Major League Soccer: Transfer Fees & Labor Relations

I try to keep up with Major League Soccer action, but since it's often times kind of like swimming up stream - after all the summer really belongs to baseball, the Red Sox in particular for me, and the fall belongs to NFL action. However, I've been a fan of "the beautiful game" for as long as I can remember and have been a supporter of Major League Soccer since the beginning - I went to the first two MLS cups and have been to two more since.

Now that those credentials have been established, I'd like to discuss the MLS credentials. From the start, the MLS was designed as a single entity with investors rather than owners of franchises. Players negotiated with the league directly, not the individual teams.

About a year into the new league, 1997, the players filed an anti-trust suit in federal court against the league, propped up by the NFLPA in a sort of proxy battle. In short, the allegations were that the single entity was a sham to eliminate competition for players (and ergo salaries), that the hard salary cap was a violation of anti-trust laws by keeping salaries below fair market value, and it argued collusion with FIFA around transfer fees, which would put a damper on player movement. A good discussion of the suit and the issues can be found at the SoccerTimes.com.

By 2002, the players' case had been rejected and appeal had been denied by the Supreme Court. A nice timeline of events can be found HERE. If you're really into such things, a visit to this link will send you to the text of the case. Unless you're a labor law geek, you're probably not going to read it. Long and short, if you're a single entity, you're not violating anti-trust law.

Now, the MLSPA has never really been a "union" per se and it's bylaws prohibit collectively bargaining; for several reasons the players believed it was in their interest NOT to engage in collective bargaining. It was, however, an association of professionals. This allowed the MLS to contract the two Florida teams in 2002 because there was no CBA (collective bargaining agreement) to deal with.

In 2006 the transfer issue became an issue again, notably with Clint Dempsey. The MLS reportedly turned down a $2 Million transfer fee from a European team. The MLS is now caught in the middle space between importing talent and exporting it, an issue for a maturing league. The Boston Globe suggests that the league is out growing it's single entity model.

I disagree. It's this model that has allowed it to continue and develop talent without out pricing itself from it's public. It meant that Dempsey had no recourse but to play out his contract even if that meant he bolted for Europe upon it's expiration a year from December and the MLS would get nothing. He meant more to US Soccer and the MLS here than in a $2 Million fee. In December 2006, Fulham FC offered MLS $4 Million, which was accepted, demonstrating that the MLS does have an idea of what their players may be worth. A portion of the transfer fee went back to the New England Revolution for use in player salaries and player development, the rest was distributed by the League, demonstrating the MLS entity understands that continuous commitment to player development is the path to a healthy, long term league. That $4 Million will keep other talent in the MLS and develop more talent, while keeping a lid on player salaries.

If the players association becomes more of a player itself, perhaps it can force the issue of putting transfer fees back into player salaries, but until then MLS needs to stay the course, develop talent, and sell the product before they start down the slope of balancing fees and player salaries.

Transfer fees and player salaries have been an issue since the start of the league, with much acrimony resulting. This is nothing new, what is new is the idea that Europe is willing to pay for American talent.

RESOURCES:

http://en.wikipedia.org/wiki/Clint_Dempsey

Jamie Trecker, MLS turns down multi million dollar offer for Dempsey,
URL: http://community.foxsports.com/blogs/JamieTrecker/
2006/08/17/MLS_turns_down_multimillion_offer_for_Dempsey

Frank Dell'Apa, "A Matter of Value Judgments"
URL: http://www.boston.com/sports/soccer/articles/2006/08/22/
a_matter_of_value_judgments_mls_players_clash_on_cash?mode=PF

Fraser et. al v. Major League Soccer, LLC, et. al. 2000,
URL: http://www.sportslawnews.com/archive/Court%20Rulings/MLSDecision.htm

Robert Wagman, "MLS, Players no closer to settlement"
URL: http://www.soccertimes.com/wagman/2000/feb24.htm