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by Joe Maye (better known as TAFKA)
INTRODUCTION
This is Part 4 of the extensive writings that the Soccer Down Here podcasters affectionately refer to as “The Opus”. It’s a well-earned joke, given the absurd length of the writing. Also, in retrospect, it’s a FAR better title than “MLS – From Now Until Perfection” which just sounds so nauseatingly pretentious now. (My apologies!) I found that discussing pro/rel in America meant expanding the discussion into topics I had not intended to delve into initially. As a result, Part 4 is a very long, but I could not bear to leave out content that I felt puts this discussion in the proper context and with the proper complexity it deserves. Don’t worry. If you don’t have the time or patience to read the whole article, I have provided a Table of Contents for easy navigation.
Table of Contents
BRIEF REVIEW OF PARTS 1-3
A QUICK PRO/REL PRIMER
What is Promotion/Relegation?
What purpose does it serve?
PART 4: INSTIGATING HYBRID PRO/REL IN AMERICAN SOCCER
Comparative History and Culture
Hurdles exist, but the foundation for Pro/REL is in place – FINALLY.
The Hybrid System Explained
The TV Deal
How do we make it worth it for MLS & USL?
What about the USSF?
The Potential Negatives and My Counterarguments
CONCLUSION
BRIEF REVIEW OF PARTS 1-3
Let me briefly summarize Parts 1 through 3:
Part 1 dealt with the general history of MLS expansion, its future expansion, and the challenges that expansion creates for the league’s scheduling and competitive structure. I argued that the league should stick to having only two conferences without further geographical divisions. Aside from decreasing the intrigue a league provides, further divisions would result in a reduced national broadcast interest, since the ramifications of a given result will be limited due to reduced size divisions. I argued in favor of a league with either 34 or 38 clubs total. The benefit to 34 or 38 clubs, is that if you divide them into two conferences you get 17 or 19 clubs in each – which allows for an equal number of home and away intra-conference matches.
Part 2 dealt with changing MLS’s competitive structure. I argued that the league should adopt a completely different league structure that mimics the Liga MX split season. The first half of each season would be strictly intra-conference play. At the end of the first half-season, MLS would award the conference championship trophies. The league would then allocate the top half of clubs from each conference into a new table together for the second-half season. These clubs would compete for the Supporters Shield and for playoff berths. The lower performing clubs of each conference would also be placed into a new table together, and would likewise play for playoff berths. By way of example, (assuming a 34 club league) if Atlanta completed conference play in the top half of the Easter Conference standings it would be put into a table with 8 other eastern conference clubs and 8 western conference clubs. (A tie breaker of some kind will be needed to determine which conference gets to have 9 clubs in Supporter’s Shield table). Each grouping then plays 16 more matches, with one match against each opponent. In this format, all clubs will have played a balanced schedule against the same opponents. The club with the best record in the Shield group wins the Supporters Shield. Also, the Supporters Shield would gain considerably legitimacy in this setup.
This structure would provide for a 32 match regular season for all MLS clubs regardless of which table they are allocated to. You award the Shield table clubs 3/4ths of the playoff spots (12 of 16) based on league standings. You award the other table 1/4th of the playoff spots (4 of 16), likewise based on league standings. This setup allows MLS to create better matchups all year long, and it creates multiple story lines for competition. It also prevents dead-rubber matchups as most every team will have something to play for up to the very end of the season. The improved season long matchups and the various storylines would improve the valuation of MLS’s broadcast rights in future TV deals. There are plenty of fun tweaks and variations you can do with it all --- but that was the gist of it.
Part 3 dealt with scheduling. There were three main points: 1) the system set forth above could be scheduled to help avoid league play during FIFA international breaks, specifically the annual June break and World Cup breaks, 2) the system could be scheduled properly even with a league as large as 38 clubs, and 3) the league should consider scheduling the two half seasons with climate in mind. Doing so would allow warm climate clubs to have a home-heavy starting schedule in February and cold climate clubs to have a home-heavy starting schedule for the second half-season starting in the summer. It’s a weird thought, but it may be best for the players, the fans, and the league’s revenue to avoid the extreme cold and extreme heat that certain geographies present.
A QUICK PRO/REL PRIMER
Let’s start with the basics for those who are not familiar with the concept:
What is Promotion/Relegation?
