Strike Rumblings in the MLS

Soccer America's Ridge Mahoney is reporting that rumblings of a possible strike are coming out of the MLS/Player's Union Collective Bargaining Agreement talks. Writes Mahoney:

I'm starting to hear the S-word in talking to people about negotiations regarding a new collective bargaining agreement (CBA) between Major League Soccer and its players, and that word has nothing to do with salaries, as in minimums or maximums or caps or anything else.

The S-word is "strike," which could result if no agreement is reached by Jan. 31, when the current CBA expires. Discussions began early this year and haven't gone anywhere, from what I've heard, and the dynamics may have slid backward two weeks ago when MLS Commissioner Don Garber decried the involvement of FIFPro, an international players agency, which had petitioned FIFA on behalf of the MLS Players' Union regarding certain strictures utilized by the league in its contracts.

FIFA promptly issued a statement to the effect that it had no intention of meddling in a domestic labor-management negotiation. FIFPro and the MLSPU contend that by not guaranteeing contracts for their full duration and not permitting players unrestricted movement within MLS when their player contracts expire the league violates FIFA statues regarding transfers and movement between clubs.

For all its power and influence, FIFA is loathe to be dragged into any court in any land, and it seldom intervenes except in specific cases. Its transfer windows only apply to contracted players moving between associations in different countries, and thus, say, a short-term loan between two English clubs in October or an MLS trade in May that doesn't jibe with those windows doesn't break any of its rules. While option years may be more common in MLS than in other leagues, they are neither unknown nor "illegal."

The issue of contract guarantees was one that I was positive was going to come up. I didn't think that the Player's Union was going to get fully guaranteed contracts, but would get some sort of guarantee change. As Mahoney points out, usually only the first year of a contract is guaranteed and the second and remaining years only guaranteed if the player is on the club's roster on July 31 (the close of the MLS transfer/trade window).

But the Player's Union dragging FIFPro and FIFA in the discussion, which on the surface sounds like a good idea, may not have been the best tactical move. In the end, the Player's Union might win this battle but lose the overall war.

What is interesting to me, as Mahoney writes it, is that issues such as salary cap and minimum salaries don't appear to be on the table. That means one of two things:

1. The salary cap issue has been addressed and all sides are happy with what the new cap will be, i.e. that it is liveable for the owners but comes with minimum salaries that are acceptable to Player's Union; or

2. The negotiations have gotten bogged down on the guarantee issue and the sides haven't even talked financials.

If the situation is the former, all the better and I think the Player's Union should push for two guaranteed years and be happy. If the situation is the latter, the battle over guarantees are going to kill the discussion and there will be no talk of significant changes in salary caps.

The issue of the rights of players should be simple to resolve and the fact that MLS and the owners don't see this to me is shocking. As it stands now, if an MLS player is out of contract, meaning his current contract is over there are four options with the following consequences:

1. He can resign with his current club. Player and club are both happy--great.

2. He can retire from club soccer, in which case the club has no rights to him, unless he pulls a Brett Farve.--see caveat

3. He can try to transfer to another league--usually Europe but not always. See caveat.

4. He can try to go to another MLS club. See caveat.

CAVEAT--even when and MLS player is out of contract, meaning his contract with MLS (who holds all player contracts under the single entity structure), his former club retains his MLS rights. So in case 2 above, if the player retires but pulls a Brett Farve, then his rights are retained by the last club he played for. Ditto for case three and case four. There are exceptions, such as the case of Brian McBride which is a little different.

But this fix is so simple. An out of contract player is out of contract. He should be free to contract with any club he wants, in the MLS or other leagues. But I can see a modicum of protection for the MLS to MLS free transfer--a right to match or first refusal.

If say Houston have the rights to Rico Clark and Clark wants to go play for Seattle and he is out of contract. Seattle can make the best offer they can and Houston has to either match the offer or lose out. If Seattle really want Clark then they will make an offer that Houston can't or won't match. Seattle have to be judicious since those terms would become binding on the club and unless they make Clark a designated player, they have to pay him with the salary cap in mind. If Houston really want him, they have to match the offer again, with the salary cap in mind.

But a player should be free to sign with whoever is willing to give him a deal he likes and wants. Assuming the player sees out his contract, there should be no roadblocks to allowing him to ply his trade where he wants.

Back to the topic, I don't see a strike happening. MLS is coming off a great season (New York Red Bulls aside). While attendances (outside of Seattle) held steady or slightly declined, much of that can be attributed to the financial climate. The quality of the game is getting better and MLS is taking steps to becoming a proper league in terms of helping the game develop.

