Major League Soccer: Deciphering the Single Entity
OTF’s Alex White puts a legal magnifying glass to that confounding soccer league known as MLS…
One of the things I struggled with most when I started to watch Major League Soccer was the question of how exactly it all fit together. I anticipated the clubs were stand-alone entities, but the league would often pop into negotiations, and “free agents” had to enter the Re-Entry Draft, and there is an “allocation order” to certain international signings but not others, et cetera.
Recent high-profile player acquisitions only added to my confusion: Who is pulling these strings? Is MLS notifying teams of player availability? Is the league negotiating, and funding (or actively blocking) transfers? When a player signs with a club, who is he actually contracting with? Who pays the players? How is direct league intervention like this not considered collusion, especially since other leagues have been accused of it while doing far less?
When compared to soccer leagues in other countries, the structure of MLS is difficult to wrap your head around. Elsewhere, each club stands on its own; it contracts with players and coaches themselves, and its success or failure is derived from a Darwinian, free-market oriented promotion/relegation system.
From the American perspective, MLS’s nature is both more surprising and less. While the fact that MLS turns its back on such free-market entity independence seems counter to our culture, American fans are used to the concept of their teams as franchises within a single-entity closed system. All of our nation’s most popular sports have been monopolized in fact, like the National Football League in the present, or by law, as Major League Baseball’s was when a judge told us so back in the 1920s.
Likewise, the arguments MLS uses today, based upon protecting the investment of its owners and ensuring the long-term survival of the league, would ring true to baseball and gridiron followers of the early 1900s. In many ways, MLS has gained its comfortable government protection on the trail blazed by those other sports leagues, who argued for the investment of their owners or defended their salary cap as negotiated with a players’ union.
But MLS is not the NFL, and it’s not MLB. Besides through our own common sense, we know this because judges told us so.
In the early 2000s, a group of veteran players gathered to sue MLS as anti-competitive for allegedly keeping wages down and for allegedly colluding to do so. The case was named for one of those players, and Fraser v. MLS could have been the American Bosman ruling, opening up the market for players’ services at home as it is in Europe. Ironically though, those “socialist wacko” courts across the pond stood up for the rights of the individual in the latter, while the US decision touted the importance of collective effort in the former.
The “Background” section of the case is an especially good read to learn more about how MLS works. The league was built to be a much more cohesive structure than the American sports leagues that preceded it. For example:
• All MLS players are employed by the league itself, not their respective clubs.
• The league retains all intellectual property and negotiating rights, but employs owner/operators to manage the individual clubs.
• Individual clubs have the authority to control player personnel within the organization (including intra-MLS trades), subject to the salary cap (currently set at approximately $3.10 million for 2014).
• Stadium gate receipts go to the league, with a percentage given back to the individual owner/operator.
• Owner/operators sit on MLS’s board and committees and collectively make league-wide decisions.
For the judges presiding over Fraser v. MLS, all these marks were in the league’s favor. They were careful not to weigh in on whether collectively bargained agreements or sport monopolies were a good thing, but summed up that MLS fit more logically as a single entity than not. While this seems perfectly illogical against American free-market sensibilities and the example of other leagues world-wide, it is those very leagues that helped MLS’s case.
MLS was able to successfully argue that it was really competing with those international leagues [insert punchline here], and therefore, even a USSF Division I certification meant the league was not a monopoly in the US marketplace. The player-plaintiffs had actually played abroad and could theoretically do so again.
The differences between MLS and NFL are drawn more starkly thanks to an even more recent case, American Needle v. NFL, which cemented the fact that the NFL is 32 individual teams working together. The throwball clubs each contract with their own players, keep their own intellectual property rights, and operate in a more financially independent manner—all in stark contrast to the single-entity MLS detailed above. (In the case, the court ruled that the NFL could not sell all 32 teams’ IP rights for, for example, merchandising, because that would essentially be collusion between competitors)
So that settles what MLS is and what it isn’t.
Or does it?
MLS has changed since Fraser in 2002, most notably through the high-profile stars it brings in via the Designated Player rule. While the rules of that game remain opaque, we know it is the clubs themselves who are footing the bill, with the occasional help from the league in the form of negotiation, transfer-fees, and salary assistance. MLS is notoriously tight-lipped about these details, so we remain confused by whether MLS or a club owns a player to keep or sell as they choose—not to mention how these players are being chosen to land with the clubs they do. That said, we know, ultimately, players’ contracts are indeed owned by the league.
But as MLS embarks on its new high-spending stage (with Clint Dempsey, Michael Bradley, and Jermaine Defoe to start) — intervening in the affairs of select franchisees in ways that seem to reward high-attendance and big markets — the issue of legality seems less important to me than whether I like what’s going on.
I’m left uneasy by league intervention into teams’ rosters, which is close to undermining enjoyment of the games themselves. When the rules are constantly changing, conspiracy theories are too hard to avoid.
For example, Toronto, a team that hit the market with fantastic attendance, only to see it plummet, was recently reborn with a new executive team that wants to show its ambition. Once Toronto was notified of a US national team member abroad’s availability (Bradley), his transfer was facilitated with league negotiations and funds (overlooking other clubs, and in seeming contradiction to well-defined league allocation agreements), just in time for a league opener with Seattle and Clint Dempsey – for whom the same description could be used.
I’m not sure I will ever shake the feeling that Major League Soccer is manipulated.
Imagine if the NFL, despite its established draft order, allocated this year’s best college quarterbacks to Buffalo and Jacksonville (or Cleveland or…) and picked up a bit of their salaries for the team? Or if MLB negotiated a star Japanese pitcher’s salary (and negotiation fee), paid half of it, and sent him to kick-start the rebuilding job for the Cubs (or the Mets or…)?
MLS is placing players around the board like chess pieces. Sure, the teams may be the ones actually playing the games, but the league is deciding how many queens each has. The whole thing feels like a shell game, like a fictional drama, or an overly edited reality TV show.
It’s one thing for a club to form a “superteam,” or for clubs themselves to fight over superstars to maintain balance, but when it’s so artificial the product itself begins to ring hollow. To be fair though, the NFL attempts a similar manipulation – one example is scheduling based on previous records (a discussion of MLS scheduling will need a whole ‘nother article).
The simple fact is, since its creation, MLS teams aren’t truly competing against each other, but as a whole against other sports or the rest of the world.
Looking back at that statement, it’s the “aren’t truly competing against each other” phrase that sticks with me.
For more on these topics, including legal analyses, click on the recommended reading below…
Fraser v. MLS
American Needle v. NFL
Federal Baseball Club v. National League
OTF’s Alex White is a Georgian-in-exile who’s fallen for the Windy City, and an Illinois attorney—but for the love of all that is Good, do not get your legal advice from something you saw once on the internet, including anything he says. Follow Alex for non-legal opinions @A1exWhite or send him an email at firstname.lastname@example.org