Most countries around the world have two, three, or even four professional soccer leagues of varying quality. Often these leagues are visualized as a pyramid, with the lowest tier league at the base and the most elite league at the top.
Promotion/Relegation or “Pro/Rel” is an inter-league system allowing for clubs to move up or down that pyramid based upon merit. Most commonly, movement up or down is based upon a club’s league standing at the end of a given season. High performing clubs in a lower professional league are given the opportunity to play the following season in the next highest league up – aka “promotion”. Conversely, the system requires the worst performing clubs of each league to be demoted or “relegated” to the league directly below the league of their most recent season. It’s simply an organized system for upward and downward mobility of clubs within multiple leagues.
What purpose does it serve?
In most countries around the world, there are simply too many soccer clubs to facilitate single league competition. There needs to be a system to allocate those clubs to a league commensurate with their talent and quality of play. Aside from competitive parity, there are other important benefits that make clubs strive for promotion to higher leagues and avoid relegation to lower leagues.
Generally, the higher up a league is in the country’s soccer pyramid, the more profitable it is for players, coaches, and owners because revenues are higher. You want the best clubs playing in the best leagues and earning the most money. It is also a matter of both pride and reputation, as generally a club would prefer to compete in the higher league, as opposed to simply winning a lower league without the ability to strive for more. Similarly, you don’t want to reward poor performance or risk clubs becoming complacent in their status in a high tier league.
Those are the basic reasons why pro/rel exists for leagues. For fans, it boils down to two simple words: hope and accountability. Fans of lower tier clubs foster the hope that their club can rise up the pyramid, earn more revenue, and achieve a more renowned status in higher leagues. In short, everyone wants to be the absolute best – not just the best of the unexceptional. On the other side of the coin, when a club falters there needs to be a form of accountability. The fans themselves form part of that accountability, as they will always demand improvement. But ownership in sports can often turn a deaf ear to fan criticism. In sports, money talks, and relegation ensures that a poorly performing club receive less profit in the league below and instills the need for improvement so as to see prior profits and status restored. Hope and accountability are the fundamental reasons why pro/rel is a desired component of competition.
PART 4 – INSTIGATING HYBRID PRO/REL IN AMERICAN SOCCER
Comparative History and Culture
Promotion/Relegation is perhaps the American soccer junkie’s favorite day dream. It represents an intrinsic element of competition across multiple leagues that no other sport in America provides. Unfortunately, conversations on the topic of pro/rel often become toxic, as pro/rel has become a divisive issue and referendum for the legitimacy of MLS as a “quality” league. I don’t count myself among those who think pro/rel is a necessity for league legitimacy. However, the more I thought about the topics of this Opus, the more I realized just how huge an opportunity for growth pro/rel could be for American soccer, if implemented correctly.
For the longest time pro/rel was an entirely hypothetical discussion since America lacked any viable lower tier league in which to operate pro/rel in the first place. It took a while, but the American soccer landscape finally exists in a well-defined and stable soccer pyramid.
The creation of the American soccer pyramid is a welcomed development, but it differs substantially from the development of soccer in other countries. In most every country around the world the soccer club began with and sentimentally belongs to the community it hails from. Since most countries are not the size of the United States smaller countries wound up with a lot of clubs, each representing a small geographic boundary. Admittedly, many of those clubs have built gigantic fan followings, field players from all over the world, and thrive in the international market. But soccer clubs around the world, as a whole, still exists as an element of the community’s identity. On top of the community identity formed around a soccer club, history shows that often individual clubs existed well before leagues were put in place to organize them for mass public consumption. As a result, there was less of a basis for assigning a “minor league” stigma to clubs. That was the petri dish for which soccer was commonly grown, but as the sport grew there had to be some form of hierarchy for quality. Promotion and relegation was the logical answer.
America is different. Its professional sports clubs all represent major cities, or even multi-state regions. For example, the Carolina Panthers represent both North and South Carolina – a square mileage equal to the entire United Kingdom. The result is that a fan may live many hours away and are isolated from actively supporting their club beyond television viewing. America is certainly not short on fandom, but the ability to produce a “community” feeling on such a large scale is incredibly difficult. This is not to say that large scale MLS clubs can’t form a community identity with their area. Atlanta has accomplished this with exceptional success, but the expectation that each MLS club can form that type of relationship with neighboring states or distant secondary cities is unrealistic. Nor should it have to, as soccer facilitates multiple independent league competitions, in contrast to other American sports.
