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EXCLUSIVE: Stefan Szymanski of Soccernomics talks dollars, data, & why MLS isn't "major"

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We called in one of the big guns to help us sort through the MLS collective bargaining mess and the future of soccer in America. Here's part one of our exclusive interview.

Stefan Szymanski wrote the book on the business of soccer. A few times, actually.

The English-born economist is the Stephen J. Galetti Collegiate Professor of Sport Management at the University of Michigan, and an expert on how money really works in the Beautiful Game. His most recent book is Soccernomics, co-written with journalist Simon Kuper. Currently in a third edition, it has rightly drawn comparisons to Michael Lewis's Moneyball in sports analytics circles.

He's mapped out just how the world's best clubs and richest leagues achieve and maintain dominance. Based on his sample, he discovered that wage spending alone accounts for the vast majority of variance in where teams finish within Europe's top leagues.

With that in mind, I reached out to the professor in hopes that he could illuminate the morass of ideology that is the current debate on MLS's collective bargaining agreement, which has pitted a players' association seeking to increase wages against a league and an ownership dead-set on preventing the relative freedom of free agency.

I learned very quickly that, if the ultimate goal is to grow the league and its level of competition, MLS faces far greater issues than anything laid out in the current CBA debate. We'll get right to our Skype chat from last Wednesday, February 18th, in just a moment. BUT FIRST, the noted mathematician Tom Lehrer will get us into the proper state of mind:

Here we go, edited only for length:

Hudson River Blue: What is your level of familiarity with the economics of Major League Soccer?

Stefan Szymanski: I understand the single-entity model. I know how much they spend and where most of their revenue comes from. I don't know the exact figures for the accounting data because, of course, you can't see that anyway. I'm also deeply skeptical about the MLS model.

HRB: How so?

SS: In a nutshell, I think it's "Minor League Soccer," and that's fine. I don't have a problem with it as Minor League Soccer, but it will never be "Major" League Soccer as I understand the term.

HRB: What would an "actual" major league look like in terms of being competitive worldwide? That appears to be the overall goal of both the players and the owners despite the current labor dispute.

SS: That's the fundamental problem. It's really incredibly simple: if you're going to have "Major League Soccer," they would have to be spending, for each team, upwards of $50-100 million on player salaries-- ten to twenty times what they're spending now. And there's no bridging that gap, in my view. There is nothing else that you could conceivably do that would raise it to a level that made it globally competitive and ultimately attractive to the majority of Americans.

I think it can be a niche, as it is now. It's a very successful "minor league." To me, the model is Minor League Baseball until the arrival of the broadcast era. They didn't pretend to challenge the Majors. They served local markets, and would have gone on being successful if they hadn't been taken over by the Major League teams and served into feeder clubs. To a large extent, that was a consequence of the broadcast era, where fans locally transferred their allegiance to the Major League teams in their region, because they could see them. They followed the quality.

This is not an American thing, but a global thing-- people like to see the best, and you only need to watch Real Madrid or Bayern Munich or Manchester United for a few games to know that it's a different world from MLS. The quality is way in excess of anything that's produced here, so the fate of MLS is to be a minor league.

HRB: Is an organizational structure like that of New York City FC a game-changer for MLS?

SS: Last year, I had a rather interesting exchange with a number of MLS fans about the future of the league. My conclusion was that the only real option is to become a feeder league for Europe, and I was reflecting on that in light of NYCFC with the whole Frank Lampard saga.

Thinking about Manchester City's struggle to comply with Financial Fair Play, why wouldn't major teams in Europe want a feeder club in the U.S. where they could park talent temporarily, help them develop, play at a reasonable standard of competitive soccer, then pick them out whenever they need them and take them over to Europe?

HRB: That would make a mockery out of many things, but Financial Fair Play stands out. We still don't even know exactly what FFP is!

