed by counterparts in other leagues and other countries, were necessary to get MLS off the ground. He understands why the founders wanted to control player acquisition and compensation at the beginning. But the union is preparing to stand firm behind the argument that the catalyst now is a cancer.
Foose believes it makes MLS less attractive, efficient and rewarding, thereby hindering an evolution in the quality of play.
“We do not need to be so defensive – in fact, the opposite. If we’re going to grow, we need to be more aggressive,” Foose said. “We are committed to working hard to be reasonable to making changes, in transitioning. We don’t want to turn the world upside down over night. We understand that can be disruptive. But there can be no mistake about it. From our standpoint, there has to be change and it has to be significant. The current system is not designed to take us to where we want to go in 2022. It’s just not.”
Both Foose and Abbott said that the relationship between the sides is good and that there’s a general sense of trust between them. That trust is grounded in the belief that both have the sport's best interests in mind and that both want to see the league emerge as one of the sport’s best in eight years. They want to be a “league of choice” for players, as Garber often says. They want to be relevant to fans in the U.S. and Canada and respected by the opposition in Mexico and across the Atlantic.
The league and union just can’t agree on the path. And If they don’t forge a new one together over the next three to four months, MLS might finally face something the more established U.S. leagues already have endured – a work stoppage.
“It’s never the goal. If that’s anyone’s goal then their priorities are misplaced,” Foose said, echoing comments made by Abbott. “It’s certainly not our goal and not what we’re aiming for. It’s also certainly something that we’re prepared for and have been preparing for. That’s the reality … The player pool very, very strongly believes that change has to happen in order for us to go forward.”
Collective bargaining agreements are complex organisms that cover everything from how heavily players may be fined to the rules governing their contracts and the per diem they’re given on road trips. Everything matters, and everything is negotiated.
For the union, two elements matter most of all – compensation and free agency.
Labor believes that more pay and increased freedom to move within the league at the conclusion of their contracts will motivate current players, entice better ones and offer clubs more leeway to improve their squads. Foose said he also understands the revenue reality in MLS.
“We are very respectful of the investment that our owners have made and will continue to make. The last thing we want to be is financially irrational. That said, you can’t get to where we’re all trying to go without investing more money, and you can’t get there without spending more money on players, and that’s a reality as well,” Foose said. “What we are seeking to do is make sure that as revenues grow, player compensation is growing along with them.”
If the players hope to be paid like their counterparts in the world’s top soccer leagues, there’s a long way to go. According to a study conducted last month by the UK’s Daily Mail, MLS’ average salary ranks 22nd, falling far behind the usual suspects in addition to second-tier leagues in Switzerland, Ukraine and Austria.
Average annual salaries in the top 10 circuits ranged from $3.6 million in the English Premier League to $416,000 in Liga MX, whose teams have won each of the past nine CONCACAF titles. The average MLS salary at the start of the 2014 season, according to the union, was $207,831. Even if the league’s 2022 goal was to match only Mexico, average wages would have to double (and that's if Liga MX remained static).
MLS pay used to be a lot lower. When evaluating the league’s growth, Abbott called 2007 a turning point. It was the year the Designated Player rule and its inspiration, David Beckham, entered the picture and the year Toronto FC helped change the paradigm with a colorful fan base in a downtown stadium. The year before, in 2006, MLS players earned an average of $85,329. There was just one, Mexican midfielder Juan Francisco Palencia, making seven figures, according to the union.
“We invest every year more than we did the year before and there’s no doubt we will be investing more. The discussion is how much more and in what ways. As I think Don talked about in [Tuesday’s] State of the League, in the last five years we’ve gone from no investment in youth development to close to $30 million a year,” Abbott said. “We’ve never said this is about reducing our investment or lowering our costs. It’s about what’s the prudent amount of investment to make … some of it doesn’t show up in salaries.”
The union will argue that soccer’s increasing popularity in the U.S. will drive additional revenue. The league will counter that with a fixed, eight-year TV contract and many stadiums close to capacity, opportunities for significant hikes are limited. Expansion fees go only so far and sponsorships cover only a portion of the costs. An increase in franchise values might help clubs borrow money for infrastructure improvement but it doesn’t mean much on an operating basis.
