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MLS player salary structure to be tested by league’s growth

October 5, 2018

The salary cap is a fact of life for the traditional major pro sports leagues in America. All four have either strict salary rules or a system of fines for teams that exceed a set dollar amount. And player salaries are the biggest determining factor in whether a team can add new players.

Relative newcomer Major League Soccer also has a salary cap, albeit a version with more loopholes. But around the world, soccer financial restrictions look much different, designed to prevent teams from going bankrupt rather than leveling the playing field. As MLS grows, it will have to figure out which kind of league it wants to be.

In Europe, the worlds biggest clubs have a cap that covers more than just salaries. The so-called Financial Fair Play rules give UEFA, the European governing body, the power to examine the books of any club that participates in the Champions League or Europa League. If UEFA determines that the club is spending far more money than its bringing in, it can fine them, restrict the number of players on their roster, or ban them from competitions entirely. Domestic leagues have similar rules.

The idea is to force clubs to build themselves up in a sustainable manner, rather than betting (and potentially losing) huge amounts of money on a chance to rise quickly up the ranks. In practice, though, it keeps other teams from challenging already-dominant teams. The clubs that bring in lots of money whether through playing in the Champions League, signing large sponsorship contracts or through their other financial advantages end up with far more money to both pay their current players and buy new players from other teams.

Its as if the NHL gave the defending champion Washington Capitals the first pick in the draft, and also gave them a chance to pluck players from the rest of the league.

The result of this system is exactly what youd expect: The biggest clubs come from the biggest cities, where fans and money are concentrated. The seven biggest clubs in England all hail from London, Manchester, or Liverpool three of the four biggest cities in the country. Madrid and Barcelona dwarf every other city in Spain, and the three biggest Spanish clubs are from those two cities. Go around the European leagues and there are few if any exceptions no Oakland Athletics of soccer competing despite a tiny payroll.

MLS has a much more American system. Instead of tying spending to revenue, the league simply restricts any team from spending very much. This has the opposite effect from the European rules. It punishes spendthrift teams on behalf of the cheapskates, rather than forcing the cheapskates to find ways to increase their own revenue.

The European system is more fair in terms of rewards, but unfair in terms of competitive balance. The American system is like making the leader in the Tour de France carry an anchor on his back for the next stage, but it does mean that every team is on more even footing.

As MLS grows, its going to have to pick which kind of system it wants: A more European system that expands spending, or an American system that serves as an artificial drag on teams that want to grow quickly.

Writer Jon Marthaler gives you a recap of recent events and previews the week ahead. jmarthaler@gmail.com

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