SS: The Europeans have this rather offensive term, "Sugar Daddies," used to refer to people like [City Football Group's] Sheikh Mansour or [Chelsea FC's] Roman Abramovich. [UEFA's Michel] Platini has made it clear that they want to keep those people out, but they've actually ensured that Mansour and Abramovich can enjoy the fruits of their investment. Nobody is going to be allowed to challenge them. They're able to use opportunities like parking players in MLS in order to circumvent the FFP regime. But who wouldn't want the billions? Think about how that money trickles down through the game.

HRB: Specifically for those following the MLS labor debate and all of its accompanying wage issues, what can we learn from the successful leagues in Europe?

SS: MLS is very much hung up on the idea of competitive balance and some kind of parity amongst the teams.

HRB: That's an American thing. We hate the idea of relegation, even though it would prevent NBA teams from tanking for draft picks, for instance, or whatever the hell the Philadelphia 76ers are doing. We don't accept relegation because it's all about the franchise. The media market.

SS: I think one of the things that MLS could learn is that nobody really cares about competitive balance. Really, the American public don't care about it either. If they could stop this charade-- I think it only serves to undermine interest in the league

Part of the problem here is the contrast between the profits of owners versus the long-term health of the league. If you really wanted to create a major league sport, what you would do is just open everything up to competition, create a promotion and relegation system, bring in billionaires and say, "build your own team." I think, in a small number of years, you would see that develop into a dynamic, very exciting structure. The U.S. would be very good at attracting those kinds of individuals.

But I don't think that's going to happen, because the current owners would have to surrender their own commitment to making profits in the short-term, and they won't do it. That's the problem, the American model – the NFL, the NBA, MLB – of organizational structure is very successful when there's no real viable competition elsewhere in the world, and that's just not true in soccer. [MLS owners] don't recognize it, but they won't succeed in making money because it's not a viable model in a competitive environment.

The other thing they could do would be my alternative proposal, which is to accept that they're not going to be a major league and sign up to become minor league partners of major clubs in Europe. Again, I don't think they're going to do that – out of pride, independence – but there probably is some money to be made in providing a competitive league structure which major European teams could use. Obviously [MLS and its owners] would lose control of the structure, but they're sitting on a structure that isn't going to work anyway, that isn't worth anything.

HRB: So, does that single-entity structure have to fall in order for the league to become more competitive?

SS: The issue is irrelevant. They're scrambling around, fighting over tiny issues and just missing the big point. Who cares whether it's a single-entity structure or if there's an open market for talent? If you put substantial sums of money into it – and I'm talking ten to twenty times as much per team compared to what they're currently spending – nobody's going to care about this [besides] their loyal fans in the local markets. But so what? It's not going to get any national TV attention. The TV ratings for MLS are pathetic. Woeful.

HRB: The Mexican league routinely outpaces MLS in U.S. television ratings, and we know that TV money is dictating more and more worldwide.

SS: And for the Mexican League Final, [the rating] was way ahead of the MLS Cup. Something like three or four times the viewership. The salary levels in Mexico are much higher, and they play a higher standard of the game. It's not as if the Mexican League is that great, it's just that MLS is way behind it.

The Premier League is making almost three times as much money on its old U.S. broadcasting contract as MLS gets on its new one, and the Premier League is going to sign a new contract in the U.S. this year or next year that could be maybe five times as much as MLS's contract.

HRB: Going back to the CBA, Sebastian Giovinco stands to make more money in a few days than some of his teammates in Toronto will make for the entire season. It isn't sensible. Within the current CBA debate, what isn't being discussed in terms growing wages from the bottom and increasing MLS's competitiveness that way?

SS: Well, the key word is "sensible." Who ever said that European football is sensible?

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If the goal is to grow the league, Major League Soccer has far greater issues than single-entity versus free agency! Stay tuned later this week for part two of our exclusive interview with Dr. Szymanski. In the meantime, we want to hear your takes-- is he right about MLS? Is he dead wrong? Leave a comment or blow us up @hudsonriverblue!

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