“Nobody will invest in the MLS if there’s a risk of relegation”

This is a common objection to pro/rel in US soccer.

To use this objection reveals ignorance on a few fairly obvious points.

That most of the rest of soccer world that uses pro/rel and has no trouble finding investors for clubs.

That even Americans have invested in clubs in these pro/rel leagues. Some folks who have invested even commentate for American soccer, like Stu Holden, who invested in FC Mallorca then in Spain’s second division and won promotion to its first division. Stu was very, very excited that day.

Might SOME investors be reluctant to invest with a threat of relegation? Sure. But that’s not ALL investors.

Likewise, some investors may be reluctant to invest in a closed league for lots of reasons One reason could be that you like to win, you think winning depends on having the best players possible, and yet central office restrains your roster choices to keep the league competitive (i.e. prevent a talent bidding war among owners), because it thinks that works.

Often, when these points are made, the critic moves the goalposts on the discussion to other points like “but, clubs fail when they are demoted.”

Which reveals more ignorance. Have clubs failed when demoted? Sure. Does it happen every time? Far from it.

Does it matter? It shouldn’t. Failure is common and accepted in all walks of life. Why should sports be immune to it? It matters even less if the incentives are in place to encourage more competition to quickly replace those failures.

In places with pro/rel, there is plenty of competition to fill the voids of the occasional failure, just like in other markets. When one restaurant fails, plenty others are there to fill the void.

I also understand that failure isn’t fun for the folks involved. But, I think a landscape that allows for the occasional failure when a team isn’t working, and that has a vibrant landscape of competitors, is better than a landscape with a few players that is prone to total system failure.

But MLS is far from total system failure!

That’s the topic for the next post.

Advertisement

NFL Draft: The pinnacle of rigged sports

Many of my friends don’t buy my belief that much of pro sports is “rigged for ratings”.

They only hear the ‘rigged’ part and assume that I mean that it’s as phony as pro wrestling. But, that’s not what I’m saying.

I’m saying that an out-in-the-open, stated goal of many professional sports leagues to achieve ‘competitive parity’ among their teams, because they believe that makes for good ratings. They reason that close games are more interesting to watch and leagues where ‘any team can win it in any given year’ are also good for ratings.

The NFL Draft is one out-in-the-open way the NFL helps achieve parity, as the worst teams get the best draft picks to give them a better chance of improving to garner better ratings.

Is the word ‘rigged’ a bit hyperbole? Sure. Technically, ‘rigged’ means manipulated by dishonest means and the NFL Draft is manipulation right out in the open that is even celebrated by fans and accepted as normal.

I once thought it was perfectly normal, too. But, when I learned about how promotion/relegation systems work and are commonplace in the rest of the world, I saw the draft in a different light.

Basically this light: Why should billionaires’ teams get rewarded with high draft picks to prop up their ratings when they’ve done a poor job?

The real answer: they don’t want to compete with each other. The nice trick is that they’ve convinced the fans that it’s for their own good.

‘Sports doesn’t build character. It reveals it.’ -Mike Munger

I picked that quote up from this Econtalk podcast with Angela Duckworth on Character.

Host, Russ Roberts recounted it from a time he and Mike were watching Russ’s kid play a stressful baseball game and Russ said ‘at least sports builds character,’ and that was Mike’s response.

Russ thinks it does both. Maybe. I think it may reveal it much more than build it.

Promotion/Relegation: “It should just be about the soccer. I don’t know why it’s about the business.”

Host Segev Robinoviz gives one of the best and simplest descriptions of promotion/relegation I’ve heard in this Coaching Soccer Weekly podcast from about the 19 minute mark to 27 minutes.

During this segment, he discusses his thoughts on the how the Canadian Soccer Federation licenses. He says that clubs cannot play at the highest level in Ontario unless it has a National Club License.

To get to it, I have to give some of what he was discussing. Here’s my slighted edited transcription with emphasis added:

“So, you are not allowed to play with the best teams at the best league. It doesn’t matter how good your team is. …that’s why I’m not optimistic about the continuous development of Ontario soccer [which is the stated goal of the licensing].

