Which is better—a regulated league full of evenly matched teams that all have a shot at the championship, or an open-market structure that invites the creation of super clubs? Wendy Thomas explores.

BY Wendy Thomas Posted

October 05, 2015

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THERE IS AN APOCRYPHAL STORY about how the principle of parity entered professional sports.

In 1935, two NFL teams, the Philadelphia Eagles and Brooklyn Dodgers, sought the services of the same player, “Stockyard Stan” Kostka. Following a bidding war for his services, Kostka signed for the Dodgers. The Eagles’ owner, Bert Bell, embittered by losing out on Kostka’s services, argued that teams should no longer compete for the services of players and instead the best new players should be awarded to the worst teams. The NFL then implemented the reverse-order draft, where the team with the worst record from the previous season gets to make the first selection in the college draft.

The idea of parity, i.e., the condition of a controlling force that intervenes and institutes rules designed to impose equilibrium on a market, actually existed in sports decades earlier. Before the enactment of the Sherman Antitrust Act in 1890, professional baseball teams included reserve clauses in player contracts to control their salaries. To justify the imposition of the reserve clause, owners argued that, though anti-competitive, the reserve clause prevented rich owners from buying all the most talented players, and thereby preserved competitive balance.

As it turned out, the reserve clause had the opposite effect: the richest teams still wound up buying the most talented players but assigned them to their minor league rosters, which gave the rich teams an insurance policy to bulwark their fortunes in the event senior team players suffered injuries and also prevented the best players from landing on opponents’ rosters.

Even after the Sherman Antitrust Act was passed, U.S. leagues maintained their cartel status by asserting legal challenges to antitrust laws, arguing that since the goal of sports is ultimately “entertainment," anti-competitive practices, which serve that goal, should nonetheless be permissible. Rulings in American League Baseball Club of Chicago v. Chase, 149 N.Y.S. 6 (1914) and Federal Baseball Club v. National League, 259 U.S. 200 (1922) (which held that baseball was not subject to the Sherman Act) led to the United States Supreme Court upholding reserve clauses in Toolson v. New York Yankees, 346 U.S. 356 (1953).

The Courts’ reasoning in these cases rested on the notion that since the baseball league was a single entity amusement, the purpose of which was to entertain fans, it was justified in using anti-competitive devices such as reserve clauses to offer the most competitive product possible.

When FIFA awarded the 1994 World Cup to the United States, it did so on the condition that the U.S. start a professional soccer league. The founders of Major League Soccer were wary of following the path laid by the NASL, which had modeled itself after the European free-market football system only to suffer a momentous death spiral. This time, the MLS founders wanted to build a league that focused on competitive balance and thus instituted some of the mechanisms other American leagues employed to generate parity and minimize the risk of collapse: salary caps, luxury taxes (of which the Designated Player rule is one variant), revenue sharing, cross-subsidies to small markets, reverse-order drafts, etc.

Did the MLS founders achieve their aim? When compared to the world’s other soccer leagues using a variety of criteria, the answer is yes.





There is a much smaller gap in performance between the best and worst teams in MLS than in the major European leagues. The 2014-15 season ended with the following points differentials between the first and last placed teams of the major European leagues:

Bundesliga

48 points (Bayern Munich 79, Paderborn 31)

English Premier League

57 points (Chelsea 87, QPR 30)

Serie A

68 points (Juventus 87, Parma 19)

La Liga

74 points (Barcelona 94, Cordoba 20)

In MLS, the first and last place teams last season were separated by 36 points: The Seattle Sounders finished with 64 and the Montreal Impact had 28. This year, that differential has only narrowed. As of October 5, 2015, the Los Angeles Galaxy and New York Red Bulls sit atop the MLS table at 51 points while the lowest-ranked Chicago Fire has 30, which means every team in the league is within 21 points of each other. In fact, if one excludes the Chicago Fire from consideration, then every team in the league is within 16 points of each other.

In terms of yielding multiple championship teams, MLS also enjoys more parity than its counterparts. In England, the same three clubs—Manchester United, Arsenal, and Chelsea—have won all but two Premier League titles since the competition was founded in 1992. Since La Liga came into being in 1929, either Real Madrid or Barcelona has claimed the championship 55 times, with only seven other clubs ever having won it. In Portugal, Benfica or Porto has won the Primera Liga every year since 2001. Since Serie A’s founding in 1929, Juventus, Milan, and Internazionale account for 60 championship titles.

Since MLS started 20 years ago, approximately half of its teams have won the MLS Cup: the Los Angeles Galaxy (five times), D.C. United (four), Houston Dynamo (two), San Jose Earthquakes (two), Kansas City (two) and one win each for the Chicago Fire, Columbus Crew, Colorado Rapids, and Real Salt Lake.

The Supporters' Shield winners are also varied with 10 teams having claimed it: the Galaxy (four times), D.C. United (four), Columbus Crew (three), San Jose Earthquakes (two), and one win each for Kansas City, Chicago Fire, New York Red Bulls, Seattle Sounders, and the now-defunct Miami Fusion and Tampa Bay Mutiny.

So MLS has achieved its aim of creating a more parity-centric league than its European counterparts. Having established this, it is worth revisiting the question of whether parity should continue as MLS’ aim.

Advocates for parity-centric leagues argue that the reason people like to watch soccer is to witness competitive games between evenly matched teams in which the outcome is in doubt. By designing a league that shares revenue, uses reverse-order drafts, imposes salary caps, and regulates player movement, MLS ostensibly encourages close games and (MLS owners hope) fan interest, which leads to increased attendance and profits.





However, for a league that posits as one of its goals becoming one of the best leagues in the world by 2022 (one presumes when Don Garber uses the term “best” he is referring to the quality of play), MLS is nowhere near its goal.

Advocates for performance-centric leagues argue that the reason people like to watch soccer is to see phenomenally skilled athletes play the game at its highest level. By engineering leagues so that talent is concentrated among only a few teams, the European model encourages the artistry and displays of skill that awe and inspire fans. However, by unevenly distributing talent, the European model diminishes the competitive balance in its leagues and even deprives the league from the largest available talent pool.

Just like the baseball owners from the 19th century, superclubs such as Chelsea, Manchester City, and Real Madrid stockpile talent and often relegate players to the bench who otherwise would be playing regular minutes for other teams.

Both systems have advantages and disadvantages.

The cartel-like U.S. sports leagues favor stringent equality over excellence, and though they are more stable than European leagues, American leagues are closed-market which means the local supply is limited (though obviously there are many global soccer leagues for consumers to follow). It is no small coincidence that a closed-market system also accelerates the rate at which franchise values increase. On the other hand, the less-tightly controlled European leagues increase the odds of achieving excellence but are more susceptible to being captured by powerful interests, carry greater financial risk, are more likely to disenfranchise fans and impose greater social distortion, e.g., when a team collapses.

Either system is viable—but which one is optimal? The question MLS needs to answer is, “What is the essence of the product we are selling: competition or quality?” Therein lies the course it must plot for its future.

Wendy Thomas is an attorney and contributor to American Soccer Now. Follow her on Twitter.