CBA Negotiations / MLS

Is free agency necessary to avoid MLS work stoppage?

All the talk about a Major League Soccer strike or lockout may come down to a single concept: Free agency.

Larentowicz, trapped in contract limbo

Right now, MLS players can’t sign with another MLS team after their contracts expire unless their team lets them. That’s why a guy like West Chester’s Jeff Larentowicz needed a trade to leave New England, despite having played out his contract. No major American sports league or foreign soccer league restricts their players like this.

That’s why there could be a lockout or strike when the current MLS collecting bargaining agreement expires on Jan. 31,  delaying or even ending Philadelphia Union’s inaugural season before it starts.

Players say the league flouts FIFA regulations on player contracts. The league says FIFA is OK with them. FIFA avoided the dispute, likely because it’s largely irrelevant in this case. Why?

European leagues are not the model for MLS. The NFL is. With stable, profitable franchises and competitive parity, the NFL has no Portsmouth or Leeds collapsing into financial oblivion. Even small market teams like Jacksonville and Buffalo compete. To succeed long-term, the MLS must become like the NFL, with its revenue sharing, player acquisition system, stadium controls and competitive parity.

MLS has followed nearly every best practice of American sports leagues, but it holds onto an anachronistic sports management concept by not allowing free agency. This is basically the same as baseball’s old reserve clause, which was struck down by a court arbitrator in 1975. MLS may have already won in court, but American sports history shows that means little. Baseball and football players eventually won free agency, but they needed labor battles to get there.

MLS players have one good argument: Free agency. Their other points don’t fly in American sports. Here’s why and how it breaks down.

The international players union says MLS violates FIFA regulations on several points. (Also check out Soccer America’s breakdown on this.)

  • “Player contracts are routinely terminated by the league during their term, as almost 80% of players in MLS do not have guaranteed contracts;”

MLS may violate sections 13 and 16 of FIFA’s transfer regulations forbidding unilateral and mid-season termination of contracts, but Article 1 offers some leeway. Again, FIFA isn’t the model for success. NFL  teams routinely cut players and end contracts mid-season, and it bolsters club stability by freeing teams from contracts with over-the-hill players. (Players frontload their contracts to account for it.) The question is what your severance payment is.

  • “MLS operates as a cartel in that every player’s contract must be entered into with the league instead of his club;”

Irrelevant right now if you allow free agency.

  • “The contract of virtually every player in the league contains multiple unilateral one-year options that may only be exercised by the league;”

Option years are common in American sports contracts. A player can choose not to sign the contract or hold out until he gets a contract he likes (though that’s never a good option).

  • “Virtually any player in the league can be transferred to another club within the league without his consent even if such transfer is international, such as a transfer from an MLS club in the United States to or from an MLS club in Canada;”

Trades are normal in American sports leagues. It’s not changing.

  • “There is no freedom of movement for any MLS player to any other MLS clubs when his contract expires – in fact, even if a player’s contract is unilaterally terminated by a club during its term, that club continues to hold such player’s rights and he is prohibited from signing with another club in the league.”

This is the kicker, where MLS players have an argument that we’ve heard before in American sports. The NFL and MLB once prevented free agency too. They initially succeeded in the courtroom, only to fail in the long run.

MLS players must hope for the same. They filed suit in 1997 after the league’s first season, but they lost their case, Fraser v. Major League Soccer. They had three major claims:

  • Count 1 –  MLS and its operator/investors violated Sherman Act by agreeing not to compete for player services.

The court ruled in 2000 that MLS is a single-entity, so there can’t be collusion.

  • Count 2 – The combined assets of MLS operator/investors substantially lessened competition and created monopoly in violation of the Clayton Act.

The court ruled that you can’t reduce competition in an existing market if there was no previous existing market (i.e. no preexisting Division 1 soccer).

  • Count 3 – MLS (possibly conspiring with U.S. Soccer Federation) monopolized the market for Division 1 soccer players in the U.S. by preventing sanctioning of another Division 1 league.

The court ruled that players failed to prove the U.S. is the relevant geographic market or that the relevant product market is limited to Division 1 soccer players. Considering how relevant they seem, maybe a different legal strategy wins this argument in a subsequent case. This appears to have shot down arguments about restraint of trade against players.

____________

American sports leagues’ greatest strength is their competitive parity. You never know before a season who will win the championship. There hasn’t been a multi-decade dynasty in 30 years (whereas most European soccer leagues see the same teams dominate every year).  That parity exists largely because of revenue sharing, salary caps (NFL version), amateur drafts and waivers systems that give the most prized players to the worst teams. (Lack of promotion and relegation helps too.)

MLS has taken those concepts to the next logical step, controlling them more firmly thanks to its single-entity ownership, which comes with “operators/investors” for each club.

