MIAMI, Fla. (January 4, 2020) —
Part I: The biggest thing that will happen this off-season
Right now, fans of MLS clubs are getting ready for the coming season, the league’s 25th anniversary year. New teams like Inter Miami CF and Nashville SC are now less than 60 days away from their first real matches. The primary MLS transfer window opens on February 12th, and the European winter transfer window is now open and runs until January 31st in the UK, Spain, France, Italy and Germany, among other countries. There will be countless discussions about player signings and trades, and MLS will have its Superdraft along with other roster management as teams try to gear up for next season.
That said, the biggest story of this MLS off-season is one that soccer fans in the US and Canada are probably not paying attention to: the collective bargaining agreement (“CBA”) between the MLSPA (the players union) and the league.
The CBA affects every player from every team in MLS. On January 31, the league’s existing collective bargaining agreement (“CBA”) between MLS and the MLS Players Association will expire. The goal of course is to come to agreement on a new deal. In fact, both sides have been engaged in negotiations for months already. As with any negotiations between a union and management, if an agreement can’t be struck before the start of the season, the league faces the prospect of a work stoppage.
The fallout from whatever the new CBA looks like will have lasting implications for the league.
Back on December 5th, MLS commissioner Don Garber spoke to reporters following the third and final MLS Board of Governors meeting. As was the case at the SoccerEx USA 2019 Conference I attended in late November, the commissioner was questioned about the status of the negotiations.
Garber has declined to get into any specifics regarding CBA negotiations between the league and the MLS Players Association. He did, however, confirm on both occasions that the sides are currently engaged in talks and were meeting. Regarding the nature of those discussions, here’s what he had to say:
“You know, I think there’s a desire from both parties to reach an agreement. I don’t think any league or players’ union goes into a negotiation without the hope and the expectation that you’re going to reach a deal and then start the season on time. All CBA negotiations are difficult, but with us, it’s not about taking things away, it’s how do we manage collectively as a league and as a player group to be able to provide more resources in a wide variety of areas that are manageable for ownership and acceptable to the players. I’ve been through it many times before. … It’s not the most fun part of the job, but I’ve got hope and confidence that we’ll be able to reach a new deal.”
What’s The Backdrop To The Discussions?
The negotiations for a new CBA are also set against the backdrop of the exponential growth MLS has experienced since the the last CBA was executed in 2015. At that time, the league had 20 teams. MLS will begin next season with 26, with another four (Austin, Charlotte, Sacramento and Saint Louis) set to join in the following two years. MLS expansion fees are now at least $200 million. Investor/Owners are making sizable commitments to build new soccer-specific stadiums. Off the field, they are also spending large sums to build state-of-the-art training facilities. Player salaries have also risen, in part due to the implementation of targeted allocation money (“TAM”) having the effect of increasing the salary budget for each team by $4 million a year. These factors have led to the average MLS team being worth around $313 million according to Forbes, an increase of 30 % since 2017 alone.
The league now has 24 partners, and signed new deals in 2019 with Captain Morgan, Headspace and MGM Resorts International. In addition, while the next CBA is in effect, MLS will be approving a new media rights deal that is expected to be worth substantially more than what the league recrives from its existing media rights partners. This commercial growth is a factor in the CBA negotiations – the MLSPA is given full transparency into the league’s business deals. “We have made detailed proposals to the league on how to deal with that [media rights] issue,” said MLSPA executive director Bob Foose.
With the league in growth mode, a failure to agree to a new CBA could result in a work stoppage. This scenario is one which both sides wish to avoid.
Here are the main issues for the league and its players to decide.
Issues For MLSPA
The core issues for the players association heading into the 2020 season include higher wages for players, a reworking of the current free agency system that creates a more open market free agency system consistent with other North American professional sports leagues, and more charter flights for teams. The MLSPA believes that the benefits of the league’s growth and the increased investment should naturally flow in part to the players.