Promotion and relegation has never been needed because no one sport had enough teams competing to justify it for a nation as large as the US. Even if a sport was large enough to warrant promotion and relegation, American sports culture favored regionalized divisions and playoffs to ensure all can compete. That’s how the NCAA manages to find national champions for countless sports, despite having 100s of competitors.
I’d argue the purest source for “community sport” exists with schools and colleges. NCAA sports popularity demonstrates this fact quite clearly. Most every state has multiple division 1 colleges for athletics, meaning the feeling of community is more local and therefore more easily achieved. Also, residents’ attendance at the school breeds devotion and enthusiasm. In America, college has become the source for community association and the proving grounds for professional play. Contrary to some soccer snobs in this country, college sports demonstrate the all-important premise that even America can develop interest in leagues that do not represent the most elite competition available. The important element for success is that a community relationship develops between the club and the local fans.
While some minor leagues exist for professional baseball and basketball, they are an afterthought for the professional competitive model and are often in existence primarily as a means of providing games to fledgling professional talent already owned by the major league clubs. The general premise of minor leagues in the United States is to promote the player, not the team. Even with colleges, sports fans derive their sense of pride when one of their players is drafted into “the big leagues”. They never imagine any other possibility.
The “promotion of the player” concept highlights the domestic bubble that American sports have operated in for decades. Even with the advent of technology and a more internationally conscious mindset, America’s other major sports generally do not exist at an international level in any substantial way. Therefore, the development of the individual talent in America has been self-contained without comparison to international markets. For most sports, elite youthful talent generally finishes high school and then competes in college before advancing into professional play. As a result, pro athletes are seldom younger than 19 years old, and the age of the player is not an issue because American players do not have to compete with players from abroad in any noticeable degree. If American soccer did not have to compete at the international level, it is likely that college would continue to serve a more vital role in the development of professional soccer players, and likewise a more vital role as the “community identity” for soccer, but that is not the case.
Professional soccer players are developed and/or marketed more quickly than athletes for other sports, with 15, 16, and 17 year old soccer players frequently finding professional contracts with clubs, and the club taking a vested interest in developing the player further. The collegiate system is prohibitive to basically all players under 17 years old and is therefore already behind the international curve for development of professional soccer players. Due to college’s limitations, America soccer clubs have adopted the more international model of operating academies to take control of a prospects professional development from a young age. As any soccer fan will tell you, this was a welcomed development. But, the transition away from college soccer means the common foundation for community identity is no longer available for a sport that has skyrocketed in interest in the United States. It is up to the 2nd and 3rd tier leagues to fill that community gap that college would normally occupy.
Hurdles exist, but the foundation for Pro/REL is in place – FINALLY.
America has finally created its own professional soccer pyramid, with fully defined 1st, 2nd, and 3rd tier leagues, along with numerous regionalized semi-professional and developmental leagues. MLS is the top tier league with 30 clubs competing by 2022. United Soccer League (“USL”) operates its “Championship” tier 2 league, and a separate “League One” as the US third tier league. (Yes, the nomenclature is odd – blame England). It’s the first time in the history of the country that the pyramid is this well-defined and stable. Like minor league baseball, there are clubs owned by MLS clubs that operate in these lower tier leagues. The difference is that the USL provides America a substantially independent competitive lower tier system of professional play – one that covers an increasingly substantial footprint in the United States. In that regard, it is entirely unique to American sports and an amazing development of the past 10 years. Including next year’s expansion, USL Championship boasts 26 independent clubs. (*a couple of these function in a hybrid “operated, but not owned by MLS affiliate” manner). USL League One, only in existence since 2019, will have 13 clubs total, 5 being independent clubs. USL League One has already announced that more independent clubs are likely to join in the coming seasons.
All three of these leagues are prospering, but they each exist within a closed system. There is no pro/rel system, so no matter how much quality a lower tier club shows – they are confined to their current league and limited in the growth and aspirations they can hold for the future. There is rumor that the two USL leagues may soon form a pro/rel system for tiers 2 and 3, but the key issue is that the top tier American league is inaccessible. The hurdles in place for pro/rel in MLS are the same characteristics that have made it so successful, despite starting from scratch in the heavily monetized and marketed 20th century sports market.
