What could a Donald Trump presidency do to soccer in the United States, Mexico, and Canada?
It’s important to note that this is all theory - the president-elect’s plans could best be described as nebulous, and have been subject to change suddenly and without warning.
Part of Mr. Trump’s campaign promises centered around the US economy, primarily promising tax cuts, increased infrastructure spending, and deregulation. According to an article in The New York Times, “That set of policies has led markets to expect speedier economic growth and thus higher interest rates in coming years. That, in turn, is driving the value of the dollar higher.”
The US dollar being stronger against foreign currency is good in some aspects - teams in the United States will be able to compete for pricier players from abroad with a stronger dollar. It does have its drawbacks however. MLS, NASL, and USL all operate in Canada as well as the United States, and a stronger US Dollar means Canadian clubs - especially in the lower divisions - will struggle to compete with American clubs. We saw this when the price of oil sands dropped in 2014, the Canadian dollar plummeted, and an Ottawa Fury team that had gone to the NASL Soccer Bowl Final in 2015 saw ten players leave in December 2015 and January 2016. Of those ten players, nine went to the US (Uğur Albayrak went to play in the German fourth division).
One thing that may prove to be a boon for MLS clubs in the United States are the proposed tax breaks for infrastructure spending. While this usually means spending on national infrastructure (bridges and highways, water and sewer systems, and other necessities we often take for granted), it has been speculated that this could also be broadened to include sports stadiums. In this article, Vice Sports’ Neil DeMause sets the case for sports owners honing in on the proposed $137 billion dollars in proposed tax credits for infrastructure projects.
This will sound good not only to owners with existing stadium plans (D.C. United), but for owners who don’t want to shell out their own money for a stadium (the Kraft family and the New England Revolution), as well as any prospective MLS ownership groups who may need funding for a bigger stadium in a new market. I asked Dr. Tim DeSchriver, Associate Professor in the Department of Business Administration at the University of Delaware, if with the strengthening dollar and the expectation of higher interest rates under the Trump Administration, is now a good time to invest in MLS and what should perspective owners expect from the economic climate that has been forecast. He replied:
“It appears that tax breaks may be coming for the wealthy. If this is true, their net incomes should increase. With this extra money, some high wealth individuals may be interested in investing in pro sport teams. However, many pro sport team investors/buyers purchase teams through the use of debt. If interest rates increase, the cost of debt will also increase. If a person is borrowing $100 million to purchase a team, an interest rate increase of 1-3% can be costly for the borrower.“
With MLS expansion fees set at $150 million (and these could rise to $200 million after the next round) and the prohibitive cost of infrastructure (stadium, training facilities, youth setup, USL team, etc.), the interest on this alone could run into the tens of millions of dollars. DeSchriver also went on to say:
“On another note, there are reports that the Trump proposed trillion dollar investment in infrastructure could possibly include the construction of sport facilities. If subsidies are granted for the construction of sport facilities such as soccer stadiums, this could make the purchase of a team more attractive.”
This would help defray the cost of some of the physical infrastructure needed to run an MLS club (stadium costs for Talen Energy Stadium were about $120 million in 2010) - at the taxpaying public’s expense. Therein lies the rub. DeSchriver says:
“With respect to consumers, historical evidence does not definitively state how the presence of economic booms or recessions are related to consumer spending on sport. While it is a leisure activity and not a necessity, some people turn to sport consumption during difficult times as a method of escapism from the daily personal economic troubles. Thus, it is difficult to predict how an economic boom/bust would influence ticket sales, merchandise sales. It is expected that an economic boom should lead to companies spending more on marketing which would included sport sponsorships.”
Theoretically speaking, while the owners would be able to get financial help with infrastructure costs, the taxpaying public may turn to soccer as an escape from being on financially shaky ground. Then again, since they’re on financially shaky ground they may decide to opt out of things like attending a soccer game in person or buying merchandise.
The economic impact of a Trump presidency - at least for the owners - seems like it will be positive. For some players however, it could be a much different story.
Players who come to the United States currently must acquire a P-1A Visa “to perform at a specific athletic competition as an athlete, individually or as part of a group or team, at an internationally recognized level of performance.” Players who stay in the United States for anywhere from two to five years are eligible for a “green card” which grants them permanent resident status. From there, a player can gain full American citizenship after five years (or three if he marries an American citizen). Trump’s immigration policy focuses on two groups - illegal immigrants and Muslim immigrants. While all players who come to the United States to play in MLS are legal immigrants, it does call into question players from predominantly Muslim countries as well as Muslim players from countries where Islam is not the predominant religion. Would a club be allowed to sign a player from Somalia? What about Tunisia? Indonesia? Kosovo? Would a player such as Franck Ribery - French born, but a practicing Muslim - be allowed to come and play in MLS, or would the Trump administration forbid them entry?
The issue with this is that even if nothing explicit is said, it could implicitly serve as a deterrent for clubs looking to sign a player. Clubs would be forgiven for thinking it would be too much trouble to try and sign a player from a country and just look somewhere else for talent.
Trump’s policies could also have a chilling effect on youth talent. Children born in the United States are American citizens regardless of the citizenship of their parents. If the Trump administration follows through on its promise to deport every illegal immigrant in the United States, children who are citizens of the United States will either be forced to depart the country with their parents or they will be left behind to live with extended family, friends, or sometimes live alone, one or both parents unable to return to the country to raise them. How many kids currently in Academy programs will wind up playing elsewhere because they, their parents, or their entire family will be deported to a country they might not have been in for more than a decade?
To say that Trump’s election is heading into uncharted waters is an understatement. We’ll have to see if any of these proposals wind up being enacted into law - and if those laws are enacted. Since we have no track record of tangible political action from Mr. Trump, we can’t say for sure if the value of the dollar will rise or fall, or if there will be tax cuts for stadium projects, or even if anyone will be barred entry to (or forced to leave) the United States. The incoming administration’s influence over sports may be as intriguing as the sports themselves.