Up-and-down | MLS Pro-Rel debate returns

  • CAS expected to rule on demand from two lower-league clubs that USSF adopt promotion and relegation
  • Miami FC and Kingston Stockade may force Fifa to clarify its position on MLS ‘exemption’
  • Australia and India – the other big countries with closed football leagues – exploring options to adopt promotion and relegation

Stadium of Light, Sunderland, 5pm April 29, 2017. An elderly man sits alone, surrounded by empty seats. He is decked out from head to toe in red and white: track suit, scarf, baseball cap. His head is bowed, his hands joined, as if in silent prayer. He is crying. He has just seen Sunderland lose 1-0 to Bournemouth, condemning the team he loves to the drop into the Championship.

Wembley Stadium, London, 5.53pm May 29, 2017. Huddersfield Town’s Christopher Schindler tucks a low shot past keeper Ali Al-Habsi to win the English Football League play-off final against Reading 4-3 on penalties, after a goalless draw over 120 minutes. The Huddersfield fans behind the goal go bananas. Hugging strangers, jumping up and down, barking celebratory nonsense, temples throbbing from a mixture of disbelief and orgiastic joy – the usual stuff when a Championship team reaches the promised land of the Premier League, sweetened by an absence of 45 years from the top flight.

These are the extreme emotions produced by relegation and promotion. Heaven and hell for fans all around the world. But they are emotions fans of Major League Soccer teams have never felt.

The closed nature of MLS – its lack of relegation and promotion – was one of the issues which came back into the forum of debate in the US following the country’s October elimination from 2018 World Cup qualification by Trinidad and Tobago (Fifa world ranking: 87).

‘Minor league soccer’

Supporters of ‘pro-rel’ argue that never facing the threat of relegation means franchise operators are under no real competitive pressure – the type of pressure which makes owners elsewhere in the world invest in the best playing talent and develop elite youth academies. As a result, the quality of MLS players will never match that in other top leagues.

As economist Stefan Szymanski says in his book Money and Football: “The fact is that the American organization model works well when there is limited competition from elsewhere (as in American football, baseball, and basketball), but it’s not designed for a competitive market. Unless their business model changes, MLS may always be minor league soccer.”

Supporters of the status quo say without a closed model there would be no league in the country. Gary Hopkins, author of Star Spangled Soccer: The Selling, Marketing, and Management of Soccer in the USA is of this view. He tells SportBusiness International: “Under no circumstance could relegation and promotion have worked for soccer in the USA over the past 25 years. It would have killed investment dead and still would. The price of entry into MLS is now $150m (€124m) and building a required new stadium $200m, so a $350m investment.

“No one is going to risk this if relegation to USL [second-tier United Soccer League] or NASL is a possibility. Major League Soccer, indeed soccer as a whole, is not strong enough financially or as far down its evolutionary path as necessary to support such a development. In 30 years’ time, when MLS has a billion-dollar TV contract and the USL or NASL has 20 teams with 20,000-seat soccer stadiums and a major TV contract, maybe. But even then…”

The debate will be given fresh stimulus in the coming months from two quarters. In February’s elections for the presidency of the US Soccer Federation, two of the eight official candidates – former players Eric Wynalda and Kyle Martino – are advocates of relegation and promotion. Then, in March or April, the Court of Arbitration for Sport in Lausanne is expected to rule on the case brought last year against Fifa by Miami FC of the North American Soccer League and Kingston Stockade FC of the National Premier Soccer League to attempt to force the USSF to adopt promotion and relegation.

Professional clubs in the US and Canada are not the only interested observers. Any argument from Fifa that closed, franchise leagues are a part of modern football will not go unnoticed among the richest European clubs. Europe’s elite have had a fractious relationship with Uefa, European football’s governing body, since their 1998 discussions with sports marketing company Media Partners (now Infront Italy) about creating a breakaway super league.

Not for MLS clubs the joy of promotion…

Article 9

Miami and Stockade lodged the case with the CAS in August 2017. They are represented by Jean-Louis Dupont, who led the legal team which forced the landmark Bosman ruling on player transfers in December 1995, defeating Fifa and Uefa in the process. They claim that by not requiring the USSF to respect Fifa statutes on promotion and relegation, the governing body is in breach of Swiss law on associations and Swiss competition law.

At the heart of the case is Article 9 of Fifa’s statutes, which states: “A club’s entitlement to take part in a domestic league championship shall depend principally on sporting merit. A club shall qualify for a domestic league championship by remaining in a certain division or by being promoted or relegated to another at the end of a season. In addition to qualification on sporting merit, a club’s participation in a domestic league championship may be subject to other criteria within the scope of the licensing procedure, whereby the emphasis is on sporting, infrastructural, administrative, legal and financial considerations. Licensing decisions must be able to be examined by the member association’s body of appeal.”

Whether or not the two clubs are successful, the case may push Fifa to spell out unambiguously what its statute means with regards to MLS and the USSF, and, more generally, whether it is merely a guideline or should be considered mandatory for national associations.

Josh Levy, an associate at law firm CMS Cameron McKenna Nabarro Olswang, says that in applying Swiss law, CAS is likely to take into account the original purpose of the statute. This was to ensure that a situation which arose in Spain in 2007 could not be repeated. A wealthy investor who owned fourth division club Granada had bought second division club Ciudad Murcia and moved the club to Granada, renaming it Granada 74, thus giving the city a second-division team without it having to be promoted.