There is so much to lose and really nothing to gain by the Player's Union striking. A strike could set the league back 10 years if not kill it altogether. The owners know that the trend in the league is toward moderate profitability and the best way to get profitable is to put a quality product on the field. In a year when the World Cup is coming (complete with a massive game between the U.S. and England for the first time in 60 years), both sides have to know that a strike or a lockout is not a good thing for American soccer.

The Top 10 American Soccer Stories of 2009

As we come to the end of the year 2009 and look forward to what is sure to be a jam packed 2010 for American soccer, it is time to consider, like most people, what has happened in the past year. So from 10 to 1, here are my top American soccer stories of 2009:

10. Arguably the best rookie class in Major League Soccer history. This year, at least in soccer households, Steve Zakuani, Chris Pontius, Rodney Wallace, Stephan Frei, Omar Gonzalez, A.J. Delagarza, Sam Cronin became household names long before anyone thought they would. IN five years, I predict that everyone of these players will be superstars in MLS or playing in Europe and I hope it is a mix of both.

9. The playoff run of Sky Blue FC in the WPS. Like Real Salt Lake (See #5), they were the last place qualifier for the playoffs and won the whole thing by playing their game.

8. The rebirth of women's professional soccer in America. Say what you want about the ladies game, it truly is some good soccer and if America wants to keep in Women's World Cups, they need this league.

7. The massive outpouring of support for Charlie Davies and the #9 Displays both at the qualifier and around the MLS. Classy stuff from the supporters.

6. The resurgence of the L.A. Galaxy--at least until the second half of the MLS Cup Final.

5. The playoff run of Real Salt Lake in the MLS. Jason Kreis showed the MLS that a TEAM of lesser known players can play their brand of soccer and win championships.

4, Two Words--Seattle Sounders. The rave green mass is changing the way we look at and support professional soccer in America.

3. The U.S. qualifying for their sixth consecutive World Cup. It got a little hairy there for a while, but they pulled it out.

2. Jonathan Bornstein's header in the final qualification game against Costa Rica. The only thing that could have made that goal any sweeter would be if the header had eliminated Mexico instead of Costa Rica.

1. Duh! The U.S. 2-0 win over Spain at the Confederations Cup to cap an amazing run and the U.S. first finals appearance in a world international competition.

Why Do So Many People Hate Health Care Reform?

Megan McArdle looks at the problem. One explanation might be risk aversion.

If somebody has a 50/50 shot at winning $1 million or can take $500,000 for certain, what will he do? A risk neutral person would be indifferent. But most people's risk aversion will make them eager to take the sure thing. People are extremely risk averse when it comes to health care precisely because the stakes are so high.

That was McCardle quoting Jay Cost. But McArdle suggest that is not risk aversion that makes people leery of the health care overhaul, but loss aversion.

Reconfigure Cost's scenario and you would get a different result. If someone has $300,000 in hand and has a 50/50 shot of winning a $1 million with no cost, most people would take the risk. If the scenario was, you have a 50/50 chance of winning $1 million or a guaranteed opportunity for $500,000, but no cost, the risk adverse person would generally take the $500,000 in order to avoid the possibility of not getting anything. But what if the chance to win $1 million or take $500,000 guaranteed cost $300,000. Even taking the guaranteed $500,000 means a net 33% loss. I don't think anyone would take that risk or guaranteed loss.

That is what we are facing with health care. Most people like their health care. They may not like the means by which we are paying for the health care (which is the real subject of the debate), but they are satisfied with the level and quality of care they get. If you give people the chance of Cadillac level health care (but not a guaranteed chance) or their current care guaranteed, I think most people will stick with their current care out of fear of unknown. This is the $1 million chance or $500,000 guaranteed case. But if you tell people that the cost of this opportunity is their current health care quality--you are less likely to see people support the idea.

A Review of Basic Labor Economics

In my entire working life, I have had only one job that was not created by someone richer than I creating the job opportunity and that one exception was the United States Navy. Thomas Sowell reiterates that matter is a very simple way:

What does it take to create a job? It takes wealth to pay someone who is hired, not to mention additional wealth to buy the material that person will use.

But government creates no wealth. Ignoring that plain and simple fact enables politicians to claim to be able to do all sorts of miraculous things that they cannot do in fact. Without creating wealth, how can they create jobs? By taking wealth from others, whether by taxation, selling bonds or imposing mandates.

However it is done, transferring wealth is not creating wealth. When government uses transferred wealth to hire people, it is essentially transferring jobs from the private sector, not adding to the net number of jobs in the economy.