To talk about the the National Youth Club licensing, one of the characteristics is that you need to have a facility strategy, access to advanced facilities, access to physical space as a headquarters for operations. There’s so much stuff that clubs and academies like mine that are so small just have no chance of achieving.

Meaning our players, no matter how good they are, unless they try out for these teams, cannot play at the highest level.

What upsets me the most about this, there’s a couple of things. The first thing is that Ontario Soccer talks a lot about inclusivity and how everyone should play and yet there’s a gap now that they are creating between clubs and academies to get players to play at a high level. Now they can’t do it, no matter how much a player wants to. Even if they’re good enough they may not be able to afford playing at the highest level because it’s going to cost you more if you have to rent a facility, have physios on your staff. There’s so much financial structure that’s passed down to the players because it is a pay-to-play model.

The best players that historically come from not necessarily the richest part of town, this is what we can see throughout history and all of the world, the best players didn’t start out at a fancy academy. Maybe they got to the academy by the time they were 15/16, but very rarely do they come in at U13.

The solution to this is super easy. Promotion/relegation and that’s it. It should just be about the soccer. I don’t know why it’s about the business. The business doesn’t matter.

The way that most clubs operate here is that teams are pretty much separate from each other. There aren’t a lot of clubs here where the U10’s know the U11’s.

So, to get away from the soccer part and really just talk about how you as a business must operate this way to have your players play at this level, it doesn’t make sense.

How is it at U9, U10, U11, U12 we’re not putting the emphasis on how good is your team? If your team is really good, let’s get them all together and play. If you’re at U15 and you have a fantastic team, because we’ve had teams here in Ontario who have won the Ontario Cup that were not OPDL [highest leagues] and that’s the proof. The best team for the age group didn’t play at the highest level [assuming the league and Ontario Cup are two separate competitions].

It just doesn’t make sense. If we had a promotion/relegation system, which we do at the district level and it works great, this is just a huge problem and this is what is going to continue to not allow our players to develop.”

-Segev

Yes. That’s how it is in the U.S., also. Certain elements of the business has been dictated by the Federation, rather than just letting the soccer on the field play out.

It’s a tough concept for bureaucrats to get their arms around. They have lots of reasons to justify their meddling, like ‘stability’ or ‘to make sure the athletes get the best experience’ and have no concept that their meddling works against the thing they want to achieve, because it limits, rather than encourages, competition.

Or, put another way, competition is what drives improvement and development, not advanced facilities or physios on staff.

It’s worth a listen, as is the segment on tactics on playing out of back. It takes more than just technical skill.

Why own a sports team?

Owning a major sports team is like having nearly self-funding, highly effective marketing machine.

The direct economics of the business are terrible. Players hold the cards and get most of the operating profit from the sport. What’s left on the bottom line is relatively paltry compared to the owner’s other holdings.

But, the indirect benefits of owning a team are much more valuable. It can raise an owner’s profile orders of magnitude more than any marketing spend can buy. The owner’s box is a great place to entertain business partners and ink deals.

It also give owners amazing reach within their communities as many of the well connected vie for luxury suites and season tickets for very much the same reason. These folks aren’t looking to resell these tickets for a profit. They are much more valuable of a currency to give favors, repay favors and host folks.

It’s tough discussing sports economics with folks that don’t understand this because they assume that the bottom line profit is what the owner is in it for.

That leads them to such conclusions as:

Therefore, taxpayers must fund stadiums to make the bottom line more attractive for owners.

Or, the salary caps are to help control costs (player pay) to make it more attractive for owners.

Owners don’t mind us believing that. It gives them negotiation power, which is something successful business people aren’t in the habit of giving up. Why show your cards?

It gives them negotiating power over cities, who think hosting a team is good for their economies, so owners can then pit cities against each other to get them to squeeze their taxpayers the harder.

It also gives them negotiating power over players, or really, over their fellow owners to keep them from bidding up player wages to put together the best teams and running the risk that their self-funding marketing machine won’t be self-funding anymore (i.e. they might have to dig into their own pockets to pay players).