Take the aforementioned media rights deal for example. The existing contracts that MLS has with its national broadcast partners ESPN, Fox Sports and Univision bring MLS $90 million a year. The current deal will expire at the end of 2022, meaning a new media rights deal will be approved in the middle of any new CBA. It is expected that the next media rights deal for the 2023 season will be worth significantly more. This is a complicated topic to factor into a new CBA, but something the union is eager to do.
The issue also came up at the last negotions prior to the current CBA. Simply stated, the union seeks more free agency. In the 2015 negotiations, the players won a small amount of free agency, and as a result, under the current CBA, players who are at least 28 years old and who have played in the league at least eight years can be free agents when their contracts expire. They can also receive raises of only between 15% and 25%, depending on their salary level.
Under the current free agency rules, many players in MLS never qualify for free agency. The union wants both the age and time of service requirements to be lowered and wants the cap on salary increases removed or at least raised considerably.
Salary Budget Rules
Anyone who has studied the salary budget rules would likely agree that they are complex; one practically needs a law degree to decipher them. The MLSPA aims to have MLS’ salary budget rules simplified.
While the owners have increased player salaries during the existing CBA, which is viewed by the union as a positive, the MLSPA has always been troubled by the introduction of targeted allocation money (“TAM”) in 2015.
Indeed, it seems that TAM may be the biggest issue, and perhaps the hardest one to agree on, in the current contract negotiations. This type of allocation money is given by the league to clubs and can only be used to help cover salaries for players making between $530,000 and $1.5 million. As a result, using TAM cannot be used for the majority of MLS players, who are categorised by MLS’ salary budget rules into senior, supplemental and reserve roster ‘slots’ that have specific limits on what those players can make. According to salary data made available by the MLSPA, 37.4% of the players make annual salaries under $100,000.
The union has a completely negative view of TAM and wants the league to allow its teams greater autonomy in terms of how they build their rosters, rather than have rules dictated by league headquarters. “We should stop being a league where you design a competitive football league in a boardroom. It should be done by the people who know the game,” said Foose.
”The impact of TAM, a made-up set of restrictions done from a central office to try and dictate to all of our franchises how they build their rosters, in my estimation didn’t really add anything to this league,” Foose said. ”And it’s certainly frustrated and angered both the players association and our players.”
“In the simplest terms, TAM is silly. It’s not necessary to try and tell our front offices how to sign players; they’re perfectly capable of doing that themselves. And frankly, if they’re not, then they should suffer the consequences, and that’s the kind of accountability that we want to see happen.”Bob Foose, Executive Director, MLSPA
The union’s argument is that simplifying the rules would lead to more of a meritocracy: players’ earnings would be a reflection of how they have performed on the pitch.
The union seeks increased spending on charter flights. At present, the vast majority of teams fly commercially, which can lead to long travel days, especially when teams are flying through multiple time zones. Teams are allowed only four discretionary charter flights a year, but there is no mandate that they have to use them. Take one case as an example:
The Philadelphia Union’s journey back and forth from Vancouver was an odyssey that lasted all day Thursday and Sunday. The Union took 10 hours to get out to Vancouver through commercial flights, while they woke up at 4:45 a.m. Pacific Time on Sunday to start a journey back to Philadelphia, via Toronto, that didn’t bring the team back home until 8 p.m. Eastern Time.
Alejandro Bedoya, who is captain and a winger on the Philadelphia Union, has been one of the players who has spoken out about the lack of charter flights in the league. Bedoya recalled how his team didn’t use a single charter flight during the regular season. According to the players association, at the end of 2018, only about half of the available charter flights were used.
Professional athletes place rigorous demands on their bodies. Being stuffed into an economy seat on a long flight can hamper a player’s physical recovery. With MLS spanning the continent across two countries, travel conditions can also increase the risk of a player being more susceptible to injury. Moreover, frequent flight delays and cancellations disrupt both training and post-game recovery.
“We’re at a time where I think we need to take the training wheels off,” Bedoya said. “The league has moved on so far.”
Bedoya said the charter flight issue is one he’s going to voice his opinion on. “I’m going to be a part of it,” Bedoya said. “I’m going to voice my opinions and what I think. We’re united. We’re having meetings here and there so that’s good. For me, this is one of the crucial things we need to get to the next level.”
