Ups and downs in the US. Is it time to end the closed-shop league structure?

By Andrew Warshaw and Paul Nicholson

November 22 – A report by Deloitte’s sports business consultancy into ending the closed shop league system in the United States and introducing promotion and relegation in the MLS says that there would be substantial long term gains for the sport and professional game in the country.

The report maintains that the introduction of a pyramid system, for many years the subject of fierce debate, would provide “a major opportunity” to capitalise on the nation’s growing interest in football.

Furthermore, the report finds that this is what US fans actually want to see and that it would increase their engagement with the league. More than half of US soccer fans polled, according to the report, said they wanted to see the introduction of promotion and relegation, with just 6% opposed to the move.

The problem for the report is that it was commissioned by the owner of Miami FC that plays in the rival second tier NASL league and as such has been labeled as having “serious credibility questions”, according to MLS Deputy Commissioner Mark Abbott.

The credibility issue is obvious and one that Deloitte acknowledges up front but maintains that the report was all their own work and not influenced by outsiders. The point of the report is to look at the debate and ask the questions around the benefits or otherwise of what would be a big change (and opportunity) for the professional club structure.

Deloitte’s head of sport business Dan Jones says most fans outside of the United States believe MLS should copy the majority of footballing nations by rewarding success and punishing failure rather than allowing the same teams to compete against each other every year.

“We believe the introduction of promotion and relegation into the existing league system could have numerous long-term benefits, including increased attendances, increased broadcast audiences, improved commercial revenue and a positive impact on both elite players and grassroots participants,” said Jones.

“Though the US soccer league system may not be ready for such a move immediately and its implementation may not appear urgent, the topic is worthy of greater exploration and debate.

“US soccer should properly consider the merits of introduction of promotion and relegation and a transition plan for its successful introduction in order to drive US soccer forward.”

The report, commissioned by a company owned by the Miami FC owner Riccardo Silva, falls heavily in favour of club movement between divisions.

“The current closed system has served MLS well in its early years, but as it matures it is reaching member capacity, preventing further expansion,” said Jones who adds that a closed shop system – widely frowned upon in Europe – drives US fans towards more competitive overseas leagues.

“Other challenges facing the current structure include growing fan interest in overseas leagues such as the English Premier League and a stagnation in the number of players annually registered with US Youth Soccer,” says Jones. “The number of registered players has barely risen since 2000 despite vastly increased rates of participation in high schools.”

Jones says this isn’t by any means a criticism of the MLS “which has done a great job in getting US soccer from where it was in 1994 to where it is now.”

Abbott hit back publicly in an interview with the Daily Telegraph newspaper.

“The report was paid for by an NASL owner with a vested interest in promotion,” he charged. “I think we have to look at it through that lens and recognise that there’s some serious credibility questions with respect to the report itself.

“With respect to the substance, the report ignores the really fundamental aspect of what is required to continue to grow professional soccer in the United States and that is the investment of hundreds of millions, if not billions, of dollars, in a wide range of programmes, infrastructure and initiatives, including player development, soccer-specific stadiums, marketing, the creation of high-quality broadcast and digital content to name just a few.

“And by narrowly focusing on the sole criteria of winning the championship in the second division, the NASL’s proposal does not propose or require any of this investment – and I think in fact would discourage it.

“It is simple common sense that a team that is promoted and faces the prospect of relegation the next year would not be prepared to invest the hundreds of millions of dollars required to build a stadium or the other areas needed to grow a strong fan base.

“New stadiums now cost $150 million and require strong public-private partnerships and based on decades of working with elected officials across the country we know that no local community would be willing to contribute to that partnership if that team was subject to relegation.”

The counter argument to this is to look to at what the structure of that promotion and relegation would be, and whether relegation pain can be eased through systems of parachute payments and recognition of founder member status via larger pay outs.

Jones says the risk analysis is actually quite straightforward. “If you have a division of 20 teams with two relegation slots you have a 10% chance of going down. But if there is also the chance of another 10% of value then you have a 90% chance of being bigger and better.

“People who invest in sports are by their nature people who would back themselves not to be in the bottom 10%.”

The US professional leagues of the MSL, NASL and USL have all seen club growth, though the NASL has been the most challenged and is undergoing a process of change.

Commissioner Bill Peterson insists that the league “continues to improve and become more competitive year on year”, it is nevertheless losing two clubs – Tampa Bay Rowdies and the Ottawa Fury – to the USL next season and so far has only announced the addition of San Francisco to its ranks.

But Peterson appears unfazed, saying: “We have a dedicated group of owners who want to build a stronger league and will focus on that.”

“Movement (of teams) is a product of how the game is structured. Any club owner can choose the league he wants his team to play in and file admission forms to join that league. It is not something we like to see, teams going to other leagues. But it is going to take three strong leagues (MSL, NASL and USL) to grow the game and be part of the fabric,” said Peterson.

Peterson said that you can expect more co-operation between the leagues in the future. A series of meetings in recent months, including with the US Soccer Federation, appear to have been positive in terms of planning what the professional game will look like in the US in the future.

But that co-operation is not likely to include promotion and relegation immediately though Jones’s recommendation for a transition plan for this to happen has certainly raised the level of debate.

There is something of an irony in that a report proposing an end to closed shop leagues in the US as a way to future prosperity comes at a time when Europe’s biggest and most successful clubs have threatened to form just that with a breakaway Super League.

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