Wednesday, March 4, 2015

MLS Labor Negotiations - Wednesday, March 4

On Thursday, I wrote a follow up piece that works off of Jeff Carlisle's report on the agreement details and evaluates it.

6:30 p.m. CT UPDATE: We have a report of an agreement. Tunstall's compatriot, Simon Evans (@sgevans) is reporting that there is an agreement in place. Carlisle confirmed.

Goff has a link to an article with a lot of details on the agreement in principle.

Ives is reporting that a number of MLS clubs voted against the agreement. He also asks a good question.

5:45 p.m. CT UPDATE: According to Brooke Tunstall (@YesThatBrooke) there is a player vote happening. He said despite his best efforts, he cannot ascertain whether it is a vote on a deal or a vote to play this weekend without an agreement, or some other vote.

But consistent reporting from Brooke, Goff and Carlisle have made it appear that things are moving in the direction of a deal rather than broken talks. Goff even went so far as to tweet he expects a deal to close late today or Thursday, with the caveat that it was a hunch of his.

As I stated below in my analysis, this is consistent with what I expected, although developments on the free agency issue have been surprising. The latest appeared to be a 28 years old/8 years of service offer with a 10% cap on salary raise. Again, considering it is a form of free agency, I am surprised the owners are offering it as it erodes the SE structure. The 10% is something that I imagine is very unpalatable to the players.

12:30 p.m. CT UPDATE: Steven Goff (@SoccerInsider) recently tweeted: "Reliable sources describes state of talks as 'desperation but still talking." Jeff Carlisle (@Jeffery Carlisle) reported that there has been "some movement" on both the free agency offer. Again, those two have been the most involved in getting the "raw" out.

Neither change my opinion of the information below, although clearly, time is running short and there remains work to be done. It does appear that both sides are tightening up leaks and information, which is also usually a sign that it is getting down to the nitty gritty.

For what it is worth, ESPN is regularly updating the situation on SportsCenter as well.

Labor negotiations. They have a life and flow of their own. But it appears this round of MLS negotiations have started to take shape and I think we can make some reasonable predictions.

Granted, the situation is incredibly fluid – probably more fluid than I have ever seen in 20 years of following the league. And a lot of the information used in this piece is based on reporting that usually does not name sources, so bring your salt shaker. But again, I think we have enough tea leaves to read, even though we may be the drunken monkeys with the Ouija board, that we can discuss a general landscape.

First, the issues. Free agency, length of the CBA itself and the salary cap increase seem to be the biggest topics of discussion. The parties seem far enough apart that there is real work to be done, but there does appear to be enough definition to the points of view that they have a fair chance at negotiating a middle ground. The fact that numerous sources have stated that the sides negotiated until 6 am ET Wednesday supports this assertion.

Free Agency

Something that has been an issue from the beginning from the players’ perspective has been the Single Entity nature of the league, and the fact that all contracts are with the league rather than individual teams. The bubble of protection that this provided to players by not having to worry about a team folding has long been outweighed by the restrictive nature it has on movement between clubs and the effect it has on salary negotiations.

Without going into the details as to why this is an integral part of the league structure – a structure that every MLS owner bought into as a major selling point of their multi-million dollar investment – which is a whole different discussion, just know that this Single Entity structure is something that is as much a part of what the owners purchased as that it is a soccer league. To really understand the nature of these negotiations, you have to let that sink in. The league structure is as important to the owners as is the fact that the league plays soccer. That might be a moderate over-statement, but I don’t think by much. And I definitely can say this – the vast majority of owners would not have bought into MLS had it not been for the SE structure. Simply look at the explosion of ownership that happened after the original players’ lawsuit (Frazer v. MLS) was finally resolved.

So you have a very real problem. The SE structure was implemented specifically to disallow free agency(*). And there are legal reasons for ownership not agreeing to it as the original Frazer ruling was not a 100% endorsement that MLS was a true single entity, and the league has done things to erode even that status. Adding any significant Free Agency would possibly be the straw that broke the camel’s back, opening the league up to another players’ lawsuit that would have a much better chance of succeeding.