The league runs into trouble by controlling that competitive environment too much. The model works great on paper but doesn’t account for people wanting to choose their hometowns. Players are basically told that, if you want to make a living as a first division soccer player in the U.S., then you’ll go where we tell you. If you don’t like it, you can leave,  because we’re the only game in town. To get to a team he wants, a player’s suitor must set up a trade, as was done in the Larentowicz and Troy Perkins trades, and even then there’s no guarantee he’ll get the club he wants.

Players in every American sports league won free agency by striking or winning lawsuits, but they didn’t play in young leagues in danger of collapse, like MLS. If MLS players strike, soccer fans have other TV options like the EPL, La Liga, Serie A, Bundesliga, and Mexican league. Players could go abroad.

Is an MLS collapse good for American soccer? Probably not. MLS has probably the most realistic model for pioneering sustainable professional soccer in the U.S. That doesn’t mean it’s perfect.

Should MLS take the “training wheels” off, as Alexi Lalas put it, and free clubs and players from the the single-entity system’s constrictions with free agency and eliminating the salary cap, some teams would thrive, but most would probably fail.  American soccer might prove no different from England, Spain, Italy and Greece, with big market teams in New York, Los Angeles and Toronto dominating and a dozen teams struggling  for profitability. That might fly in Europe, but the U.S. has four other major sports leagues with which to compete.

MLS could develop a free agency model that maintains competitive balance without blowing up its whole management system. The NFL offers compensatory draft picks for free agents lost. MLS could do something similar with its amateur draft, allocations or lottery acquisitions for returning national team players.

It seems better than a strike or lockout, doesn’t it?

9 Comments

  1. I think the reason that players think there should be so many player rights due to FIFA regulations is because they are actually basing their ideas on European Union law without realizing it. They think that FIFA is protecting their rights, whereas the European rules on free trade and labor protections most likely makes it so that a player can’t be traded unless he agrees to be traded while under contract. FIFA rules have to be looser because they deal with leagues all over the World where local laws may be very minimal in scope.

    MLS would still do fine if they allowed free agency but maintained a salary cap. Of course I could see certain teams not attracting many decent players and having to pay more for mediocre players. It would be a shame, but it would also allow the market to determine which venues were best from the players point of view rather than just owners and MLS.

    I would like to see a profit sharing system for the players, so that they have a greater stake in the success of the league and so that they get compensation based on their contributions to growing the fan base of the league.

  2. Ed Farnsworth says:

    Great round up of the issues and, to the extent that big name players have been the leading mouthpieces for the player’s positions, free agency does seem to be something of a solution. As someone who looks to Europe for my sense of how soccer is supposed to be run, it can be easy to forget the very real distinctions of soccer in America. And, it’s important to note that some in Europe have been looking at the MLS model as an answer to some of the problems they have there. I am always going to lean toward the players in most issues (average pay is an embarrassment) but I think Lalas is naive when he says something like “it’s time to take the training wheels off.” (Perhaps such a naive outlook explains the fact that he’s no longer involved in management in the MLS?) The league is still expanding, attendance levels are schizophrenic across the league, TV viewership is anemic, press coverage outside of specialty outlets inconsistent, and so on. “Is an MLS collapse good for American soccer?” Emphatically not. And neither is a lockout. Perhaps the Players Union has been premature in making the stand they have now?

  3. Ed Farnsworth says:

    You’re right Andrew about European labor laws making the difference here, specifically the Bosman ruling of 1995. Quoting from Wikipedia, “The case was an important decision on the free movement of labour and had a profound effect on the transfers of football players within the EU. The case banned restrictions of foreign EU members within the national leagues and allowed professional football players in the European Union (EU) to move freely to another club at the end of their term of contract with their present team.”

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

  4. Yeah, the Bosman ruling is essentially what created Europe’s version of free agency, but it basically has no effect on MLS. Pretty much every major sports league there’s ever been has tried to prevent free agency.

    All that said, I wouldn’t put money on a work stoppage. I think they’ll find a way to avoid it. Jan. 31 is when the CBA expires, but their real deadline is opening day.

  5. I’m not sure you are correct about Fraser and single entity. My recollection is that the court decided the case on other grounds and never ruled on single entity.

  6. Chris, check the case out at http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=1st&navby=docket&no=011296 — particularly this section:

    “On April 19, 2000, the district court granted MLS summary judgment on both counts, holding that MLS and its operator/investors comprised a single entity and as such, could not conspire in violation of section 1. Fraser v. Major League Soccer, LLC, 97 F. Supp. 2d 130, 135-39 (D. Mass. 2000).”

    That’s what you’re referring to, no?

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