Features

April 15, 2012

Analysis: MLS growth v A-League dysfunction, by Chicago Fire founding GM Peter Wilt

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Major League Soccer in the United States and Canada and the Hyundai A-League in Australia and New Zealand have remarkable similarities, with the exception that the A-League was birthed a decade after MLS.

Due to these similarities, SBI invited me to provide my perspective on the A-League’s current “challenges” in context with MLS and its growth history.

It’s almost as if the A-League is following 10 years behind MLS’ footsteps.  Both Leagues started strong, hit a rough patch then faced a day of reckoning.  MLS handled its day superbly in 2002.  The A-League may soon be facing its day.  How it is handled will likely determine the League’s long-term sustainability.

I’ve chosen to break the comparison into half a dozen categories offering context and opinion.  I strongly suggest that the reader take this piece with a heavy dose of salt.  While I have more than a quarter century of soccer leadership experience in the United States with a fair track record on both the commercial and competitive sides, my knowledge of the A-League is not so grand.

“If the owners are not engaged, consulted and used to drive the A-League, the league will fail.  Palmer and Tinkler may have been abrasive, arrogant and disrespectful, but they had the resources and at one time, the desire, to set the A-League on to the path towards a prosperous future”

So it is recommended in advance of this piece, that the reader consider that the opinion portion is provided by an outsider who has only followed the A-League with interest for a little more than a year.  As a virtual supporter of Melbourne Victory I’ve watched dozens of A-League and Socceroos matches over that time on television and the Internet.

I’ve also read hundreds, if not thousands, of historical and contemporary articles, essays, Tweets and blogs on A-League teams, players, officials and issues.  That has all given me a little bit of knowledge on the subject of soccer … errr … football Down Under.  And as folks are wont to say: “A little bit of knowledge can be a very dangerous thing.”

And as a matter of further disclosure is the fact that at the bequest of A-League supporters, I have submitted my name unsuccessfully for several leadership positions in the A-League.  With those caveats and recitals out of the way then, let’s examine, compare and contrast America’s upstart league from the mid-1990s and the A-League.

History

Both MLS and the A-League are descendants of ethnic-based predecessors that provided the foundation for the sport in their countries.  MLS followed the North American Soccer League a dozen years after the latter folded in 1984.  In between were a number of professional and semi-pro indoor and semi-pro outdoor leagues including the MISL, AISA, NPSL, WSA, APSL and USISL.

The A-League followed by 18 months the National Soccer League which operated from 1977 through 2004 under the names Philips Soccer League, Coca-Cola Soccer League, Ericsson Cup and briefly during the mid-1990s as the A-League.

Audience

MLS began in 1996 as a 10 team league dependent on support from suburban youth soccer families and ethnic audiences who were attracted to see star players from their native countries. Players like Mexico’s Carlos Hermosillo, Poland’s Piotr Nowak, El Salvador’s Raul Diaz Arce, Colombia’s Carlos Valderrama and Bolivia’s Marco Etcheverry.  For the most part, MLS lacked  traditional, serious, soccer fans that followed the team and the sport passionately.  DC United and Chicago Fire, when added in 1998, were the exceptions with sizable active supporters sections.

In the League’s early years, MLS teams did a great job – and still do – manufacturing ticket sales through outbound sales, promotions, discounts and leveraged sales.  Organic sales based on general fan and community interest, however, was limited and only spiked with appearances by a few name players such as Freddy Adu and Jorge Campos.

Development of purpose-built soccer stadia, the advent of designated players - most notably David Beckham – and expansion into Canada and the Pacific Northwest in the last five years spurred acceptance by traditional young, urban active soccer supporters that transformed the experience for all fans at MLS games and has made MLS a profitable business for many of its teams.

Similar to MLS, the A-League also fights other codes that are more popular with mainstream Australian media and sports fans.  The old NSL went head to head with the other codes in the winter until shifting to summer play in 1989.

The A-League fan base seems to resemble early MLS: large majority of soccer families and varying degrees of ethnic and young urban active supporters.  Most teams appear to have relatively small, but very loyal active supporters sections with the North Terrace at Victory home matches and the Cove at Sydney FC matches being the notable, larger, exceptions.