The players feel very strongly about this issue. It’s difficult to imagine this being a “hill to die on” issue for the MLSPA, but Atlanta United midfielder Jeff Larentowicz said, “This is one piece of the pie for us, a very important piece, a commonsense piece, but one that we’re taking very seriously.”
“It’s unfortunate that this is discussed in a CBA context, because this isn’t a CBA issue,” Bob Foose said. “It isn’t in other sports and shouldn’t be in ours. It is an infrastructure issue and is tied to player performance.”
MLSPA Executive Director Bob Foose delivered an end-of-the-season video message on November 9, 2019. He thanked fans for their support and talked about the coming off-season, highlighting the importance of the collective bargaining agreement negotiations with MLS and explaining players’ priorities. He said he hoped that a work stoppage would not happen, but left that as a possibility.
Issues For MLS
From the league’s perspective, their primary objective is a familiar one: a level of cost certainty as it pertains to player expenses. This is something the league has effectively managed through it single-entity limited liability company structure, whereby player contracts are actually entered into between the player and the league rather than with an individual club. Furthermore, in most instances teams retain the MLS rights of players even after that player has been transferred or his contract has expired.
In addition to maintaining cost certainty with respect to player expenses, MLS also wants control over where that money goes. The introduction of TAM is evidence of this, whereby teams may spend more on players only within a specific salary range. The league maintains TAM allows teams to attract new and retain current players. They feel that TAM has been successful, and MLS wants to retain that discretionary control as to where investments are made. Whether the league could have gotten to where it is without TAM is unknown, and the league doesn’t sound as if it is ready to find out.
In December 2017, Major League Soccer announced a substantial increase in TAM, touting the influx of millions of dollars into the league’s roster spending. What’s noteworthy is that the increase was unanimously approved by the MLS Board of Governors. There is genuine debate about whether a divide is growing between owners who want to increase spending and those who want to slow down. Owners now entering the league are doing so by undertaking a considerable investment – the Charlotte bid, headed by Carolina Panthers owner and billionaire David Tepper, paid a reported $325 million entry fee, by far the most of any team in league history. Sacramento paid $200 million. This is a considerable risk and in addition to the expansion fee itself come salaries and hundreds of millions to build a training facility and stadium. Miami’s planned Freedom Park and Soccer Village will be a billion dollar investment, on top of the millions being spent on its training facility and temporary stadium thirty-five miles to the north in Fort Lauderdale.
With owners committing what can be a half a billion dollars or more before their team so much as kicks a ball, there is the expectation of seeing a return on that investment, and some believe the league must increase expenditures in its on-field product in order to drive higher revenues. But other owners are more cautious – they believe there is no proof higher spending will lead to those higher revenues. Instead, these owners would prefer to pursue “strategic growth.” What the eventual CBA looks like will tell us something about which group of owners has more influence.
“There are a variety of different areas that will be the subject of discussion as to where we should be making investments, whether it’s the senior team, whether it’s player development, whether it’s on other benefits,” MLS president and deputy commissioner Marc Abbott told ESPN. “And in the CBA what we’re seeking to do is within the limits of what we’re able to spend that we ensure that we’re allocating those expenditures in the areas that are most likely to have the most impact.”
The charter flight issue comes down to money. Don Garber has previously indicated there is room for negotiation in this area. It won’t come cheap. The biggest reason why MLS doesn’t use more charter flights comes down to cost. It has been estimated that it would cost $20 million per year for the league, and roughly $1 million per team. The cost of flying an entire team on a charter flight, plus the price of fuel, can quickly add up. Each flight could cost a team upwards of $150,000 per charter.
Will an agreement be reached or will there be a work stoppage?
Historically, the union and the league have been able to avoid a work stoppage, although the last time Major League Soccer negotiated a collective bargaining agreement with its union, both sides braced for a work stoppage just 72 hours before the 2015 season was scheduled to begin. Professional mediators were also needed to help the two sides hash out an agreement. The league wouldn’t budge from its final offer, one the union insisted it would not accept. The players voted against the offer and a strike appeared imminent. It was averted only because the union surrendered.
