MLS and players far apart on labor negotiations

(by Kristian Dyer espn.go.com 12-6-09)

Closing in on year No. 15 and in the middle of negotiations over a new collective bargaining agreement with its players, MLS is much like any adolescent at the crossroads of its identity. After a crucial '09 season, with attendance holding relatively steady in a recession and successful expansion in Seattle opening doors for the league, MLS heads into an offseason of labor doubt.

Simply put, the league's destiny is in its own hands as it tries to determine how best to grow and flourish. The major issue is competition and whether the current MLS rules are the best way to improve both the quality of play and, in turn, the bottom line. The screaming of fans for more star players like David Beckham may only be drowned out by the "ka-ching" of the cash registers as the league looks to keep a tight belt during an economically uncertain time.

With the current collective bargaining agreement set to expire, MLS and its players have to decide how to achieve the next step in the league's development. In 2007, it took a major step forward in terms of prestige and perception when it implemented the designated player rule, allowing teams to spend outside of strict salary budgets to bring in marquee players, many of whom were attendance draws. The designated player has been used by nearly half the teams in the league, showing a willingness on the part of certain owners to try to compete on the world market.

"MLS has made tremendous strides in its first 14 seasons," said Bob Foose, executive director of the MLS Players Union. "We believe it's now time to take the training wheels off and give MLS clubs the freedom to truly compete against each other and other clubs outside of the league in a manner that is consistent with what occurs everywhere else in the world." A source close to the league called last week's negotiations "contentious" between the two sides.

And now the union is adamant in saying that the league is not in compliance with FIFA, the world's governing body for the sport, on several key issues. Previous statements this week by FIFA and the league indicate compliance, but FIFPro -- the "worldwide representative agency for all professional players" -- and the union came out more than two weeks ago with a strong statement to the contrary.

First and foremost remains the fact that most MLS players have contracts that can be terminated during the season without full compensation. The union asserts that FIFA is clearly against this. The union says the league is in full violation of this policy, and MLS says its mechanisms fall under the auspices of FIFA's rules. FIFA has issued a statement indicating that it has full confidence in its rules being enforced.

Another sticking point and hurdle concerning the collective bargaining agreement from the union's perspective is the restrictive way in which players' rights are kept by an MLS club. Upon the end of the contract, a player is free to make a move to any overseas club without the league holding him back. However, if that player wishes to sign with another club within the league, his original club holds onto his rights. This is the case even if that player's contract was terminated prematurely by the club or if the club declined to pick up the player's option.

This creates, in many ways, an indentured servant-type relationship, restricting a player's ability to move clubs within the league. As such, what this means is that if a player wishes to make a move within the league, the club desiring him needs to make a trade with the old club. Even though his contract is up, and despite the fact that he is no longer on their roster or their payroll or even in their plans, his rights are still held by his old club.

"All we want on this front is for MLS to play by the rules and provide the same thing to our players that players in every other country in the world have, and what FIFA's regulations require," Foose said.

The league's divergence from the systems of other leagues around the world, in large part due to the business model of MLS, not only hurts its own players but stifles their development, says the players' union. The league is quick to point out that its business model has provided growth and stability for a sport that is still very much developing in the United States.

"Having a system that differs substantially from those around the world causes quality players in the league to leave, and causes quality players outside of the league, both foreign and domestic, to refuse to come on board," Foose said. "And that is a bad result for all of us, as it negatively affects the quality of play in the league. We can have our disagreements in these negotiations, but one thing we all agree on is that we need to constantly strive to improve the product on the field."

MLS disagrees entirely with the idea that it is not in compliance with FIFA regulations or standards. MLS president Mark Abbott said the league is constantly checking and providing a self-review of its operating procedures and protocols. This internal review, according to Abbott, is a routine part of MLS utilizing its legal counsel to ensure it is compliant with the cumbersome FIFA regulations. The review has determined that the current standard for contracts, including the lack of a guarantee and the limitations on player movement, is within the confines of FIFA's standards. Abbott said the league "has always been compliant with FIFA" and remains committed to staying that way.

Perhaps the part of the new collective bargaining agreement -- the first for the league since 2005 -- that will draw the most interest is the salary cap. Obviously any major increase in the quality of play will require additional resources. The single-entity structure of MLS has dictated a stringent cap which has seen little growth since the league's inception, up to its 2009 level of just over $2.3 million per team.

Recently, however, the introduction of the designated player rule has brought about an increased interest in some owners in opening up their wallets a bit more and creating more competition for players. There are signs that certain investor groups, such as the investor/operators behind the Los Angeles Galaxy and the New York Red Bulls, want to throw some more cash around the league, loosening a single-entity structure that frustrates many fans.

"Single-entity status is a big factor here. For one, it allows the league to sidestep antitrust concerns. Most North American sports -- apart from baseball -- have lost labor cases in court, on antitrust grounds," said Dr. Raymond Sauer, a professor at Clemson and the author of the Sports Economist blog. "MLS has less to fear due to its single-entity status, as well as the existence of substantial international competition. They can do what they want, limited only by market conditions."

MLS commissioner Don Garber has said he is committed to a new collective bargaining agreement that will be good for players and management. The question that remains to be answered is how much MLS is willing to loosen the reins on its teams in order to spur the competition necessary to fuel continued growth.

And what the union is looking for, according to Foose, is for the players to share in the revenue stream, specifically proportionate to the league's growth in terms of revenue. It is also his hope to create "greater competition" through an increased cap. With the expenditures on players like Juan Pablo Angel, David Beckham and Freddie Ljungberg, Foose and union representatives are hopeful that the recent splash of cash by several clubs indicates an increased willingness to raise the standard of play and caliber of the players in MLS.

"The question to be asked is not whether the $2.3 million cap is fair, but whether increasing it by any sum would increase fan interest sufficiently to warrant the investment in player talent," Dr. Sauer said. "It's not a matter of fairness, since there are dozens of competing leagues where players can work if they are good enough."

But perhaps the real question for a league that has seen slow and steady growth over 14 years is whether the current status quo is good enough for the next cycle of the collective bargaining agreement and can still grow the game. Will an increased salary cap and free agency improve not only improve the lives of the players but also give teams more flexibility to fill certain needs? All against the backdrop of a recession.

"There are a lot of factors which come into play here. The economy is certainly one of them," Abbott said. "The league, in some areas, has made some progress. There are also areas where we continue to face a number of business challenges."

Dr. Sauer warns that both the league and the union need to be careful to find a common middle ground. Determining how the league can balance an economy in flux with the desire to grow in the future is what Abbott calls "the delicate balance."

"The weak economic conditions weaken the negotiating position of labor not just for MLS, but in any sport and any company," Dr. Sauer said. "Particularly in a nascent league -- we've seen several recent failures [such as] arena football where the weak economy is a key factor. So now is not the time for a union to dial up the pressure."