April 2011, Featured

For Love of the Game… I Mean, The Money: Why Soccer Shares the NFL's Labor and Financial Predicament

Labor Struggles and Financial Gloom Surround Soccer Too-- and soon it may affect more than folks like the Portsmouth faithful.

By Puck This article was initially going to be a Puck’s Friday Happy Hour piece, but my editor thought it warranted a different day, as it was “important given the current labor situation surrounding other sports”, and useful given that MLS is one of only two leagues remotely stable in this country as I write. Don Garber has his detractors, but early returns this season are positive: both ratings and attendance are up and in at least this writer’s view, quality is increasing as well.

The other stable American sport, ironically, given its history, is baseball, and as my Yankees are off to a hot start (Big Tex!!), I’m more than engaged and pleased we finally reached opening day. Before I dive into the meat of the piece, I would like to add a couple of thoughts on the USMNT friendlies. Last Saturday, the USMNT managed a scrappy draw against Messi and Argentina, then fell to a weaker Paraguayan side 1-0 Tuesday evening. Since I last wrote, several different TYAC writers have done an excellent job analyzing the results. While I agree to a great extent with both Neil’s five thoughts, and Raf’s tactical breakdown, this in the venue for me to throw in my two cents. First, like I have discussed at length before, Gooch’s time is up. Yes, it is disappointing to hear, but it is a cold hard truth. Secondly, while Bornstein was not completely God awful; he certainly was not good. The only way to describe his performances is like going to dinner at a new restaurant. You look at the menu and struggle to make a choice. Once you eat, you’re not completely disappointed, but you really wish you had ordered the T-bone steak instead. Bornstein’s performances constantly produce this feeling, completely underwhelming, always leaving you half-full and wishing you had something else. Eventually, it’s time to try a new restaurant. Tactically speaking, it would nice to see either JFT or Kljestan get a chance to play the spot vacated by Holden in the 4-2-3-1 formation. Finally, Chandler, Ream, and Agudelo are the real deal Holyfield. All three of these youngsters should make the squad for the Gold Cup. Now, as a soccer and sports fan in general, I understand that while the product on the field gives me something to watch as I fight off my PBR and Whiskey induced hangovers on a Saturday morning, the entire system would come to a crashing halt if a great deal of people were not making money. It is the reality of the situation. On the large scale, very few good things have ever been done in the world that didn’t involve a financial gain for somebody. No owner of a major sports team does it simply for the love of the game. Yes, many of them do have some true passion like the Rooney’s in Pittsburgh and Mark Cuban

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in Dallas, but if they told you that was their only motivating factor, they’d be lying. That said, the financial state of sports is in complete disarray. For reference, we need to take a quick pulse of the major American Sports.

Young stars like Buster Posey, labor peace and soaring attendance. Baseball is, oddly, a paragon of stability in sport.

First, Major League Baseball seems to be fully recovered from the terrible work stoppage of the mid 90’s. As I wrote in the introduction—baseball is ironically a paragon of sporting stability. As Howard Bryant wrote in this excellent piece, given baseball’s history, it is unusual that other league’s could look to MLB for a primer on how to conduct peaceful labor negotiations—but certainly they could and should. Bud Selig, like Don Garber, has his detractors, but the evidence suggests he is doing a fantastic job promoting and growing the game of baseball. Yes, there are the Bonds and Clemens perjury trials approaching, and they hark back to the steroid era and the last labor stoppage. Those things aren’t as far in the rear view as purists want to imagine. The flip side, however, is that the purists are right about the health of the game these days. Attendance is at record levels, a good thing as baseball, more than any other sport, lives at the gate. Young stars are seamlessly replacing the older ones, and there are boatloads of them: Tim Lincecum, Robbie Cano, Buster Posey, Jason Heyward, Mike Stanton among many. And believe it or not, while there are competitive equity issues top to bottom, the middle-market teams are proving you can win with Moneyball principles, pitching and defense. Yes, there are some arguments for a hard Salary cap, but with 9 different teams winning the World Series since 2000, there is evidence that things are working fine. For these and the reasons Bryant mentioned in his fine piece—this should be a great baseball season amidst labor chaos. MLS can make the same argument, and that’s a positive thing. Other sports are not as fortunate. The NHL is still trying to pry itself out of the hole it created from the most recent strike and to be frank, with a mediocre television deal, low ratings and declining gate in new markets; evidence suggests it still has not found