Major League Soccer exists as a “single-entity” structure, and love it or hate it, it has created the most prosperous soccer league in American history and has done so by a considerably margin of quality. While the league continues to grow through both expansion and popularity, the league’s structure is a major hindrance to implementing promotion and relegation.
In order to become part of MLS, investors have to pay substantial sums of money to purchase an ownership interest in the league itself. In recent years, this fee has exceeded 300 million dollars. This is a positive development, as it demonstrates the demand for ownership rights and the investment valuation for those rights. While a great indicator of league health, expansion fees are the first hurdle to pro/rel. No new owner is going to pay that much money with the knowledge that their investment may be endangered by relegation into a lower tier league where revenues are substantially less. Similarly, owners of MLS original clubs have invested for decades and endured the league’s lean years. They likewise do not want to see the value of their investment damaged due to relegation.
The second major hurdle is that Major League Soccer operates under a salary-cap that is put in place to ensure a level of parity between all competing clubs, and to ensure that salary outlay remains in a sustainable range. It is hard to justify the relegation of MLS clubs when there are mechanisms in place that artificially restrict club spending and purposefully try to keep all competitors within a set range of quality. Some may instinctually respond by saying “well just get rid of the salary-cap”. I strongly disagree with this premise. As world soccer has shown us, there are severe consequences to leagues lacking cap restrictions. Primarily, the disproportionate distribution of talent within a single league, leading to the same 3-4 ultra-rich clubs competing for titles and leaving other clubs and the league as a whole, an irrelevant or boring competition. Secondly, these “irrelevant” clubs often over spend or spend rashly to try and keep up with the richer clubs. Third, fringe clubs of a given league are enticed to spend rashly to specifically avoid relegation, despite not having the overall quality deserving of tier 1 competition. The result is numerous clubs always teetering on the verge of financial calamity. The positives of a salary cap league far outweigh its negatives, and the positives of a salary cap league far outweigh the consequences of competitive structure that has no restrictions in place. Fourth, despite soccer’s increased popularity and prosperity, the financial position and revenues of USL in comparison to MLS are still too divergent to make traditional relegation feasible. Relegating MLS clubs to a lower league would be tantamount to an execution.
With these league characteristics in place, it’s obvious that traditional promotion/relegation is simply not going to happen. However, a hybrid form of pro/rel can be implemented that side steps these hurdles while still providing the benefits that a traditional pro/rel system provides.
The Hybrid Pro/Rel System Explained
As I mentioned above, “Promotion and Relegation” really boils down to “Hope and Accountability”. Fans and owners alike do not like glass ceilings. Fans and owners invest their time, money, and devotion, and like any investment, they don’t want to be told there is a hard limit to its growth. On the other side of the coin, you want clubs and owners that perform poorly to be held accountable and not rewarded for complacency or mediocrity. How can we create those same effects within single-entity and salary-cap structures? The answer: is hybrid pro/rel, and here’s how it works.
In 2022, the league will have 30 clubs. Presumably, they’ll be divided into two equal conferences of 15 clubs each. The first step is to expand each conference table to 17 clubs – therefore creating two vacant spots within each conference table. MLS then allows the USL Championship to promote two clubs to each respective conference to fill those vacant spots in the table. If the USL also enacts pro/rel between its Championship and League One divisions, then you have a fully accessible pyramid – any independent professional club can climb to any level it proves worthy. As a result, you have “the Hope” portion of the equation in place; that’s the easy part. (**Clubs owned by MLS that participate in USL as secondary teams would either need to be diverted to USL League One permanently, or otherwise disqualified from pro/rel. There is no commitment yet to do so, but USL has already mentioned the possibility of taking this step).
Obviously there has to be some form of relegation too. As discussed, there are multiple reasons why MLS owners would never agree to a system that sees their club relegated. So, let’s call the existing MLS clubs “permanent members” ineligible for relegation: a perk they receive for their substantial investment in the league, and the infrastructures needed to operate a first division club under USSF standards. To accomplish relegation the promoted USL clubs would compete in MLS just as any other club does, but in addition to competing for Supporters Shield, playoffs, MLS Cup, etc, these clubs would also be competing against each other for the right to remain in MLS the following season. The promoted USL club with the best regular season record in each conference remains in MLS and the lesser performing USL club in each conference is relegated back to USL in exchange for the Eastern and Western USL conference champions. This system could also be tweaked for the use of a relegation playoff, if desired.