One year ago, Forbes estimated that 19 MLS clubs took in a combined $494 million in 2013 and that 10 teams posted profits before interest, taxes, depreciation and amortization. Forbes didn’t have access to the league’s books, however, and MLS has dismissed the study. Abbott told SI.com that the league, its clubs and its marketing arm, SUM, still lose in excess of $100 million per year. Some outside the league office believe the deficits may be even greater.
Each team operated under a salary budget of some $3.1 million this season, although thanks to the DP rule, allocation money and other mechanisms, 10 teams were spending more than $4 million at the start of the season. Four clubs – Toronto FC, LA, Seattle Sounders and New York Red Bulls – shelled out more than $11 million. But a good chunk of that money is owed to a small number of players, and the union is concerned about members who may be struggling to make ends meet. While TFC was spending millions on Michael Bradley and Jermain Defoe, seven Reds were earning less than $50,000 this fall. One might argue the team's results suffered as a result of that discrepancy.
Foose argued that those players might be distracted or dissuaded from pursuing a pro career for financial reasons. MLS regards them as developing players whose pay will increase once they’re proven pros. Like most businesses, the league hires employees for what they’re willing to accept. And it has multiple cost centers, as Abbott indicated. Ownership is investing in more than just the 18-man roster on a given game day. Foose claims MLS will get better players if it pays more, in part because it will allow younger pros to focus on their craft, in part because it will incentivize the middle class and in part because MLS will become more attractive to newcomers.
“If you raise the compensation for a slot, you’re going to get a better player. You may not get one tomorrow, but you’re going to get a better player … If that results in some of our guys losing their job, they accept that. They are competitors,” Foose said. “They fully accept if someone comes along who’s better at their job than them, they’re going to lose it. We are not trying to hide from that or trying to generate a new pot of money that only gets paid to our guys, who don’t have an obligation to get better. They get it. They have to earn it every day.”
And some of them have. You don’t need to be the deputy commissioner to recall that Chris Wondolowski once earned $30,000. He now pulls in $650,000. Graham Zusi and Matt Besler signed DP deals after the World Cup. Omar Gonzalez, an American defender, is a millionaire. Landon Donovan will retire a millionaire many times over. Raises are there for some. But the union will argue that they’re the exceptions. MLS must reward those who’ve proven themselves in MLS, the players claim, not steer money toward newcomers who are unfamiliar with the league and therefore far less of a sure thing.
“It’s not efficient,” Foose said.
In the end, numbers are negotiable. There’s a middle ground. The salary budget almost surely will rise. Maybe the DP charge will drop. Perhaps the league’s developmental relationship with USL Pro will facilitate a reduction in senior rosters, thereby allowing clubs to spread the wealth to fewer players. One can speculate, because there are options.
When it comes to philosophy and principle, however, things can get binary. There’s a right and wrong way, and the dispute over free agency is one that’s as much about values as it is about money. There, it’s tougher to compromise. When the players and MLS start to hammer out a new CBA, they will be addressing the very identity of the league.
“When we established the league, we had the great fortune of being able to study all the other North American sports leagues. We studied the [original] North American Soccer League and European leagues and we said, ‘If you were going to start a league in the mid 1990s, what type of things would you do to ensure that you had the best opportunity for success,'" Abbott said.
Abbott and his colleagues realized that prohibiting owners from bidding against each other for players would help stabilize salaries. They realized that MLS as a whole might value a player more than any given club. That’s why the league office approves all contracts and transfers, and why it sometimes pitches in or conjures new dispersal mechanisms to ensure athletes who might boost the collective profile are signed or retained. And they realized they were competing in a global market that had a massive head start.
For those reasons, there’s no free agency in MLS. And if the league has its way, there won’t be under the new CBA. It made concessions in 2010 with the re-entry draft, a mechanism that allowed players who met certain criteria to move on from clubs that had no interest in either signing them to a new deal or exercising an option.
As a result, an eligible player had a decent shot of landing with a club that wanted him at his old salary. It also ensured some resolution to a participating player’s ambiguous contract status far earlier than the previous system. It wasn’t free agency, however. The player had no control over who selected him and next to none of the bargaining leverage that veterans in other major North American sports, as well as out-of-contract footballers throughout the world, enjoy.
“We have a system in place that tamps down pay for players who are committed to MLS and building it and staying,” Foose said.
Said Abbott: “I thought it was a tremendous way to deal with specific issues. I liked it when it was conceived and I think it’s been successful.”