Levy tells SportBusiness International: “It all comes down to the interpretation of Article 9. Does it require all leagues to have a promotion and relegation system, or does it give Fifa room to manoeuvre, depending on the individual circumstances of the league and the country, of how football is going in that country and of all sorts of issues? If you go back to the history of Article 9, the purpose of the statute was never to make promotion and relegation mandatory, but to prevent the Murcia/Granada situation occurring again. But if CAS says that Article 9 is not mandatory, that could open a can of worms politically.”

‘The very essence of football’

In March 2008, in the wake of the Murcia/Granada case, Fifa issued a statement that the system of promotion and relegation of clubs was “the very essence of football”. It explained the thinking behind what was to become Article 9.

Concept: Results on the pitch decide whether a club goes up or down a level in every championship around the world except in the United States and Australia, where there are ‘closed’ leagues. Recently it has been possible to achieve promotion artificially by buying or moving a club. Fifa wishes to make sure that this cannot happen again.

Objective: To protect the traditional promotion and relegation system for clubs based purely on sporting criteria – which is Application: The decision was taken at the Fifa Executive Committee meeting on 15 December in Tokyo. The article will now be submitted to the Congress next May for approval and implementation as a ‘new article’ within the rules governing the application of the Statutes.

Example: In Spain, the president of fourth division club Granada bought second-flight Murcia then moved the club near to Granada, allowing Granada 74 to move up artificially into the second tier.”

Levy points out that after the incorporation of Article 9, Fifa had provided clarification on how it should be interpreted.

On May 30, 2016, in a response to a query from the Football Federation Victoria in Australia about the closed nature of the country’s A-League, Fifa wrote: “We would like to reiterate our position communicated to you in correspondence dated 10 March, 2014, that the principle of promotion and relegation is of fundamental importance to Fifa, as provided in Article 9. We understand and are sympathetic about the benefits promotion and relegation can bring in terms of incentivising clubs in the A-League and the National Premier League to perform both on an off the field.

“However, the principle of promotion and relegation needs to be implemented at the right time and needs to take into consideration the specific nature of club football in each country. Given that the Football Federation of Australia is already committed to the introduction of this principle at the appropriate time, any licences granted to A-League clubs expressly provide that participation in the A-League is subject to any promotion and relegation system implemented by the FFA. We shall not intervene in this matter at this point in time.”

…or the pain of relegation

Success story

Of the 202 professional leagues in the world, 85 per cent have promotion and relegation. In most of the cases where it doesn’t exist, it is because the country is too small or too poor to sustain more than one professional league. The main exceptions to this are the US, India and Australia. In India and Australia, however, talks are under way to move towards a system of relegation and promotion. Plans in both countries face major obstacles but if successful would isolate MLS.

In October, the Australian Association of Football Clubs unveiled a plan to create a national second division from 2019 with a view to creating an integrated league structure with promotion and relegation to the A-League by 2024. The club association said it was in talks with the FFA and A-League clubs about the plan.

The Asian Football Confederation, in collaboration with Fifa, is working with the private, franchise-based Indian Super League and the national association-backed I-League to create a unitary structure for the professional game which would involve relegation and promotion. One source close to the process says that “when and how promotion and relegation will happen is not certain”. The earliest it could happen is probably 2019 or 2020.

There is little question that when MLS was born, as part of the process of bringing the 1994 Fifa World Cup to the US, special measures to ringfence investments were justified given the troubled track record of the sport in the country. The question for Fifa in 2018 is whether it accepts a closed, franchise league as a permanent situation or still views MLS as a temporary exemption to Article 9. And if so, how temporary.

MLS’s success since its 1996 launch may undermine the argument for its privileged status. According to Forbes, the average MLS team in 2017 was worth $223m, up 20 per cent on 2016. LA Galaxy, at $315m –with annual revenues of $63m – is the most valuable despite finishing last in the 2017 MLS overall table.

The $150m entry price for expansion teams is up from $40m just five years ago. Soccer United Marketing, which handles the commercial rights to MLS and the national teams of the US and Mexico, is valued at $2bn following the $400m sale of private equity company Providence’s 20-per-cent stake last year.

Rick Burton, professor of sport management at Syracuse University in New York, says that MLS commissioner Don Garber has done “a brilliant job” of wealth maximisation and helping owners to increase the value of their assets. He doubts that there will ever be a groundswell of opinion in the country pushing to abandon the current model.

“The fact that we are not generating enough competitive countries on this side of the pond has to be the larger issue for Fifa. You have a World Cup largely dominated by two continents – Europe and South America. Fifa has got to look at whether that is a sustainable model for the worldwide growth of football. But if Italy didn’t make the World Cup, the USA’s failure to do so can’t be laid off on relegation.

“The approach of MLS is a wealth maximisation model and not a utilitarian model, where the club belongs to the community. This is a critical difference to a lot of other countries, although it has been changing in places like England, with the arrival of people like the Fenway Sports Group [owners of Liverpool] and [Roman] Abramovich at Chelsea. It is to get in at X and to get out at 10 times X. On that level, MLS has been enormously successful. It is profitable, sustainable, growing. I am not surprised that Eric [Wynalda] has considered [promotion and relegation] or put it into his portfolio as to why he should be selected but there is no undercurrent bubbling to the surface that relegation would create better players.”

“What is joy without sorrow, what is success without failure?” said Mark Twain. “You have to experience each if you are to appreciate the other.”

But the thousands of Toronto FC fans who crammed into the city’s Nathan Phillips Square in December to celebrate the team’s first ever MLS Cup victory would no doubt tell you that their joy was every bit as real and profound as that of Huddersfield’s supporters. And unless the Court of Arbitration for Sport delivers a massive surprise in the next few months, images of Atlanta United, Portland Timbers or Montreal Impact fans crying as their team gets relegated to the USL or NASL are still a long way off.

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