Anti-Competitive Soccer in the U.S.

I saw a debate comparing soccer in the US and Europe to socialism and capitalism. It went something like this:

“Soccer in the U.S. is socialist, in Europe it’s more capitalist and works better!”

“No! Soccer in the U.S. is, by textbook definition, not socialist. It’s capitalist and is like all of capitalism — the wealthy control it.”

I find analogies to economic systems hurt a debate because it devolves into what people think of those systems, rather than the problems with US Soccer.

U.S. Soccer, in my opinion, has one overarching problem: it is deliberately anti-competitive to protect MLS owners.

As Terry Moe pointed out on an EconTalk podcast last year, “Vested interests are universal…those vested interests have a stake in protecting their institutions from change…and have absolutely nothing to do with whether the institutions are performing well.”

I believe the anti-competitive measures in the U.S. started with good intentions. US Soccer wanted to bring some stability to a soccer landscape pockmarked with league failures. They thought it would be good to have a top league that wouldn’t go bankrupt and disappear overnight. That would give US players a stable league to play in to develop and help grow interest in the game.

So, back in the 90s, they turned to other sports leagues in the U.S., and their owners, to help them develop such a model, which unsurprisingly, they based on the other successful anti-competitive pro sports leagues in the U.S.

But, since then, the good intentions have morphed into ill-intentions that actively protects MLS owners and US Soccer power brokers from competition that could be great for the game in the U.S., and that helps drive the game in other countries.

One of the anti-competitive measures is the Professional League Standards that sets a high barrier to entry to leagues that might compete with MLS and essentially gives MLS leadership the power to veto them. Imagine giving McDonald’s official veto power over anybody that wants to start a restaurant in your town. That’s essentially what we have in U.S. Soccer.

To imagine how high this barrier to entry is, consider, that I don’t believe the MLS met those standards for the first 10-15 years of its existence.

Not surprisingly, the US Soccer/MLS powers-that-be uses that power to keep out upstarts it doesn’t like (i.e. those with smaller pockets or those not aligned to the philosophy of protecting owners from high player salaries or watering down the competition to ‘keep it interesting fro the casual fan’) and uses it to direct big pocket investors to kiss their rings to be granted entry to the club.

Another recent development locks out non-MLS competition from the international market of transfer fees, training compensation and solidarity payments for players.

MLS leaders didn’t even understand these revenue streams just 3 years ago. I believe MLS owners with stakes in foreign clubs educated MLS leadership on these revenue streams. As soon as they understood it, they immediately started acting to monopolize these.

One way they did this in 2020 was limiting the top youth league participation to primarily the youth clubs of MLS teams, and a few other politically connected clubs. The effect is that top youth talent will need to get on one of these teams should they want to participate in the top league, which then locks that talent up for the MLS owners, either for their own teams or for the revenue streams that might come from a foreign transfer.

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