The reality is that even in traditional pro/rel systems a newly promoted club is often immediately relegated back down. (According to http://www.footballbetting.org.uk/articles/how-often-do-newly-promoted-clubs-get-relegated it’s actually 42% for the Premier league). My system guarantees that two promoted clubs always stay in MLS for the following season – an equivalent of 50%. The numbers are similar; the means of reaching them are different.
At first glance, some may find this to be an unfair system if the relegated USL club were to outperform an MLS club. Indeed, implementing this hybrid system provides the relegation, but it fails to provide the “accountability” we desire against complacent permanent member clubs. So instead of relegating MLS clubs to USL, install a “performance penalty” for MLS clubs that fail to beat a USL club in final standings. For instance, if Phoenix Rising were promoted and they outperform four MLS clubs at the conclusion of the regular season, then each MLS club must pay a $100,000 penalty (obviously the amount can be adjusted). This idea can be further extended to include an additional penalty paid directly to MLS as a spur against clubs that underinvest in their club’s roster. The result is that poorly performing MLS clubs are sufficiently penalized and the USL club can be fairly rewarded for its performance, even if it fails to maintain promotion in MLS. At the same time, relegation is still fairly applied as the right to remain in MLS is simply dependent upon outperforming one other USL club.
I recognize that this isn’t a perfect system, but I think any USL club owner would agree that the ability to access MLS in a hybrid pro/rel system is better than a permanently inaccessible top tier. If we can all agree that pure pro/rel is impossible, is this not the best available alternative for pro/rel and for creating an open access pyramid? It is important to remember that the “MLS1 v. MLS2” arrangement suggested by many as a means of pro/rel does not create an open system. It merely creates a really large “subdivided” top tier of soccer. I’m not opposed to that arrangement, but I think it still leaves the primary element of “hope” out of the equation. I’d argue that the most important aspect to all of this is that the system has to allow any club the chance to climb its way up the pyramid – my system does that, and avoids the catastrophic pitfalls that pure pro/rel would inevitably create in MLS.
Now the bigger question, and the question that once answered makes this system seem even more reasonable, is: “How do we make this arrangement beneficial to both MLS and USL?” After all, why would MLS owners agree to a system that sees them lose profits through performance penalties?
The TV Deal
Pro/Rel for Major League Soccer seems to always been framed as a “concession” the league would have to make to appease fans. It doesn’t have to be a concession, and if done properly it could be an immensely profitable decision. It all hinges on the negotiating position and the new TV deal agreed upon in 2022.
There are presumably two ways for the TV broadcasters to assign value to the broadcast rights for Major League Soccer: 1) the quality of the product, and 2) the market for which that product is primarily consumed. The current TV deal signed in 2014 saw MLS receive approximately $720 million dollars over an 8 year span. That’s $90 million per season. At the time, MLS had 20 clubs in place (counting both Orlando and NYCFC, which came online in 2015). That means that the combined broadcasting companies valued the MLS product at 4.5 million dollars per year, per club. I know that may be an over simplification of a complex contract, but for purposes of this argument and conveying the general idea, please grant me some latitude.
MLS receives $4.5 million per club, per year --- that is the baseline valuation. Another way of explaining this figure is that the broadcasters valued the rights to MLS at an average of $4.5 million dollars “per market”, per year.
Hypothetically, if we presume for a moment that the MLS television product has not gained ANY value at all in the past 8 years, then the new TV deal needs to be worth 135 million dollars per year to provide equal revenue to an expanded 30 club league. Now, it is insane to think that the value of the MLS product is the same as it was in 2014. There are considerably more major stars in the league, stadiums and fan atmospheres have improved, the league has finally ventured into developing and selling homegrown players oversees, MLS clubs are beginning to invest in scouting for young talent that can be fostered for future sale, and generally speaking the quality of the soccer has improved dramatically. So let’s dispel that hypothetical immediately.
Next, with the addition of 10 new clubs to the league, MLS will have increased its US market exposure by 33% - the league will have added 9 new markets and doubled its exposure in the LA market.
For purposes of this pro/rel argument let’s say that broadcasters agree that the quality of the product and the expansion of markets warrant a conservative valuation of $5.5 million per club, per year – up from $4.5 million. That means the new TV deal for MLS with just 30 clubs should be worth 165 million per year.
$165 million /$5.5 million per club would be the new baseline valuation.
