By Charles Boehm – WASHINGTON, DC (Nov 3, 2017) US Soccer Players – Anthony Precourt’s confounding machinations about the present and future location of the Columbus Crew. The NASL’s momentous antitrust suit against the US Soccer Federation. We find ourselves talking and thinking a lot about the business of the beautiful game this fall.
“Soccer is a business,” state many of the mercantile-minded among us. It’s a truism, obvious to those who internalize it. Professional sports the world over are a fast-moving, cutthroat business. They’re generally marked by strong passions and loyalty, overheated markets, and hefty cash flows. As the business logic goes, the bottom line as the bottom line.
It’s predictable given the American mission as a forceful global evangelist of capitalism. It’s this line of thinking that forms the basis of American professional soccer. The sport has climbed a long, steep, slow road to respectability in the US and Canada over the past century or so. It’s a journey both economic and cultural. Given the number of false starts and dead leagues, at its base is financial sustainability.
Rich benefactors, careful bookkeeping, and a bold vision for future paydays. Major League Soccer’s collectivist single-entity model is the latest attempt to ride these choppy waves. It’s cost the league’s invester/operators hundreds of millions of dollars to get to this point. At least that’s the story the league tells. Keeping the economics a secret is part of that model. That means putting a number on MLS as a single-entity is tricky.
“Ultimately, it’s easy to build a case for MLS bringing in more than $400 million in revenue annually. And that’s just the league. It’s entirely possible, and even likely, that some MLS teams are being run at a profit,” wrote marketing strategist Isaac Krasny last June. “Even if expenses are outpacing revenue at this point, given the steady growth of the league and its ability to command higher and higher prices for equity stakes, it would suggest that those who have seen the books are convinced MLS is a solid investment.”
It’s with that in mind that we should look at the Columbus Crew’s proposed move to Austin. Their investor/operator’s priority is a new stadium and a better deal. At least in public, MLS agrees.
Whether or not the business model accounts for fans as anything more than customers may not even be part of the question. The Crew’s proposed move provoked the expected response in Ohio and beyond. Fair enough from that fan perspective, but we’re still talking about a league designed as a business case.
Those who consider themselves more detached, calculating observers, can see that business argument. In fairness, so can many of the fans in Columbus. Their team is lagging behind the league median economically. It’s unlikely that changes without a new stadium. Pick a major league in this country, and we’ve heard this before.
Comparing MLS to Europe and swapping out fan for supporter only does so much. That European model wasn’t designed with the American sports business model in mind. We can see the issues with that model as they try to bolt-on the colossal money-printing operation that is bigtime US sports.
“No doubt, most owners love their club and take personal satisfaction from its success. But the explanation for their investment must go beyond this,” writes author and sports economist Stefan Szymanski in “Money and Soccer: A Soccernomics Guide”
“The ownership of a successful team has become a means to display social status – on a global scale. The idea that ownership and influence over a soccer club conveys social status can be traced right back to the origins of these clubs … Soccer clubs are not enterprises whose ultimate goal is to make money. They only exist for the pursuit of winning, and the only benefit to be derived from owning a soccer club is being a winner.”
In this worldview, Precourt could be sitting back and soaking in the warm vibes of his team’s current MLS Cup playoffs run right now. It’s the latest chapter in a decade of fairly steady competitiveness despite their “small-market” status. In the Old World, it’d be his main duty to the Crew. Instead he finds himself an outcast in his own stadium, his fans rooting against him as an extension of their relationship with their club.
At its mid-1990s dawn, MLS rode a game perceived as a multi-time loser into a crowded modern US sporting landscape. That forced the league to put the cart before the horse. Yes, it was part business. It was also part social movement, a legacy of the 1994 World Cup, and another shot. That needed money and at least the slight belief in an eventual return.
That return eventually came, and with it new investment. The expectations have changed. What hasn’t is the deeper question. Is it a business, or something more? Their marketing hints at the latter, with moving depictions of passion and community. The league leaned heavily on the “cause” angle in the lean years. Now, the league’s support for Precourt’s cold air of detachment and leverage reveals a desire to have it both ways.
MLS hasn’t seemed interested in playing markets against each other. That might not even be happening here. At least publicly, and that’s still key here, Austin isn’t acting like the expansion candidates. In fairness, neither are some of those expansion teams late in the process. Swapping Columbus for Austin as a business decision is just that. Other business do it. Municipalities compete for those businesses.
In the Old-World view, that shouldn’t happen. Clubs there “are more like musems: public-spirited organizations that aim to serve the community while remaining reasonably solvent,” to use Kuper and Szymanski’s phrasing in Soccernomics. That might be a stretch given the history of pro sports franchise relocation in North America, but that’s the direct comparison for soccer.
In 2009 Szymanski and colleague Pedro Garcia del Barrio wrote a paper titled with the catchy title “”Goal! Profit maximization versus win maximization in soccer”. They crunched data from England and Spain’s top two professional divisions from 1993 to 2005. The hope was to quantify whether the clubs involved sought to make the most money, or win the most games and trophies.
“For each club, there is a league position that generates maximum profit, and positions higher than this can only be achieved at the expense of profits. There also exists a position, higher than the profit-maximizing position, at which profits are zero,” writes Szymanski. “While each team varied, we found that the league position of clubs was generally closer to the position implied by win maximization … We concluded that in practice win maximization is a more plausible description of the behavior of English and Spanish clubs than profit maximization.”
Translation: The game usually comes first. We Yanks have yet to prove our loyalty in that regard.
Is the action on the pitch MLS’ raison d’etre? Or is it the hook for the business play? The boardroom faction has been in charge for most of the league’s existence. Yet I suspect the soccer-first voices in the room will need to get a lot louder and more powerful for MLS and American soccer at large to reach the goals that lie ahead, beyond mere survival.
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