Pro/rel FAQ

I often see discussions about pro/rel in soccer fizzle on the following questions, without good answers, I thought I would try to provide some good answers.

Who would invest in a team that could be relegated?

To me, that’s like asking, who would invest in a restaurant since there’s a chance it won’t work? It turns out, quite a few folks.

But, we don’t have to draw an analogy to restaurants to imagine what might happen. A lot of countries around the world already have ‘open pyramids’ with pro/rel, so we can just look to them to get an idea. They have no shortage of investors and a number of Americans have invested in clubs in clubs in those countries, as well.

So, if you wonder who would invest in teams that have a chance of being relegates, just ask folks like Stan Kroenke, Stu Holden and Ryan Reynolds why they did?

How do we protect the investments of the owners of the current MLS teams?

By making the case that they may have tons more upside than the current path.

Here’s my case against the current path:

Fans in stadiums are great, but the real $ in sports is in TV and MLS shows no sign of being able to draw much more of TV audience than figure skating or the Little League World Series.

I think there’s good reason for that. It’s mediocre soccer, by design (i.e. outwardly rigged via roster controls to even up competition across teams to make for closer games, prevent powerhouse teams and to keep the players from gaining too much power over their salary).

While MLS is fun for locals to sit in stands to get some game ambiance and drink a beer, it’s not all that interesting to watch on TV when you can just as easily watch the best players in the world in European leagues playing in games that have consequence.

MLS hopes fans will become more interested, so their league can be like the NFL, MLB and NBA and pull in 10-20x more revenue from TV than they do from the stands. But, given the previous paragraph, I think that’s a long shot. I think it works for the NFL, MLB and NBA because they do not have competition elsewhere with the top players.

Do you think NFL would be nearly as popular if there was an EFL (European Football League) that made NFL talent look like Division 2 college players?

Here’s my case for how pro/rel might be a better path:

Under pro/rel, I think there’s a shot for MLS teams to become worth 5-10x what they are currently, for 2nd division teams to become worth what top MLS squads are worth and 3rd division teams to become worth what bottom MLS teams are worth.

So, even if your team is relegated, it will be worth about as much as it is today.

How?

I’ve already established that I think the key to value is increasing TV $s and that having the best players is the way.

But, it’s not just about getting top players and spreading them out across your league. I also think you need the best teams, built around the best players, so the top players can thrive and play the best soccer. That’s hard to do when you have a central office handcuffing your roster choices.

If you don’t understand what I mean, just consider how often you scratch your head when top players play for their country teams and don’t appear walk on water like they do with their club. What you are missing is that the club team has been fine tuned with talent to help those top players spread their wings.

Doing pro/rel right isn’t just about punishing bottom teams. It’s also about giving clubs control over their rosters and letting owners who want to dig into their pockets pay for top players do so.

But, won’t that just lead to powerhouses?

Sure. And it works in Europe! For every critic of powerhouse teams, I bet there are 3 or 4 fans walking around somewhere in the world wearing a Manchester United or Barcelona jersey.

I would say that it not only works, it is KEY to unlocking those TV $s. Few people beyond the locals will ever care about whether mediocre team A or B wins the MLS cup. That’s just not an interesting enough story line.

They do care if powerhouse team A and powerhouse team B, with 20 years each of powerhouse-ness behind them, are duking it out. That increases the appeal of the story line by orders of magnitudes. Even the critics of powerhouse teams will tune in. Even the power house haters will tune in, hoping to see the powerhouse get knocked off.

But, won’t that just lead to an arms race to buy the best players money can buy and put a lot of marginal teams out of business?

Maybe. But, if they are marginal, they were probably going out of business soon anyway. And, that opens the door for other investors to come in and give it a go.

But teams would go bust if they are relegated!

Maybe, maybe not. It happens in pro/rel leagues, but I believe that the value of 2nd tier teams in an open pyramid will be much higher than 2nd tier teams in a closed-league (see above), not only in club value, but in interest they receive with ticket sales and TV viewing.

It becomes that much more interesting when the best teams can earn their way to the next level with their play, than to watch teams forever stuck in a meaningless 2nd division.

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