Here is where pro/rel comes into the picture. If broadcasters agree that as a closed league, MLS rights are worth $5.5 million per market, then it should hold reasonably logical that a closed 34 club league is worth approximately $187 million. (30 x 5.5 =165; 34 x 5.5 =187). That’s simply increased value based upon more league participants. But what if you also tell broadcasters that they are not just purchasing new markets, they are purchasing the right to a number of new commodities created through pro/rel:
1. They are purchasing the broadcast rights to a promotion/relegation storyline all season long. A storyline that will win over many soccer fans that have criticized MLS for its lack of open access to the league;
2. They will receive the benefit of not just 34 TV markets, but will in fact receive 30 permanent markets and 4 additional markets that interchange each year. It is important to remember that there are still major television markets that are not part of the MLS footprint, but ARE a part of the USL footprint.
a. Notable USL TV Markets: Phoenix (#11); Tampa (#12); Detroit (#14); Pittsburg (#24); Indianapolis (#25); Raleigh (#27); San Diego (#29); San Antonio (#31); Hartford (#33); Vegas (#39); Jacksonville (#41); Oklahoma City (#43); Birmingham (#44); Albuquerque (#46); Louisville (#48); Memphis (#51); Fresno (#55); and Tulsa (#58);
b. That’s 18 new markets that the broadcasters would see a devoted viewership from, and it cannot be understated that there is a “residual interest” effect. Even after a club is relegated, or before a USL club has even reached MLS, broadcasters can expect such markets to have an increased viewership for MLS because they are feasibly part of that system via pro/rel.
c. These USL markets not only represent substantial viewership opportunities, but also represent a huge addition to the geography of the league. Phoenix, Tampa, and Detroit are mega-markets by themselves. However, many of these markets represent entire states that have no connection to MLS or to pro sports at all. So while some of the TV markets like Indianapolis, Vegas, Louisville, Oklahoma City, Birmingham, and Albuquerque may be smaller than major markets, the reality is that you gain the interest of the entire state and therefore gain multiple smaller markets in the process. For states like Nevada, Kentucky, Alabama, and New Mexico – you claim a state that has practically no other major sports to compete for local interest.
3. This will give broadcasters more value and return on their investment with the USL TV deal as well, which has already seen progress with ESPN. While major broadcasters can focus on the relegation battle in MLS, they can likewise focus upon the promotion battles in the USL. USL broadcasts selected based upon the developing promotion battle would see a significant spike in national viewership. Smart marketing would see double-headers scheduled where marque MLS matches are accompanied by a USL match that has promotion implications. As SDH has often mentioned, I’d favor this arrangement as part of broadcaster’s introduction of “Friday Night Soccer” national broadcast – an 8pm marque MLS matchup and a 10pm west coast USL promotion battle. The following week, the script is flipped so that fans see an 8pm east coast USL promotion battle and a 10pm MLS marquee matchup.
The addition of so many marketable storylines, along with so many USL markets to serve as either aspirer or participant in MLS, will indisputably increase the value of the MLS broadcast rights. Speaking conservatively again, I think it is entirely reasonable that the new TV deal with promotion/relegation added, would be worth 6.5 million per MLS market, instead of 5.5 million. That would be 221 million dollars per year. (For comparison, that value is only 10% higher than the old NHL contract struck a decade ago.) Regardless of what the actual figures are, it is hard to argue that the MLS broadcast rights would not be worth considerably more money if hybrid pro/rel was introduced. The added content, storylines, and markets make it an obviously enticing piece of property to sell to the American public. For the first time in our countries history, television can foster and sell the concept that a “club” can be promoted, not just the player. If you make that the broadcast theme, if they champion the inclusion of “Modest America” into the contest of top tier professional sports, they can make soccer a top 3 sport in this country.
How do we make it worth it for MLS & USL?
As discussed above, the hybrid pro/rel would create a system for open access leagues. However, the side effect is that MLS clubs would be positioned to pay performance penalties. Likewise, USL would have to agree to relegation of its clubs even if they outperformed an MLS club at the end of the season. How do we make those arrangements worth it to both leagues?
The discussion of the TV deal already demonstrates how MLS can make its product more nationally relevant and valuable by committing to hybrid Pro/Rel. However, the effect is one of considerable profit as well.