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the right formula. The NFL executives and players union are looking more and more like the kids in the sandbox that have not learned to share. The only difference is that they are not sharing toys, but 1 billion dollars. All signs point to the NBA having a lockout after next season ends. After Prince James left for South Beach, the owners wanted to institute some type of “franchise” tag like the NFL to keep guys in small markets like Cleveland. The problem, of course, is the players are hugely opposed to this idea, and if implemented, it would require the league to change its best marketing strategy—which is similar to Europe in the respect that it is a superstar and superclub league. The most frustrating aspect of the NFL and future NBA problems is that these jacklegs are arguing over billions of dollars when the rest of the world is slowly creeping out of a terrible recession. In each of these cases, major financial discontent between the players and team owners has caused, and will cause a great deal of anger, fear and resentment from the fans in the stands. Simply reading this rough sketch of the state of finance and American sport, one might think the financial quagmire is a uniquely American problem. That couldn’t be further from the truth. It is becoming more and more evident that Europe has a massive problem on its hands as well, and thus far it has no plan designed to regain control. While the financial problems in classic American sports have more to do with player/owner disputes, the problems that continue to fester in European Football have been caused by simple money mismanagement. To make a very long and complicated story short, a vast majority of European clubs are billions of Euros, pounds, dollars, or whatever other economic metric you choose in debt. The recent spending frenzy in European football has clubs scooping up talent regardless of the cost. For clarities sake,

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not all clubs are dealing with intense financial stress, but the well-off are certainly not in the majority. There has been a rich-poor gap in soccer that mirrors the rich-poor gap in global economies for about half a century—but the rate at which it is widening in club football, particularly on the European continent, is alarming.

Roman Abramovich was just the beginning-- but infuse cash, win has risks that demand reason and accountability.

Many clubs are paying out more in wages and transfer fees than ticket sales, merchandise, and television contracts bring in. These over spending clubs have not reached financial ruin for a couple reasons. Primarily, high-interest loan deals from sympathetic banks (usually with a vested rooting interest) have prevented insolvency in the short-term. Other clubs are a bit more fortunate even though they are not profitable, as the great personal wealth of some of their owners has been used to avoid bankruptcy. Roman Abramovich was just the beginning– and while it is great that he cares so much (alla Mark Cuban, really)– the infuse money, win formula needs reason and accountability. My favorite team, Manchester City, is an example of the former, as the Oil Sheiks bought the club and spend money mindlessly, much like a fraternity boy spends money on beer Thursday through Sunday. Over the last year, City have lost $190 million of their own cash while making some big money signings. To make matters worse, they still haven’t won a damn thing. I am convinced these guys wipe their ass with crisp hundred dollar bills. These problems have made big news in Spain as a potential La Liga strike for week 30 was stopped by the court system. Essentially, Spanish teams are so in debt, they no longer want to have one game a week aired on public access TV which is mandated by the government; instead demanding that all games are broadcast on revenue-generating channels in order to increase cash flow and liquid assets. Needless to say, this has caused serious outrage from fans. Just imagine that suddenly CBS and FOX no longer were allowed to air the NFL and you were forced to buy the NFL network to see any weekend football. The idea that this change would save some of Spain’s most debt-ridden clubs is ridiculous at best. It must be nice living in FantasyLand–maybe I will go there for a vacation some time—I hear Space Mountain is a great deal of fun. The games will go on, but many clubs are not happy. To address these problems, UEFA is attempting to add some new regulations that will ban clubs from European competition if they are spending more money than they are bringing in from soccer-related operations. For example, Manchester City will not be able to play in Europe if the Oil boys keep dumping in their own cash to keep the club afloat. The plan is to have a gradual drawdown in the amount of money individual owners can spend to bail out their clubs. Many in European football circles are worried that these new austerity measures will not be universally applied and that the end result will allow larger clubs, in some cases the worst offenders, to continue with their questionable business practices. The fact that many of the austerity measures have been proposed by owners of big clubs, like AC Milan’s Silvio Berlusconi, seem to give a bit of concrete reality to the fear that the measures will terminally be a classic and dangerous case of the fox ruling the henhouse. Essentially, European football is driving directly into a brick wall. Unless the decision is made to change the way things are done, there will be an epic collapse, and this collapse will come much sooner rather than later. Just like a credit card, you can only run up the debt for so long until the bill comes. What happens when the sympathetic banks wise up and want to be paid back, or the oil wells dry up? Money is not free. If it was, I certainly would not be working as hard as I do to complete my advanced degree. Without swift changes, we are headed for a serious football financial catastrophe. To make matters worse, there is a great deal of evidence that European football is not just valuable to clubs, but to the cities the clubs play in. When Rapid Vienna plays in Europa, for example, Vienna makes a great deal of money and local economies are stimulated. The collapse of European football could certainly cause a ripple effect that stagnates the entire European economy, particularly given its status as the most interconnected economy in the global market system. In the end, no– I am not an economist, but I can recognize a problem when I see one. To be fair, I have no idea how to fix the problem either, but I am certainly smart enough to know that if someone plans on driving off a cliff, you need to grab the wheel, or get the hell out of the car. Okay it wasn’t a Happy Hour—but let’s give free advice anyway—because I’m a good guy. And before I do that, TYAC would like to give a huge shout out to three of the most important players in USMNT history. Cobi Jones, Eddie Pope, and Ernie Stewart have all been elected to the US Soccer Hall of Fame. Each a member of three different World Cup squads, their importance to US soccer cannot be understated. Jones is currently the all time leader in appearances with 164 caps, a mark that will soon fall to the incomparable Landon Donovan. Pope was an integral piece of the 2002 squad that made a quarterfinal run and was robbed by the Germans. His yellow cards against Italy four years later (particularly the first one), remain mystifying. Finally, Stewart made over 100 appearances for the USMNT and scored one of the most memorable goals of my life during the 1994 World Cup against Columbia. By the way, those kits are clearly the worst in history. These three gentlemen were part of the generation of soccer players that made me truly love and appreciate the game. We at TYAC salute you. Your addition to the Hall of Fame is most certainly deserved.

