Maintaining Parity In MLS: Don Garber and the Wisdom of Branch Rickey
Any rule or regulation that removes or tends to remove the power of money to make the difference in playing strength is a good rule.
So spoke Branch Rickey, Baseball’s Ferocious Gentleman and a leading executive/owner in Major League Baseball at four clubs from the 1910s to the 1950s. He spoke the words above in May 1960 at a hearing in Congress as he looked to lead a loosening on Major League Baseball’s monopoly on talent, with the aim of launching a new entity, the Continental League. Rickey was concerned about the future of baseball, with the gap between rich and poor growing year-on-year: Trouble ahead, Trouble ahead, he warned. Rickey’s solution was to provide the poorer teams with more revenue, based on the premise that it takes two to tango: rich clubs needed to play poor clubs, and those clubs going out of existence or perennially feeding at the bottom of the tank did no-one any good in the long-run. As Rickey put it:
It has been reported that the American League club in New York City in 1959 realized a gross income of one million four hundred thousand dollars from radio and television. The Washington club in the same league took in approximately $125,000, yet the Washington club plays eleven games at Yankee Stadium. How can Washington ever expect to compete in the competitive market for player contracts where money is king?
Rickey’s solution was simple: the Continental League would pool two thirds of the television and radio revenue from every club and distribute it evenly amongst its clubs. Rickey aimed to set it up within the existing structure of Major League Baseball, at a time when each league had far more autonomy than today.
The Continental League never happened. Rickey’s ideas actually ended up having a huge influence on American sports, but not in baseball: his fundamental concern for the need for parity was adopted by the far-sighted leadership of first the American Football League under Lamar Hunt’s guidance, and then by the National Football League. In the coming decades, after the AFL had merged with it, the NFL eclipsed Major League Baseball as America’s game, whilst the latter continued to squabble over how to manage the gap between rich and poor.
The NFL was brought to this supremacy by Commissioner Pete Rozelle, who shortly after Branch Rickey’s congressional comments, led the league to a television deal that ensured a certain level of parity in income: at the NFL’s annual owners’ meetings in 1961, Rozelle convinced the final holdout on his plan, the New York Giants owner Wellington Mara, to let the NFL sell the league’s television rights collectively and share the revenue. According to Michael MacCambridge’s outstanding history of the NFL America’s Game, Mara conceded that “We should all share, I guess. Or we’re going to lose some of the smaller teams down the line, and we’ve all stuck together.”
Rozelle later admired this acceptance by the bigger clubs’ owners of the need for a collective vision: “The big-city people — Halas, Reeves, the Maras — went along. If Green Bay lost its television money, they wouldn’t have a balanced league. It was an altruistic decision on their part.”
It was altruistic, but also pragmatic. In 1962, Rozelle negotiated the NFL’s first national television contract with CBS, $4,650,000 for two seasons. Rozelle and the NFL were accused of socialism: but this was smart business, and a smart way of viewing sport. “The whole thing was equalizing the competition on the field,” Rozelle said. “The sharing of income gave everyone the tools, the money, to compete equally. Now, some don’t. But management and coaching and so forth being the big difference — and players — they had the opportunity, at least, to compete equally.”
As MacCambridge puts it in America’s Game, this was a vision that would transform the future of American sports:
Much bluster would come later about owners as selfless or devoted to the good of the whole. But in this single case, the decision to share revenue equally — echoing the one that the AFL made at the behest of Hunt, and the one that the world of baseball ignored despite the entreaties of Veeck and Rickey — would become a model for American sports that would allow the game to rise from the Darwinian business model in which each club struggled for the last dollar, toward a system that made the primary competition the one on the field of play.
At heart, the NFL’s decision to approve a joint TV contract, whatever the intent, served to place a higher priority on an equality of opportunity for all competitors than on maximizing the revenue of any individual franchise.
Forty years later, soccer had learned this lesson from the NFL: the NASL collapsed amidst wild spending, the Cosmos’ fame not enough to keep the league alive, and Major League Soccer, guided by Lamar Hunt (with his experience in the AFL/NFL and NASL) had adopted the ultimate collective model by operating as a single-entity. All investors would be directly impacted by the financial success or failure of all other teams.
Still, in 1999, Major League Soccer was struggling. Attendance had declined for four straight years following the league’s 1996 inaugural season. Commissioner Doug Logan resigned before the playoffs. MLS’ key ownership groups, the Krafts and the Hunts, turned to a man who knew little about soccer to save the league, plucking from the NFL a 42 year-old executive called Don Garber. In the New York Times, Alan Rothenburg said upon his appointment that “I believe he has the potential to be the second coming of Pete Rozelle.”
Eleven years on, and Major League Soccer is convinced Garber is fulfilling that role, yesterday announcing his contract had been renewed for four more years at the princely sum of $3 million a year. Franchise values have soared, attendance is rising, television deals are improving, and different teams keep winning MLS Cup each year while a tight salary cap keeps a lid on spending.
