View from the bottom line: MLS and the current financial structure

As much of the world soccer season begins to wind down and MLS is in the middle of the second third of its season, I found myself watching and wondering how it all went. England crowned their league champions on Sunday a week ago, Germany crowned theirs yesterday. Italy and Spain are close to wrapping up their seasons, but the trophy destination is already well known for both leagues.

Remembering that these leagues end after the final whistle of the final match and the trophy is handed out to crown the champion of the season, I can’t help but wonder how the move to a more international system would help. or would hinder MLS in the United States.

In an effort to maintain the financial viability of clubs, many football governing bodies have instituted financial regulation. One of the best known is the UEFA Financial Fair Play Rule (FFP). The simplest way to explain the FFP in layman’s terms is this: It was designed to prevent clubs from getting into long-term financial problems in the short-term quest for immediate success. Basically, it was put in place to prevent teams from spending more than they earn, over multiple seasons, by investing in players to achieve immediate success on the pitch who could put the club’s long-term finances at risk. . It sounds simple, but in fact, it’s more complicated than you might think.

Rules of this nature were meant simply to help protect the long-term health of teams and leagues. There have been harsh criticisms of the “unintended consequences” of the fair play rule and the monsters it has created. Could FFP’s current definition help clubs like Barcelona, ​​Real Madrid, Juventus, Paris St-Germain, Manchester United, Manchester City, Celtic, Rangers, Bayern Munich and Borussia Dortmund as nearly untouchable? These are some of the highest grossing and profit-generating clubs in Europe and as such will naturally have more money to spend on players than virtually any other team in their respective leagues.

Think about it: Bayern Munich have just won their seventh straight Bundesliga title, and this season was the first in a long time to go until the last day of the match to nominate the champion. Outside of a magical season, similar to the 2015-2016 English Premier League season which saw Leicester City achieve what some thought was impossible, most top clubs will find it very difficult to compete with the behemoths of the league, not only on the field, but also in recruiting players to join their clubs.

MLS, and its ever-evolving efforts to continue to Americanize football (or soccer if you prefer), has adopted a similar method to help maintain the financial viability of teams, although to be honest the structure of MLS means that it maintains its long-term financial health as an organization. Remember that MLS is designed as a single entity structure, not as a collection of individual organizations. In order for MLS to be financially sound and to protect its investors, the structure must in theory spread financial impacts and risks as widely and evenly as possible across the league.

Like many other US-based sports, MLS tries to protect its investors through a variety of means, especially in the case of the league, which means salary caps, allocation orders, and currency systems, as well as the rule structure of the designated player. Again, this is all in theory.

Looking through MLS, especially with its current growth, it’s evident that some teams come out of the starting gate better and faster than others. It could be scouting, recruiting players, better negotiating skills, a better climate – who knows?

One thing that cannot be overlooked is the property aspect. MLS clubs, as well as those big international clubs, with financial “sugar daddies” have ways to weather big losses for several seasons, if the club’s benefactor can afford the write-offs in the hope of a comeback. on investment at any given time. further down the road.

This will certainly make the competition a lot harder for some clubs, leading some clubs to be consistently lower table teams compared to teams that have much deeper pockets and create a self-fulfilling maelstrom of players wanting to join the club.

Would sport as a whole benefit from removing some of these restrictions or rewriting them? Beyond simply moving to a free market for all, are there options globally or within MLS to allow for more competition? Does MLS’s single entity structure hamper a team’s ability to grow and compete in the name of financial stability? Is MLS so focused on sustaining and growing its investments quickly, and not smartly, that it makes decisions that are detrimental to the sport itself (an ever-changing playoff structure, giving the advantage on the field throughout the playoffs, and a lack of importance of the Fan Shield)?

If you could change anything in the current league structure, what would you change? Would MLS survive in the United States if it became a league dominated by one or two clubs backed by multi-billionaires?

The investment can earn you trophies, but at what cost? How many fans could handle this level of roller coaster? How many people really understand the “ride or die” mentality of sports? There are, of course, many examples of fans in the United States who can do this, but it’s not in football; however, the tide could slowly change. I can say that I am City through and through. I’ve watched and been with clubs through relegation and promotion, and I don’t wish that on anyone. I hope a league is not only financially stable, but also competitive from kick-off to final whistle. MLS could be here soon, or …


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Marianne R. Winn

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