If MLS were to refuse pro/rel, they’d receive the previously explained $5.5 million per club, for the 30 permanent participant clubs – a total of 165 million. With the addition of pro/rel each club would receive an additional 1 million dollars of TV revenue and exposure to only a maximum of $200k in performance penalties. That’s $800,000 of additional profit for each MLS club, each year - guaranteed. Moreover, MLS can negotiate with USL to take an additional cut of the TV money that would be attributable to the four promoted clubs. For example, USL could be allocated 5 million dollars of TV revenue for each promoted club, instead of $6.5. In total MLS would make an additional 34 million dollar each year, even with my conservative estimates.
The benefits to USL are even larger. USL would have a substantial source of new revenue from the MLS TV deal, and likewise strengthen its own TV and sponsorship deals in the process. Also, with the knowledge that tier 1 soccer is now accessible through promotion/relegation, the potential for investment by current owners in USL Championship and USL League One will grow considerably. Another benefit is that the valuation of a USL franchise improves too. USL League One could see the sale of franchise rights rise to 20 or 30 million practically overnight. No more glass ceiling.
Let’s go back to USL’s profit share of MLS TV revenue. If USL is receiving 5 million dollars for each promoted club, USL could then do the following:
Award each promoted USL club 2 million dollars up front to help bolster the roster for MLS competition. This could come in the form of transfers OR loans of players from within MLS. As a result, MLS clubs can provide their underused but deserving roster players 3000+ minutes of MLS competition. Likewise, MLS instills a legitimate new mechanism for messaging the salary-cap to help keep core clubs together longer. Third, the 17 year old homegrown player who needs to find significant 1st club minutes in the league can do so.
Keep in mind that two of the four promoted clubs are GUARANTEED to remain in MLS for the following year, meaning those clubs would double their promotion revenues. USL clubs would be permitted to bolster rosters incrementally, but not beyond the MLS cap-structure. USL would then hold 1 million dollars in trust for each promoted club. If they were to be relegated, said funds would be administered with oversight to avoid the parachute payment abuses we see in the EPL. (**Frankly, I think parachute payments should be held in trust worldwide and administered for existing contracts/administrative expenses so as to avoid clubs using them to try and “fly” back up to the top division. It should go without saying, “you can’t fly in a parachute.”)
There is still a total of 8 million spare dollars from this profit sharing arrangement that USL as a league can take as the “league’s cut” for its joint venture with MLS. This amount can be distributed to USL clubs in both the Championship and League One divisions. Such a sum would be a substantial distribution, as 8 million dollars divided 50 ways is still $160,000 a year. I’m not intimately familiar with USL player salaries, but I’m sure that $160,000 would cover a good chunk of any club’s roster. The influx of that kind of revenue into USL would shorten the gap between USL and MLS dramatically, and create a constant presence for smaller regions to compete in a top tier pro leagues.
The reality is that quality ownership groups spending $300+ million for expansion rights are not particularly easy to find, and there is a finite number of clubs the league can expand to. Some may be arguing that the hybrid pro/rel profits would be dwarfed by even one more club expansion. It may appear that way, but it is important to remember that the sale of an expansion right also requires a further share of all league profits.
Creating a hybrid pro/rel arrangement allows MLS permanent members to keep the shares of its profits (SUM, merchandise, sponsorships, etc) limited to just 30 clubs, while only sharing in the TV revenues with USL. Add to that the added TV contract revenues that pro/rel provides and it easily becomes more profitable in the long run for MLS owners than simply expanding to more permanent member clubs. In any case, this arrangement does not preclude MLS from taking on a new permanent member in the future; my competitive structure has already demonstrated it can operate with as many 38 clubs. Moreover, MLS would have the benefit of the kind of marketing excitement they see for each new expansion club, the only difference being they get it every single year with the two newly promoted clubs.
The result is that you get the kind of fanaticism and community identity for lower tier soccer that we see with college sports. That in turns feeds into an increasingly prosperous MLS, as viewership and profits increase. Hybrid pro/rel could be absolutely transformative for the entire US soccer pyramid, and it could do so without putting MLS clubs in relegation jeopardy, without giving too much growth to USL clubs too quickly, and making more money for all involved. As our favorite Soccer Down Here saying goes: “A rising tide lifts all boats.”
What about the USSF?
