A little more than 24 hours before the first kick of the season, Major League Soccer and the Major League Soccer Players Union agreed to a new 5-year agreement. While details were not officially released, Paul Tenorio of the Orlando Sentinel reported the following outcomes:
- Players will be free agents upon reaching 28 years of age coupled with 8 years league experience.
- Free agent raises will be capped based on their current salary level. For players making less than $100,000 their raise is capped at 25 percent. Players making between $100,000 and $200,000 will have their raise capped at 20 percent. Players making more than $200,000 will have their raise capped at 15 percent.
- The minimum player salary will be increased from $36,500 to $60,000. There are set increases to this number in each year of the agreement.
- The agreement lasts for the next five seasons.
- Other reports stated that the salary budget increased 15 percent, which would take the budget from $3.1M to $3.57M. But those reports were touted less loudly as Wednesday night wore on. ESPN reported that the salary budget annual increases being discussed were in the 7 percent range. In the last CBA the increases were 5 percent.
What we still don't know
- There are plenty of big items still not addressed by insider leaks and the rumor mill. The first is if any of the free agency talk applies to players who ply their trade outside of MLS. For example, will fans still be subjected to a coin flip when a player like Jermaine Jones who does not have 8 years of league experience wants to player in MLS? Will a prime target like Sasha Klejstan be subjected to an allocation order while MLS players can freely choose their teams? It's likely these details have been considered but at this point we don't know how it will work.
- Do we still have allocation orders and re-entry drafts?
- We don't know how much the salary budget really will be or how much it will increase yearly.
- There were rumors that roster sizes would shrink but that is also an unknown. At this point the Union have 27 players on the roster, which was last year's minimum number.
- We also don't know if the limit of international roster players per team was changed.
- We don't know if a 4th designated player will be added or if the amount a designated player counts against the budget has changed. Given a change of that magnitude was not leaked, I am doubtful that a 4th designated player was added.
Putting what we know in context
While a 64 percent percent increase in the minimum salary of players sounds big it represents less than a 3 percent increase in total player payroll. That's also less than $3M. If you recall the league just signed a new TV deal for the season that was going to increase revenues by more than $60M per year.
As defined only about 10 percent of the league's players will qualify for free agency, and the financial upside of those players is capped. Even if you assume that each one of those players gets a 25 percent increase that's probably not more than a 3% increase in overall player wages.
The two biggest concessions by the owners eat up less than half of the rumored salary budget increase and just about 10 percent of the new TV revenue. Free Agency will continue to increase salaries as more players reach the threshold, but they will never come close taking a significant portion of the new revenues, for at least the term of this agreement.
The new CBA is reportedly 5 years long and the new TV deal covers the next 8 seasons. While getting a shorter deal was definitely a win for the players, they will not have insight into the value of the next golden TV deal. The owners will be in a position to downplay the potential and push for a longer deal next time, where players can't get the upside.
Who are the winners so far?
- Future league stars look like very big winners. Why? Because that TV money will eventually be spent on players, and the league likes stars. Owners can spend that extra money on big names and have little pain felt on their salary budget.
- The owners are obviously winners here. A 15 percent increase in the salary budget is under $500,000. If the league distributed all new TV money to the current set of teams, there would be over $3M for each. It is unclear exactly how much the teams will get but owners will have the choice to pocket the extra money, invest in designated players or invest the money elsewhere they feel they can get a good return.
- The young MLS players are also winners. Players like Union 4th round draft pick Raymond Lee just went from making $36,500 to $60,000 per year in the blink of an eye. That's a nice shift.
- Even younger soccer players who are only dreaming of playing professional soccer also won. The players did crack the Free Agency issue. They got the first concession of at least one more to come in the next decade. Hopefully this initial fissure will be the start of MLS players enjoying the same salary and freedoms as athletes in other sports.
- The fans get to see soccer. They get to tailgate, see their friends and watch the game they love this weekend and all season long. They win.
Who are the losers so far?
Given the information out there it appears the international players who don't qualify as DPs didn't get any additional incentive to join MLS. Sure there will be a little more money to entice them, but they won't have the freedom of movement that the American soccer players could one day enjoy.
MLS' American middle class: Outside of a modest salary budget increase the American players making above $60,000 but not yet 28 years old or with 8 years of league experience received very little. It's a strong possibility that the extra salary budget money will go to better international players and not go to the average American player.
Don Garber lost as commissioner of this league. Garber said in his announcement of the deal, "This agreement will provide a platform for our players, ownership and management to work together to help build Major League Soccer into one of the great soccer leagues in the world." I hate to say it, but this is patently false. What will make this league great is players and this deal did not move the needle enough to attract those players. According to a chart published by @sportingintel, of the top 25 revenue generating leagues in the world, MLS ranks 24th in player salaries as a proportion of league revenue. No other major league in the world has a proportion less than two times that of MLS. This agreement and the reported increases of 15 percent followed by 7 percent don't come close to bridging that gap, especially when you consider league revenues should grow quickly as well.
And so while the fans win they also lose. Until the owners are willing to invest their revenues into players on par with the rest of the world, the fans will be robbed of what Major League Soccer could become in America. Don Garber knows this, but he wants you to dream with him anyway.
This may sound doom and gloom for the losers of this deal, and I know there are details yet to emerge but it's hard to imagine they alter this story significantly in either direction, or they would have been trumpeted by either side by now.
Now it's time to put all this aside and enjoy the improved league, the hope for what's to come for each of our clubs, and of course the point of it all, the game itself.