And that’s as far as the league may be willing to go. MLS occupies a unique position as an ambitious soccer league in a relatively nascent soccer country, and as such it believes a unique approach is required.
“Because we function in an international market and the clubs that we are competing against for players are not subject to our salary budget, to have free agency within the league doesn’t provide us with the certainty that the union says it does,” Abbott explained. “In another [North American] league, if you lose a player from Washington, they go to Boston. They don’t go to London. When the union says they can offer cost certainty under free agency, it’s not true because we have to compete against clubs all throughout the world.”
He continued, “When we founded the league a principle part of the structure would be that when dealing with the international market, the league would make the decision as to how it wanted to react to offers. So we’re not having owners bidding against one another … the league is best served by the league, as one voice, deciding how to deal with the market.”
This may be the hill the union is prepared to die on. It will argue that the other major U.S. leagues have flourished under free agency. It will make the point that, as Foose said, MLS can't truly compete as an outlier. And, the likes of DeAndre Yedlin notwithstanding, the union will stress that the global market really isn’t much of one where U.S. and Canadian players are concerned. Passport and permit issues are just the beginning. The dwindling number of Americans contributing consistently at top-tier European clubs is an indication that, for the moment, they’re just not in high demand.
“Our players have substantial restrictions on their ability to go elsewhere and get jobs,” Foose said. “This is where the players are from, and this is the the league they’ve proven themselves in. The market for them is dominated by 20 clubs. And that’s exactly what Mark would say, but it’s ignoring the fact that they’ve got a system in place that eliminated the major market for the majority of our players.”
MLS is banking on, and the union agrees with the league’s points if not its position, that the U.S. and Canada will remain an attractive place to play. The checks clear, the fans are passionate but sane and many of the facilities are world class. Abbott contends that’s because of the league’s structure, not in spite of it. Owners, general managers and coaches must adhere to the rules, but no one on Fifth Avenue tells them who to draft. And MLS players who have excelled, including those who once were earning the minimum, have managed to earn very nice livings.
For the union, however, this is about the future. And it’s about principle. Livelihood is about more than the paycheck.
"No part of what we’re proposing has to do with us dictating how they structure their business. It doesn’t need to change to get what we’re after … Free agency can work within the single entity, no question about it.” Foose said.
“It is a core principle of our union and every other soccer union in the world that players, and all workers for that matter, should have the right to choose where they live and work,” he added. “So we have a matter of competing core principles. As a result, in this negotiation we are going to need to find a way to reconcile those competing principles. The answer can no longer be that theirs trumps ours.”
The union is hoping that some of the league’s new, more ambitious owners – the ones who don’t remember the angst of contraction and who paid closer to $100 million to get in than $10 million, might want more control over how their money is spent. They might want to spend to win. If collective bargaining becomes a tripartite process, that likely will help the players.
“I think there are real differences of opinion on the management side as to free agency. I think there are certain owners who aren’t afraid of it in any way, shape or form. It’s not substantially an economic issue in our league. It’s a control issue,” Foose said. “There are different types of owners. There’s the league office and the players. We all have very different perspectives.”
Will owners demand more say in how they acquire and pay players?
“That’s a great question and it’s one I don’t think we know the answer to yet," Foose said. "It’s eminently logical that they would. We have now grown the business to where we have front offices that are effective in doing this job themselves. Why wouldn’t they let them do it?”
But those owners, even the younger, more ambitious ones, knew the rules and regulations when they bought in. And that slow-growth certainty may have been a big part of the reason they did.
“It’s as important today as it was in 1997 that we continue to operate in a way that provides a solid foundation, that permits us to make the kind of investments we want,” Abbott said. “Just like we evolved with the Designated Player there will be other things that evolve. But the thing I say a lot when I’m talking to people about the league is, seven years ago, if you would’ve said that any number of things that are happening right now would be happening – 60,000 fans in Seattle? – that’s insane.”
The union thinks it can happen even faster -- a revolution, not evolution. If MLS plans to reach its 2022 goal, it must do more to emulate the leagues it’s chasing. It must spend more and give players and clubs more freedom.
Said Foose, “Fundamentally, we want the same thing as the owners. We want this league to grow. We want it to grow as quickly and healthily as it can. The goal is the same.”
But getting to that goal, like in any game, can be rough and tumble and difficult and taxing. It can even get ugly. On Sunday, a new champion will be crowned. But the 19th MLS Cup final may have nothing on the competition to come.