Garber is a believer in Roselle’s focus on parity, and — in the lingo of his business — marketing the product of the league as a whole. Last week, in a Q&A with the Houston Chronicle, he reaffirmed this commitment:
Q: What kind of commissioner would you like your legacy to be? Would MLS commissioners like to be like former NFL Commissioner Pete Rozelle, who created a structure where everybody shares equally and there is more parity or like Major League Baseball with little parity.
A: I was fortunate enough in my early career in the NFL to work for Pete Rozelle and then to continue working for over a decade for Paul Tagliabue. And I believe the NFL is the most popular league in the world for a reason. And that’s that every fan knows at the beginning of the season that their team has a chance to go to the Super Bowl. And I believe that belief is an important quality for any league to be successful. Therefore I certainly subscribe more to the NFL’s approach to parity than I do perhaps to the structure of the English Premier League, where for the most part only a handful of clubs really have a chance of winning the league each year.
The question is, can MLS keep to that vision while revenues rise and the richer clubs itch to sign the world’s best players?
This Sunday at Toyota Park, we will see the latest star player to join MLS, Rafa Marquez. And we may well see, for the first time, five Designated Players (stars paid beyond the constraints of the salary cap) on the pitch at the same time: Nery Castillo and Freddie Llunjberg for the Fire, and Marquez, Thierry Henry and Juan Pablo Angel for the Red Bulls. As Steve Davis puts it: “the arms race is on. . .This could easily create a rich vs. not-so-rich divide – and I’m not sure that’s a great thing for the sport.”
Balancing MLS’ need for global stars to improve the quality of play and the league’s marketing efforts whilst maintaining the Rozelle mantra that every team’s fans must believe it has a chance to go to MLS Cup at the start of each season is Don Garber’s great challenge over the next four years. The introduction of the Designated Player rule, and its significant loosening this season (allowing the Red Bulls to acquire three multi-million dollar players, something only a handful of other teams could even conceive of doing), is not easy to square with Rickey’s maxim that guided Rozelle:
Any rule or regulation that removes or tends to remove the power of money to make the difference in playing strength is a good rule.
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There is a $250,000 “luxury tax” imposed on any team using the 3rd designated player slot, so that does at least something to mitigate the perceived imbalance, though admittedly not much.
I am concerned that some MLS fans seem more focused on maintaining parity than with raising the quality of play across the league. I’m happy to see my club – the Red Bulls – pushing the envelope a bit and hopefully forcing other ownership groups to respond. As much as I’d like it to be so you’re not going to fill up a 25,000 seat stadium in New York based on the star power of Seth Stammler and Macoumba Kandji.
Luckily for soccer (and hockey), unlike baseball, football, and basketball, one player can only do so much. Baseball and pro basketball 1v1 is what wins games. So getting a great player would drastically change the face of a team. Football is more dependent on the team play, but a great non-line player can change a team.
I think with the salary restrictions still in place and the league’s revenue-sharing policies it’s not that big a deal and it won’t undermine parity. Frankly, people still view the DP slot as the “Beckham” slot – meaning each signing will be a $10 million dollar-per-year player with all sorts of bluster and fanfare. But we see several other teams using it just to attract a higher caliber of talent without breaking the bank. Seattle signed Alvaro Fernandez and moved Fredy Montero to DP status. Fernandez probably doesn’t make $8 million or something, he probably makes a few mil a year or less. And with Montero you know he’s not making huge money, it was a move to free up cap space. Landon Donovan is a DP but he still only makes a couple million dollars. I can’t imagine Nery Castillo was able to negotiate any higher than $4million a year AT BEST. And Houston had the failed experiment with Landin, where most of that DP money had to do with his transfer fee.
I think in the next few seasons we’ll start to see a sort of arms race, but we’ll also, with the opening of another (possibly 2 more) DP slots in the newest CBA, see a number of owners and GMs taking a slightly different approach to that contract. It’s no longer “home run or failure.” You can sign a mid-level international to a contract of $600k – $1 million a year that won’t break the bank and only counts $335k toward the cap, and improves the product on the field in a much less dramatic fashion than a signing like Henry or Beckham does or was expected to do. It allows for more creative team-building.
Great piece.
It’s worth noting that the NFL’s decision to have parity wasn’t just a magnanimous gesture. It was a brilliant business decision.
Look at Forbes’ list of most valuable sports franchises. Here. Sadly, there’s no list, just a stupid slideshow.
http://www.forbes.com/2010/07/20/most-valuable-athletes-and-teams-business-sports-sportsmoney-fifty-fifty-teams_slide_6.htm l
Here’s what stands out. 1. Man U 2. Dallas Cowboys. 3. New York Yankees 4. Washington Redskins 5. NE Patriots…and then you go on down the list and you’ll see every (or almost every) NFL team before you get to the #2 baseball team, the Red Sox and then on a bit before the Mets and then on and on. Most MLB teams aren’t close to the top 50, apparently.
