Posted by: stan chelney | March 10, 2010

MLS At A Crossroads Over Landon Donovan Contract

The ongoing debate concerning Landon Donovan’s future highlights that Major League Soccer stands at a crossroads with respect to its business model.

On the one hand, MLS has preached fiscal responsibility and the need to build a financially sustainable model for the league.  MLS’s insistence that player salaries must remain under control, to the exclusion of free agency, has caused friction in its current collective bargaining negotiations.  On the other hand, MLS is keen to hold on to star players such as Landon Donovan, even where it is evident that the player’s ability has outgrown MLS.  Donovan’s recent 10-week loan spell with English club Everton has proven beyond doubt that he is a capable player who fits in perfectly in a world-class league such as the English Premier League (EPL).  Yet, Donovan’s request that MLS extend his loan beyond the start of the upcoming MLS season has been met with resistance from the league and, in particular, from LA Galaxy head coach Bruce Arena.

Though MLS’s desire to keep one of its most dynamic and popular players is understandable, MLS would be well-advised to let Donovan go.  Not only should MLS extend Donovan’s loan through the conclusion of the EPL season, MLS should sell the player to the highest-bidding club for which Donovan agrees to play.

Doing so is fully consistent with MLS’s financially conservative business model.  The transfer fee for Donovan promises to be the highest ever paid for an MLS player. Whether MLS accepts Everton’s offer of £7 million or holds out for more money from bigger European clubs — Chelsea has reportedly offered £10 million — the financial windfall to the league resulting from Donovan’s sale will be significant.  MLS can use the funds to address concerns voiced by its other players that their salaries need to be increased, or it can apply more resources to grow the league’s brand domestically.

Allowing Donovan to transfer complements MLS’s sustainability model because it recognizes that, at least at present day, MLS is unable (and unwilling) to compete with established European clubs for the services of world-class players.  By design, rather, MLS currently strives to grow by developing more regional talent.  While MLS certainly seeks to enhance popularity and quality of play by bringing in designated players who earn considerably above the average MLS salary, those players are almost exclusively at the end of their international playing careers, and therefore, can no longer compete at the highest levels.  (David Beckham seems to be the sole outlier in that he is closest to the prime of his playing career, but the Beckham experiment has more to do with marketing and publicity than fiscal reality.)

Selling Donovan makes perfect sense even beyond immediate financial concerns. Throughout the world, soccer fans tend to support multiple clubs.  It is common for spectators to cheer on a super-club such as Manchester United or Real Madrid in the EPL or La Liga, respectively, and still turn out to support their local club, even if it plays in a vastly inferior league.  MLS can boost its own popularity by fostering a similar strategy at home.  Television coverage of international matches is available in the US at unprecedented levels, allowing soccer fans never-before-seen access to top leagues around the world. MLS only stands to gain if America’s brightest talents excel in those leagues.  Not only has Donovan’s recent loan created hundreds of new Everton fans in the United States, it has no doubt invigorated a wave of American soccer fans looking to attend games here at home.  Each such person represents a potential consumer of MLS this season.

Additionally, allowing former MLS stars such as Donovan (not to mention Dempsey, Altidore, and Holden) to move on to a respected league like the EPL enhances MLS’s image throughout the world, as well as in the United States.  The more that MLS players demonstrate that they can compete with the best players in the world, the higher MLS stock will rise.  The casual American soccer fan who may not have considered attending an MLS game previously will appreciate that MLS can offer a high quality soccer experience.

By the same token, the average quality of incoming American players to MLS can only improve if domestic youth players are motivated to stick with soccer as their sport of choice.  Watching their national heros experience success worldwide will motivate more of America’s youth to choose a career in soccer.   The net increase in talent can only inure to MLS’s benefit.

Finally, the excitement about Donovan’s recent success at Everton has placed MLS in a public relations quagmire.  Does MLS really want to be perceived as stunting the development of the US National Team’s brightest star on the eve of the World Cup?  Does MLS want to be seen by its own players as standing in the way of a golden opportunity overseas?  Whatever its reasons, the league must recognize that it is no different than the parent of an honor student whose hard work has paid off in a scholarship at a top-flight university located far from home.  No matter the separation anxiety it may feel, MLS must recognize that the right thing to do is to allow its brightest star to fulfill his potential abroad.

MLS has said time and again that it strives to build long-term success, not short-run gains.  The Landon Donovan situation affords MLS the perfect opportunity to further this long-term strategy.  Only by allowing Donovan to move away from MLS can the league truly maximize its future value and remain true to its own business model.

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Responses

  1. I agree completely with the sentiment, but I wonder whether the financial math really pays off for MLS. Donovan is already recognized as a leading star in US soccer, and he’s been part of MLS marketing campaigns for the past three years. As the league approaches a defining summer that will feature the USMNT in the World Cup, how would it look if not a single player from MLS was represented?

    What do you tell advertisers and TV broadcasters when you can’t hold on to high-profile players for any substantial period of time? Some MLS players are worth far more than a $7 million transfer and good PR. I’d guess Donovan is one of those players.

  2. […] says that Landon Donovan’s success in England means that the MLS business model is at a crossroads with respect to […]


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