“[I]nvestors… purchased equity in MLS itself rather than any team. MLS did almost everything for its clubs. It assigned players to MLS clubs, protected intellectual property rights and negotiated broadcasting deals.”
However, individual teams are acting more, well, individually, especially since the Designated Player rules came into affect in 2007 (aka the “Beckham rule”).
(A Designated Player is someone a team can pay over the salary cap/budget slot. The team just has to pay the high salary out of its own pocket. This allowed the LA Galaxy to sign and pay David Beckham for $6.5 million/year in 2007 while the median salary that season was just $50,400.)
At the same time, the player acquisition system is murky in the MLS. It has detailed rules, but then throws them out when it comes to a national team star (Clint Dempsey or Jermaine Jones, for example) or an aging foreign superstar (more recently, Kaka and David Villa). It’s created a league where player salaries are artificially suppressed (like the NBA and NFL) until they aren’t. I’m not saying this is a bad strategy for the league to take, but it’s creating a breaking point for the vast majority of players who are receiving less than average salary.
One of the more interesting parts of MLS finances is that the players union has been publishing the salaries of all of its players since 2007. We can see how they’ve been distributed since Mr. Beckham graced us with his right foot and perfect cheekbones.
You can see that there isn’t much middle ground between the star players and the rank-and-file. The disparity is even more glaring when looking at how far from the mean each player is. The horizontal axis below is standard deviation.
Mr. Beckham earned 16 standard deviations more from the average salary from 2007-2009. Looking at the count of players through the lens of standard deviation…… dang. Zooming in on most of the league, within one standard deviation of the average salary…… dang. The majority are below the mean (0.0 standard deviation).
How does this affect a single team? Looking at the aforementioned LA Galaxy, the former home of Becks and Landon Donovan (both since retired, Donovan finishing up last fall), you see the designated player in effect. There’s hardly any “upper middle class.” You either top out around $250-300,000 (if you’re lucky) or you’re a millionaire.
This is an interesting point in MLS history and American soccer. The MLS has never been stronger, soccer’s popularity in America is growing, but it’s still not close to the same level as the three major sports. The MLS central office’s experiment to grow the league slowly as a single entity has worked, but its growing revenue and focus on stars is creating a lot pressure from the players who make up most of the roster. What will they do?
(MLS salary file and R code here on GitHub.)