“The league isn’t seeking to have a work stoppage, and based on the discussions we’ve been having with the union, we don’t think they are either,” said Mark Abbott. “I think both we and the union are working in good faith to reach an agreement to extend the CBA. That being said, we certainly recognize that you can’t eliminate entirely the possibility of work stoppage and we’ve been working with our teams over the course of the last year to ensure that they’re prepared and that we’re prepared in case that happened. Again, it’s not something that we’re seeking.”
”We and our players are focused on doing everything possible to reach an agreement that’ll make sense for ownership and makes sense for the players,” Garber told The Associated Press in November.
Despite the difficult CBA negotiations, the MLSPA is confident an agreement will be reached. There are 130 players now a part of the MLSPA, representing about 20% of the league.
The MLS Players Association leadership insists players are serious and ready to strike if demands aren’t met.
“We’ve been talking about and preparing for work stoppage for two and a half years now,” Foose said. “At this point, talking about the details of what that would look like and how we would proceed, and how we would all work together, the players are very serious when they say they’re ready to do what’s best for the full player pool and the future of the [players’ association] and the league.”
Resolving or at least improving the charter flights situation for players is but one piece of a larger equation, according to the MLSPA, and there will not be an agreement if other requests by the union are shoved aside.
A strike however obviously would harm the players more than owners. After all, MLS’ billionaire owners can withstand losing revenue to a much greater degree than players can cope with missing paychecks. According to the latest data available (2018) the MLSPA has total assets of $10.5 million, a figure considered low in comparison to the other major North American sports reflection of not only how relatively young the union is. Compared that figure to the National Basketball Players Association, which has total assets of more than $200 million.
If there was a work stoppage, that $10.5 million would disappear pretty quickly. Foose pointed out that union funds are not the only resource players can tap into should there be a work stoppage. He says the players have been preparing on their own as well. “We obviously don’t have the luxury that some of the other [players’ associations] have with an extra zero in [their] resources,” Foose told ESPN. “But we certainly have plenty of money to do what needs to be done on the [players’ association] side of things.”
The union has also had multiple conversations with other major sports leagues on a variety of topics to help prepare for this round of negotiations.
Foose had stated previously that the league has been fully transparent in terms of its financials at the league, team and SUM [Soccer United Marketing] level. He has no doubt that MLS is leveling with the union on this topic. He added, “We also have a common understanding with them on the cost of various proposals, so we’re clear on what the changes that we’re seeking are going to cost.”
Despite the very clear issues and differences, it is in both sides’ best interest to find workable solutions and a new CBA each side can live with. “We understand exactly where the business is, and I think we have a very good feel for where it’s going,” Foose said. “And we have no incentive to damage that.” With a 25th anniversary season approaching, there’s a lot at stake.
What’s the timeline?
The ideal time to reach agreement on a new CBA is this month.
Teams are putting their rosters together and training camps are opening soon. Sporting Directors and GMs need to know if there will be roster rules changes that will affect how they assemble their teams.
The Concacaf Champions League round of 16 begins on February 18-19, and the MLS teams competing in that tournament (Atlanta United, Los Angeles Football Club, New York City FC, Seattle Sounders, and the Montréal Impact) could potentially have their games affected.
The hard deadline for a new CBA is the start of the MLS season, which will take place on the weekend of February 29-March 1st.
“If things don’t move more quickly and [the league] takes the same approach that was taken the last time through, the odds of a stoppage skyrocket, so hopefully that won’t be the case,” says Foose. “A strategy to run out the clock is not going to be looked upon favourably by the player pool or the [players’ association].”
What happens now?
Both sides are certainly being very hush about progress. The issues and the parties’ respective positions on them have been laid out. According to reports there have been proposals exchanged.
With January here, it’s time to get serious. Before a ball is even kicked, the next few weeks could be the most important ones of 2020.