This means that the Cincinnati Bengals and Pittsburgh Steelers – small markets – for example are worth more than the big market New York Mets, Dodgers or the Angels, etc, etc. I recall a few years back the Red Sox were sold the same week that the Atlanta Falcons were sold and the price for just the Falcons was just a bit less than what John Henry paid for the Red Sox, NESN and, as I recall, Fenway Park. We’re talking about the Atlanta Falcons, which have no glorious history whatsoever save one Super Bowl appearance where they got smoked and play in a notoriously bad sports town in a boring dome.
Now part of that might just be that football is just a more popular sport for other reasons, but its rapid rise to that position over a relatively short time suggests there can be no doubt that a large part of it is that the NFL has created a league where every team has some interesting subplots and every fan every team has reason to hope that their team could win the Super Bowl within the next five years. Not every team is going to be competitive every year and there are some ownership groups that understand how to build a winner (the Rooneys, the Mars) and some that simply do not (Dan Snyder), but in the long run, anything is possible.
Capitalists like stability and certainty. They’re not interested in investing in a club for whom everything is going to have to break just right in order for them to succeed. MLS is well advised to follow the NFL model and eschew the MLB idea if it wants to continue to attract investment.
The DPs are ok, but really I’d much rather see clubs spread that money around. One super talent on a team of schlubs is not going to produce as attractive football as a team of eleven reasonably decent, but not spectacular, players. But then, I’m the type of fan that actually enjoys the game itself and isn’t going to be sucked in by star power. MLS obviously thinks that it will fill more seats by appealing to the mythical “casual fan.”
One thing often overlooked in these discussions is the fairly tight salary cap in MLS. Yes, the Red Bulls will have three designated players (and their first home-game sellout ever against the L.A. Galaxy on August 14), but that means they have a lot less money to fill in their roster. If any significant injuries take place, there might not be a lot of depth there.
This is what happened to the Galaxy in Beckham’s first year. When Becks and a couple of other starters got hurt, the team fell apart. When a $million+ player gets hurt, he is replaced by someone making about $25,000. The quality of play, which is the real long term issue for the league, suffers.
Why did the Galaxy lose to Puerto Rico? Why does Mexico win CONCACAF almost all of the time? Parity. In order for MLS teams to win tournaments like that while still having parity, it would mean that the average team in MLS would have to be better than the best teams in Mexico. That’s tough.
That being said, I think the league and the union took big steps to improve the situation this past off-season. The quality of play is improving. Some of the smaller teams will bring in players from Latin America and Europe that have quality but little name recognition. Teams like the Red Bulls will bring in big name players that will sell tickets. As long as the league stays afloat, everything will be OK.
Mr. Rickey!
Serious devil’s advocate here.
Interesting thoughts about the NFL. However, an objective look at the league shows that what is really being sold is the PERCEPTION that every team has a shot within five years. Looking at who actually plays in the big games — Colts, Patriots, Steelers, Cowboys, et al — there’s actually surprisingly little movement. And deep down, the league really wants it that way. You can’t build tradition on a different team winning every year and the NFL knows it.
The problem with the NFL style is that because it’s so big, television deals are so huge, and that wealth is spread, that there’s really little actual incentive to improve the product since the franchise is a money pump regardless of wins and losses. If the Atlanta Falcons really are worth as much as the Boston Red Sox, it just goes to prove my point.
And don’t even get started about the NBA, with another huge TV deal and the same teams playing for the championship every year. Really, they aren’t that much different than Major League Baseball.
Realistically, only a very few teams in the NFL have a shot in any given season. At least the Premiership is honest about it.
Best soccer post I’ve seen in a long while.
Parity lovers are fools. Should poorly managed teams, or terrible players, or teams in markets that don’t give a darn about the club really have an equal shot of winning? Year in and year out? Why? Come on. MLS takes draconian measures NOT to ensure parity but to protect the bottom line. If MLS really wanted to be like the NFL it would abolish single-entity and make the clubs’ front offices compete with each other for players, merchandising deals, sponsors, licensing, ticket prices, and so on. NFL clubs do (not always by choice, as the recent Supreme Court loss proves, but they do). That explains why some franchizes have built dynasties and have huge following, something MLS can not sythetically replicate.
Fans are irrational. Parity measures cater to irrationality. Fans want their weak team that draws 8k fans, fields a bunch of well-dressed amatures, is run by an inexperienced manager and poor businessmen to have a chance every year. You would laugh at restraunt that expected a five star rating while serving garbage, why are your sports teams diferent?
This isn’t about parity its about money. Period.
If the argument was only about parity you have it sufficiently with the MLS Cup – half the teams get in and the suckiest of them has a decent shot of winning it all. RSL won by going on a “hot streak” that consisted of one win, one loss and two ties. Parity. Want even more? Just let more teams into the playoff.
Look, Manchester United can sell shirts $100 in St. Lucia. They are excellent because they compete in the most competitive league, not on the field but in the front offices. MLS can have excellent teams, maintain sufficient parity with a simple playoff, and not break the bank, but it must start by having front offices compete with each other.