It takes wealth to create jobs--even my soccer refereeing--a paid job--is created by families who spend money on the activity for their children (although most of them will not tell you they are wealthy and I wouldn't presume they were unless their kids pulled up to the soccer pitch in a limosine). What is the government, particularly the current Democratically lead government, good at--taking wealth from those who have it and giving it away to those who don't have it.

If the Obama Adminstration really wants to create jobs, the task is simple--stop taxing the rich so much. There is only so much the IRS can take from a rich person before that rich person stops investing their time and energy in creating something valuable. Tax breaks and reduced governmental mandates makes the cost of business go down, which will create wealth for rich people who will then hire poor people like me to work for them.

What strikes as particularly inane is how so many allegedly smart people in Washington don't seem to understand the basic economic principle. There is no single set of government jobs that actually creates wealth directly. Every government job must be funded by a group (and yes it is a group) of non-government workers paying taxes to support it. Hence, Sowell's point:

When government uses transferred wealth to hire people, it is essentially transferring jobs from the private sector, not adding to the net number of jobs in the economy.

I think at a gut level, most American understand this--hence the desire to start one's own business. The idea of being rich enough to employ other people is magical and inherently understood.

More On MLS Collective Bargaining Negotiations

There is much talk in MLS circles about the ending of the collective bargaining agreement and the efforts of the Player's Union to come to a new deal with MLS and the team owners. In a previous post, I suggested that the Union seek not a five year deal, but a three year collective bargaining agreement.

My reasoning was based largely on internal league economics, i.e. that within three years the league will have at least 18 teams and as many as 20. With the addition of Phildelphia Union in 2010 and the Portland and Vancouver Franchises in 2011, MLS will see a significant expansion in the next two years. With a CBA that would expire after two seasons of the Northwest trio, it is quite possible that MLS could be looking at a far different internal economic picture than the one they currently see.

But there are three other external factors that will be known within the next three years that could put both the league and the player's union current and likely future demands in a different light.

1. The first is World Cup 2010. Sure, a good U.S. National Team performance is likely to generate some interest in the MLS. How much interest is, of course, the question. With a number of players playing overseas, there will be pressure on the current crop of MLS players on the national team, of which there are few--Landon Donovan being the most obvious. But ESPN will also be looking to translate some of that World Cup interest to MLS interest. Of course, the deeper the U.S. run in the World Cup, the more interest that may be had. By 2013, ESPN and MLS will be coming to the end of their current contract and will be a year away from renewal. These factors can place some attention on a new CBA at a time when MLS will be looking for more money from the sports broadcasting giant.

2. The general economy will, if we dare hope, be on the rebound. The more disposal income Americans have, the more dollars MLS can compete for. A recent article in Parade Magazine by Sally Jenkins noted

While the average cost of attending an NFL game for a family of four is $412.64, it's a staggering $758.58 to watch the Cowboys. (That figure includes tickets and drinks for four people, as well as a couple of caps.)

For that same $758, I can get season tickets for two adults to DC United's 20 game package which includes all MLS home games and five other matches such as friendlies. So as the economy in general is beginning to recover, a concerted three year effort to market the game, both through the leagues, the teams themselves and most importantly the players can translate into not only better game day revenue for clubs, but pressure and incentive on ESPN to pay more and show more games.

3. World Cup 2018 and 2022 will be awarded. The U.S. is in a strong position to be awarded one of these and that means big revenue for soccer in America. The MLS will have between 8 and 12 years to capitalize on the coming tournament to increase not only the quality of MLS play, but to expand the league's player development, reserve divisions, youth academies and other aspects of the game in the game in America.

These three external factors, some longer term than others, can provide a boon for the Player's Union in the next round of CBA negotiations. That is why a three year CBA at this point is a smarter option for the Union.

The Hypocrisy of the Climate Changers

I don't know if Drudge was intentionally doing this (he probably was), but here are two items that appeared on the Drudge Report this evening:

Copenhagen climate summit: 1,200 limos, 140 private planes and caviar wedges

and

Christmas trees banned for climate summit

Now admittedly, the ban on Christmas trees has more to do with political correctness than with the climate impact of the trees. But just imagine the dichotomy, on a day when the Obama Administration is preparing to issue new rules that could require business to cut down on carbon dioxide emissions, that the natural carbon dioxide scrubbers (trees) are banned from a summit designed to reduce the trees workload.

I profess to not spending as much time on the climate change hullabaloo as others. But the environmental impact of a climate change summit seems more than a little hypocritical to me.