One major hurdle is that USL clubs generally do not satisfy the USSF division 1 league standards for stadiums. First and foremost, I think USSF would gladly grant waivers to promoted clubs - given the benefits that hybrid pro/rel would have for the nation as a whole. Keep in mind, those standards are not a universal requirement by FIFA. Bournemouth’s maximum capacity is 11,364. They would not qualify for USSF 1st division soccer if they played in America. Second, since USL is pocketing 8 million dollars each year, USL could subsidize the money needed to upgrade or build facilities of promoted clubs as an additional perk of promotion, or they could mandate that the distributed money be directed toward facility upgrades for all USL clubs.
The Negatives and My Counterarguments
There will inevitably be a larger talent gap created in MLS with the introduction of hybrid pro/rel. However, we consistently see USL clubs in Open Cup competently challenge MLS clubs. I think it would be overstating the gap to suggest that a USL club would be completely obliterated in league play, especially if they are given the means to immediately bolster their rosters. Second, that gap will shrink most every year as promoted clubs continue to receive multiple years of promotion revenue. Third, soccer fans are frequently underestimated. There are franchises across the US in every sport that are consistently BAD, but have diehard fans nonetheless. I have no doubt that the fans of an area like Birmingham would develop the same underdog diehard mentality for their USL club, even in the face of an MLS season that saw limited success. Fourth, unlike most every soccer league in the world, MLS operates on a playoff structure. This means that fans of promoted USL clubs don’t have to decry their club’s ultimate futility in the league table, they only have to make it to playoffs. That’s not an easy achievement – just ask Orlando! – but it means that even in the face of a poor season, the USL club’s matches would remain relevant and hopeful for a playoff berth for a majority of the season, and would likely be relevant and intriguing all season long as far as the relegation battle is concerned. There would be very little “dead rubber” in MLS under this system.
For MLS owners, collaborating with the USL in this way will admittedly result in the bolstering of a rival league. It is possible that doing so would lose MLS clubs some of their “fringe” fans that live in neighboring markets that might be better served by a USL club that is much closer in proximity. In other circumstances, a USL sharing the MLS market could see a division of fans. My response is this: 1) there are very few fans that regularly travel multiple hours for multiple MLS matches a year, so the loss in attendance would be negligible in the “neighboring market” scenario; 2) rivalry brings interest and fervor in the shared market scenario; 3) there may be some lost revenue in the form of merchandise, but such revenue makes up a very small piece of the MLS pie; 4) for every lost match attendee, an MLS club would likely gain exponentially more TV viewers because MLS will now be a more conscious product for fans in those USL markets; 5) MLS will foster growth of a league that will be far more likely to produce top tier talent that can be obtained by transfer fees much lower than the international rate; 6) thanks to MLS owners having staked their claim to most every major market, their increasingly large and modernized stadiums, the TV revenue, and the league’s international visibility, it is highly unlikely that the bolstered USL would ever challenge MLS as a contender for the top tier American league.
CONCLUSION
The missing piece of the American soccer puzzle is for clubs to consistently form close relationships with the community they serve. That community identity is key to fostering the type of fanaticism we see with older and more established sports franchises in the Unites States. Some MLS clubs have managed to accomplish it, but others are lacking that connection. More importantly, there is simply too much of America that is too far away from major metro areas that have an MLS club. USL is the logical solution to fill that void, but in order to do so properly there needs to be open access to the all levels of the soccer pyramid. A closed top tier league will stifle the devotion and excitement that the USL can expect from its fans. Hope and accountability are needed.
Hybrid Pro/Rel creates a pathway for lower division clubs to achieve top tier success and does so in a way that keeps the investment made by MLS owners safe while creating a mechanism for accountability that some MLS permanent members desperately need. This system would facilitate the community relationship for regions of the country that do not possess an MLS club, and in many cases do not possess any professional sports at all. Hybrid pro/rel would create a more nationally expansive TV market that is interested in following MLS alongside the improved prospects of their own USL clubs. It provides the potential for massive profits for both leagues and the opportunity for transformative change in the sport. Most importantly it’s a practical approach to a problem that doesn’t offer many legitimate solutions.
**Special thanks to my friends Zach Arnold and Jake Isenburg for giving me their own input as well as the opportunity to discuss my ideas with them.
A big thank you to Jessica Charman for taking the time to answer some questions on her perspective, having lived the pro/rel life.
Also, I want to give a very special thanks to Jason Longshore and Jon Nelson for giving listeners like me a platform to post such long soccer ramblings. It means the world to me to be able to interact with you and the Atlanta soccer world in all the ways you guys allow.