Sports And Money: Soccer’s New Labor Deal

by March 9, 2015
The Seattle Sounders celebrate during a match against Toronto FC. (Via Flickr.com)

The Seattle Sounders celebrate during a match against Toronto FC. (Via Flickr.com)

Baseball players and owners regularly tangle. So do hockey players and owners. And, last week, it looked like Major League Soccer might lock out its players. But, 50 hours before the start of the new MLS season, the league and the MLS Players Union reached a deal  on a new contract.

Though the exact details haven’t been revealed, some portions of the agreement have trickled out already.

The minimum salary will be raised to $60,000 from $36,000. and free agency will be allowed for players over 28 with at least eight years of experience in MLS.

Raising the minimum salary and winning restricted free agency seems like a big win for the union, and there’s certainly some cause for celebration. Low-profile players’ financial situations will undoubtedly improve, and some will at least have negotiating power once they hit 28.

But compared to the negotiating power afforded to professional athletes in MLB, the NBA and even the NFL, MLS players still lag far behind, and they’ll stay that way until the league’s single-entity system is broken up.

Unlike other professional sports, every Major League Soccer player is contracted directly to the league, not the teams they play for. Critics say this allows MLS to act as a cartel that keeps athlete salaries low by neutralizing competition between teams, and in turn maximizes revenue.

This system will remain in place under the new deal, and it appears free agents will only be able to attain a maximum 25 percent raise on their previous salary.  Though there are a number of restrictions on free agency in other sports, this system is by far the least free of them all.

Breaking up soccer’s single-entity status and instituting unrestricted free agency would certainly take a chunk out of MLS revenues, but the truth is most if not all of its clubs could afford it.

According to a 2013 Forbes article, the most valuable team in the league — the Seattle Sounders — is worth approximately $175 million, and had $18.2 million in operating income in 2012. The least valuable club was Chivas USA, which was worth $64 million and had a $5.5 million deficit in ’12.

The current MLS salary cap is a minuscule $3.1 million (which doesn’t include contracts for special big name players like Clinton Dempsey), and is only 12 percent of the median valued club’s revenue.

By comparison, the Detroit Tigers — MLB’s 15th most valuable team, according to Forbes — had a payroll-to-revenue percentage of 62.4 percent in 2014.

MLB arguably has the world’s most player-favorable collective bargaining agreement, and its players union spent decades fighting for it. There have been eight baseball work stoppages since the 1970s. But asking MLS players to forgo their checks to achieve unrestricted free agency is a hard sell for its union, especially considering that 76 percent of soccer players make less than the league’s average salary of $207,831 (a reflection of just how much the top players earn.)

Writing for Yahoo, Leander Schaerlaeckens contends it’s in Major League Soccer’s best interest to breakup its cartel. League revenues are soaring thanks to a new $90 million a year TV contract, and more popular players from Europe are joining its ranks.

If it doesn’t, Schaerlaeckens says the league “could plateau and lose that hard-earned momentum.”

STORY IDEAS

Major League Soccer website

Major League Soccer Players Union

Forbes List Of The World’s Most Valuable Soccer Teams