"I think I can get it past the tree, over the creek and on here, Bones." "You better hit, it."

PUCK’s FREE ADVICE: When you hit your favorite watering hole this weekend, or this Thursday if you are like me and ready to watch A Tradition Unlike Any Other (Watch a bit, if not just to see something like this instead of reading about it here), don’t immediately order your old standby cocktail or beer. Spring is in the air, the weather is changing, and you should embrace the change as well. Try something new, or even better have a drink you had not had in a while. I just finished my first Tanqueray and Tonic in about 2 years, and I honestly can’t remember why I ever stopped drinking this wonderful libation. Sorry for Partying. Puck is the Pop Culture Guy For The Yanks Are Coming. He can be reached at puck@yanksarecoming.com and you can and should follow him on Twitter, talking Man City and baseball as summer approaches, at @PuckLovesPBR.


  • Jared

    I would say that MLB is in the position it is in spite of Bud Selig not because of him.

    The big clubs in Europe are all about this new ruling because it is based on revenue. You’re only allowed to spend a certain amount of what you bring in and clubs like Milan make far more than the other clubs in their domestic league. The rich will only get richer but because of the rules are hoping that transfer fees will decrease.

    Instead of Tanqueray and Tonic go with Bombay Sapphire and Tonic. That’s the drink for me.

    • I’ll agree to disagree with you about Selig– he’s the best commish in the biz, despite his shortcomings–but you’re right that the new ruling is likely to make matters worse, not better. Thanks for reading.

  • Hendricks and tonic for me.

    I, for one, have no problem with oil oligarchs and otherwise rich people throwing their money down the drain at players, who in turn spend spend spend, spurring the world economy to movement. It’s one of the more equitable ways to redistribute wealth.

  • Raf

    By far best story you’re ever written Puck! Absolutely fantastic writing. I know you’re not an economist, but I am curious – even if you cannot prescribe any specific solutions with quantitative examples, , what would you speculate could be done to “fix things?”

  • Jon

    Space Mountain’s in TomorrowLand. I think It’s A Small World is in FantasyLand.

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