The good news, for those wanting games this weekend, is both sides seem to have given enough on this point that a middle ground is at least possible. Word from the Washington Post and ESPN is that the owners have offered a severely restricted form of free agency, and by a variety of actions, the players have shown that they know true free agency is not possible at this point. Or, at least they are willing to acknowledge that what it would take to force free agency on the league would be too costly to all parties.

Is a strike over this still possible? Absolutely. If the owners stay on their current offer on free agency – which is so extreme that I am struggling to think of any player that might qualify for it – then that might be a piece of a puzzle that adds up to a strike for the players. But considering the legal risks the owners are taking by making the offer, I don’t see them taking that step without following through.

Length of the CBA

I will admit that I was surprised to read that the current offer from the owners is an eight year deal. For a variety of reasons, this seems a unique time to offer something different than the five year deals that the players and owners have entered into the last two times. With all of the new money coming into the league, including the massive upgrade in television money and handful of expansion teams paying the largest fees ever seen for an MLS club, it seems like both sides would want to at most do another five years so that the new financial landscape could be understood and not be stuck with it for too long if it is unfair to either side.

Is a strike over this issue alone possible? I think it unlikely. If they negotiate the other issues, I think it unlikely that the owners will stick to their guns on this lone issue. If they don’t negotiate the other issues, that is its own problem.

Salary Cap Increase

This, to me, is the most practical and most important issue on the table. While I am not necessarily a fan of paying a player making $100,000 a year $200,000 a year just because you have the money, part of the reason MLS player salaries are where they are have to do with the lower divisions not offering competitive contracts for middle and entry level players, which is not the players’ fault. (**)

With the new income coming to the league, there ought to be a more modest salary cap increase, and it sounds like they just are not there yet. Because this is what will affect the majority of the players the most, this is where the rubber meets the road – this is the issue that will lead to a strike, if anything will.

Again, Free Agency is a concept that might apply to some players at certain times. For the international players (both foreign players and US players good enough to warrant money outside MLS), they already have free agency – play out their contract. For the entry level players, the idea is remote and doesn’t directly affect them. So those willing to vote for a strike on Free Agency alone is not nearly as large as those who would be willing to strike because the salary cap increase is not large enough in respect to the cash influx that will happen over the next 4-8 years.

But it is also a question of negotiating numbers. I would be very surprised to see this become a large enough issue that the players strike over it, mostly because the league is in position to give what the players could accept.

Bottom Line

This is still labor negotiations – high stakes poker if there ever was such a thing. A lockout or a strike – both are possible. But with the issues defined as they are, it appears to me that a middle ground can be found on all three of the major issues, and with so much at stake this weekend, that middle ground is likely to be found.

So keep watching Jeff Carlisle (@Jeffery Carlisle) and Steven Goff (@SoccerInsider) as your main sources of raw intel, remember to breathe every once in a while, and let’s see how things play out, but that is how this Student of the Game sees things now.


(*) This was done, in part, because soccer players have a natural free agency because soccer is a global market. It was mostly done, though, because of the way the original North American Soccer League spent itself into non-existence. The perception was that no one was going to invest millions of dollars into a new sports league, for a new sport that as of 1993 not proven anything by way of longevity or interest. This “Super Salary Cap” idea was a way to ensure that something like that could not happen again. The question is at what point is that safety net no longer necessary?

Others have done a great job of detailing the legal ramifications of the league not being considered a Single Entity, so I would encourage you to look for them. The short version, though, is it would open the league to a lawsuit from the players the likes of which that forced free agency in the NFL, MLB, etc. It’s a big deal, especially if you look at how free agency has pushed up salaries for those leagues.

(**) The real problem the players face is that for the average US player, their value outside the US is not large enough to pressure MLS to pay more. That is simple economics. The nice thing, though, is as the US soccer population improves, it is simply a matter of time before that dynamic will change. We already see players go to play in Norway, etc., for more than they would get in the US – even for fringe US national team players. And at that point, MLS will have no choice but to pay to keep the US players they have worked so hard to develop.

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