MLS negotiators have drawn a line in the sand on the most important collective bargaining issue, free agency. Even in the face of a threatened work stoppage, MLS President Mark Abbott stated that free agency “is something the league is not prepared to do.” He added, “If the players choose to strike . . . [it] will be because [they] continue to insist on changes in our system that we simply can’t make.”
Some commentators have criticized MLS’s resistance to allowing a player to freely negotiate his contract with the team of his choosing. They have argued that free agency (perhaps even in restricted form) will not harm MLS economically, particularly in light of the league’s hard salary cap. This argument misses MLS’s primary concern. Free agency — in any form — is antithetical to MLS’s ‘single entity’ structure under which the league, not the teams, owns and negotiates all player contracts.
The players challenged the single entity structure in the landmark Fraser v. MLS lawsuit, arguing that the league’s system “is simply a conspiracy among de facto team owners to fix player salaries” in violation of the antitrust law. They lost that case. The Court instead concluded that MLS operates as one business rather than as a joint venture of multiple individual teams and, as such, could not be said to collude with itself. In reaching this result, the Court noted:
At issue in this case is MLS’s control over player employment. MLS has the ‘sole responsibility for negotiating and entering into agreements with, and for compensating Players.’ In a nutshell, MLS recruits the players, negotiates their salaries, pays them from league funds, and, to a large extent, determines where each of them will play. (Emphasis added.)
Based on this fundamental structure, the Fraser court observed: “In many ways, MLS does resemble an ordinary company; it owns substantial assets (teams, player contracts, stadium rights, intellectual property) critical to the performance of the league . . . .”
What this all means is that MLS is now justified under the law to keep player salaries artificially low — but only as long as it operates as a single company. If MLS were to accept the players’ proposal on free agency — wherein teams would bid against one another for the right to sign players — MLS would risk undermining the legal basis on which its single entity organization rests. That is what Mr. Abbott means when he says that MLS is unprepared to make changes in its “system.”
Unlike the other items on the bargaining table (such as increased salaries or guaranteed contracts), free agency is a huge issue for MLS. It hits at the heart of the league’s identity as a single entity and is critical to its business model. Unless and until the players have sufficient leverage to force MLS to change its system, they will have to play within it. The union has done little to demonstrate that now is that time.