Thursday, January 9, 2014

On Mega-Corporations, Hedge Funds, Risk Management, and Faith in Major League Soccer

By: Vidda "JibJab" Grubin

If you have failed to recover sufficiently from your New Year’s celebration and the blue-ball shattering cold of early this week, you may not have heard, Michael Bradley of U.S. men’s national team fame has decided to return to Major League Soccer. Bradley will be playing for Toronto F.C. Your opinion of Bradley’s move undoubtedly falls somewhere at or between “OMFG! Awesome!” and “What a dumb-ass move, we just lost the World Cup.”

While both of the above opinions are equally extreme and speak to your need to get off the internets and find a significant other, I have no intention of addressing Mr. Bradley’s wanderings from that particular perspective. Rather, I would like you to give me a few moments of your precious soccer-blog reading time as I neatly couch this most recent Major League Soccer signing in terms of our league’s past, present and future.

First off, I have a great deal of faith in Major League Soccer and the people in charge.

Beginning in 1993 in Lamar Hunt’s cheap whiskey smelling, smoke filled, subterranean lair, where a handful of really rich guys played Texas Holdem to see who would own the rights to the Los Angeles franchise, through the lean years of the late 90’s and early 2000’s, the cabal known as Huntgarbschutz has navigated the peaks and valleys with amazing dexterity and forethought.

Many new owners, teams, stadiums and players later, Major League Soccer is truly poised to join the big boys of American professional sports. And yet, the Michael Bradley signing has tapped into a deep, long forgotten well of pessimism inside my head. (Ahh, you instinctually clever individuals are saying “Pessimism is never far from the surface with this one.” And you would be correct, but that is of no matter presently)

To get to the seething river of pessimism let’s establish a baseline. Your mileage may vary. 

1. What constitutes the solid base of MLS? A number of factors, obviously, but let’s find two. A) The well managed fiscal structure of the league and B) The growing physical presence, i.e. soccer specific stadiums.

2. What springs from 1? A) Consistency, which allows the league to acquire/develop better players, sponsors, tv contracts and B) Permanence, which gives team supporters/fans a warm feeling in their soccer loving souls.

Now that we have established what the significant foundational factors are for MLS (I realize there’s more to it. Do you want this column to be twenty pages long?), why the pessimism?

Michael Bradley, Clint Dempsey, Jermain Defoe and other similar signings in the future are so out-of-whack with the general structure of the league that it’s hard not to be a bit worried. Consider a quote from a Wall Street Journal article from September 24, 2010.

“David Beckham and Landon Donovan of the Galaxy and Rafael Marquez, Juan Pablo Angel and the injured Thierry Henry of the Red Bulls make a combined $21.7 million in guaranteed compensation from their clubs. This represents about 30% of the entire league payroll of $71.3 million, according to MLS Players Union figures.”

The above quote throws cold water on my seething pessimism and lends it credence. Most of those signings went well for Major League Soccer. The Beckham cult of personality paid for itself, but only a few players in the world can have the same effect. Michael Bradley and Jermain Defoe do not fit into the Beckham category, and therein lies the rub.

The incredible difference between the haves and the have nots, can’t be good for the long term viability of the league, right? I don’t think so, but that doesn’t make it so, unless I can convince you. The MLS players who produce at the same level as the Bradley’s and Beckham’s surely aren’t too happy when they see the fifty-fold discrepancy in pay. And when taken in context of what is possibly the most player-driven-team-oriented-sport on the planet, the feelings of inequality seem inevitable and counterproductive.

Certainly a handful of Major League Soccer players moping like five-year-olds who lost video game privileges because they don’t make the dollars they think they should isn’t going to fly the league into a tailspin; but, what about peering at the issue from an owner’s point of view. Again some background.

The North American Soccer League (NASL) of the 70’s and early 80’s, the one which attracted players like Cruyff, Pele, and Best is the cautionary tale which has kept the current owners of Major League Soccer from reaching too far, too far.

Why did the NASL fail?

Most importantly they didn’t take care of the base, that part I mentioned, you know, the fiscal and the physical. Yet, even without having built from the ground up, they might have survived if not for the hubris of the league’s owners. There were no curbs in place to keep the egos which accompany those who so often succeed in the realm of big business and finance from veering off the proper path.

Those owners drove their own league into the ground because they couldn’t control themselves. I have an inkling that you and I are seeing what just might be the beginnings of the same problem for MLS. Like the NASL owners of thirty years ago the Major League Soccer owners of today are fudging their own risk averse rules and starting to throw money around like its so much toilet paper.

Do you think the NASL owners personally went broke, and thus the league went away? Maybe one or two did, but what really happened was a bunch of rich guys got tired of losing money, and so, they stopped; because, that’s what rich guys do. If enough of the billionaires running MLS lose money long enough, they will get bored; they will find other outlets for their egos. (Pro Tiddlywinks League?)

In short, I hope my faith in the Garbers, Precourts, Leiwekes and Hunts of the world is justifiably placed. I hope they have hedged their big money moves, i.e. Michael Bradley, with more foundation building. You know, downtown soccer specific stadiums in places like Orlando, Miami, Minnesota, Atlanta, Boston, Columbus (please, Mr. Precourt, Brewery district is my fave), big money long term broadcast and sponsorship deals, and a significant increase of the salary cap/minimum salary (Say to a cool $5/6 mill/$75 thou) so that the overall quality of the league leaps forward.

If the only thing happening is individual owners spending their own money for a few big name players, that’s not good. That’s really not good. Solely trusting the vanity and perception of the human individual has always, always, led to disaster. There must be balance, and when I say balance, I’m talking balanced books and balanced perspective...Because  

Nothing ruins the beautiful game in the long run like a handful of prima-donnas (owners and players both) trying to convince knowledgeable fans that the game is about personalities and strutting egos. It’s not. It never has been. It never will be.

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