I imagine the Orange Army formed by Brisbane’s Den and River City Crew as well as other supporters groups around the A-League may argue that for big games they can, and do, get larger crowds among their supporters base.  These groups are a great sign that the potential exists to replicate the size and passion of supporters groups around the world including MLS.

Structure

While MLS and the A-League have many similarities, organisational structure is not one of them.  There are two significant differences:

  1. MLS is relatively independent from US Soccer while the A-League is part and parcel of the Football Federation of Australia.
  2. MLS is a single entity and its teams are centrally owned by the league.  The team owner is actually an owner-operator and a shareholder in the league.  The A-League is more of a traditional franchise system with owners securing local rights for a negotiated period of time.

The United States Soccer Federation sought bids for a Division 1 soccer league as part of FIFA’s requirements to host the 1994 World Cup.  MLS beat out two competitors using a single-entity ownership model.  It is a private model separate from US Soccer except that MLS must maintain minimum standards to gain US Soccer’s sanctioning.  Officiating and certain regulations such as maximum number of international players are established by US Soccer in concert with MLS.

MLS teams share 30% of their ticket revenue with the League.  Also the League negotiates player contracts (though teams consult and even direct this process to a large extent).  Individual teams, not the League, decide who is and isn’t on their roster, within parameters of League regulations including the salary cap.  This does mean, however, that the League, and not the teams, holds players contracts and pay players salaries.

MLS’ commercial division, Soccer United Marketing, handles broadcast and sponsor sales for MLS and other North American soccer properties.  Profits from SUM and the revenue sharing essentially pay for all player salaries and League operations allowing teams to try to offset their own operational costs with their share of local ticket sales (70%) and local broadcast, sponsorship and stadium revenue.

The FFA operates, oversees and regulates all aspects of the A-League including sale of team ownership licenses, which can, and have been withdrawn for violating the licenc agreement.  The A-League sells 10-year licences to operate A-League teams.

The price of that licence has been inconsistent, which has caused enough discontent in at least one case for Newcastle Jets owner Nathan Tinkler to return his  two years into his stewardship.

The price of MLS teams has also been somewhat inconsistent, but has generally increased over time.  The original 12 MLS teams cost $5 million each.  Values have increased to the reported $40 million fee paid by the League’s most recent expansion team in Montreal.

MLS began with 10 teams, contracted two –Miami and Tampa Bay– and added eleven expansion teams in its 17 year history. The A-League began with eight teams, folded three –New Zealand, North Queensland and Gold Coast – and added four expansion teams in its seven year history.  Additionally, Western Sydney will be added in 2012-13 and the fate of Newcastle Jets is to be determined.

Not everything is different between the two League structures, however.  There are some similarities.  Both MLS and the A-League have a salary cap negotiated with their players association, both lack promotion and relegation and both have regular season and post-season playoff champions.  Also, with the introduction in 2012-13 of the FFA Cup, both Leagues will offer knockout cup competitions open to clubs at all amateur and professional levels similar to England’s FA Cup.

Leadership

Both MLS and the A-League have had two leaders.  Both Leagues had initial leaders that established the foundation, but then fell out of favor with their bosses before being replaced by the respective Leagues’ current leaders.  The difference of course is that due to the League’s structural differences, FFA’s first CEO John O’Neill had his falling out with FFA Chairman Frank Lowy while MLS’ Commissioner Doug Logan had his fall out with the actual owners of the MLS teams.

MLS operational leadership has morphed from centralised at the League level in the first few years under Loganto a localised operation under the reign of current Commissioner Don Garber who has deftly steered the League since arriving in 1999.  Garber was a long time NFL executive and previously served as President of NFL Europe.  Out of necessity in the beginning, the MLS front office provided hands on assistance to teams in many departments including player and staff recruitment, marketing and ticket sales.

DC United was the most independent team early on and their expertise resulted in the most success on and off the field. Chicago followed that path in 1998 and, under Garber’s leadership in 2000, the rest of the league followed DC’s independent model.  This allowed the league to focus on growing SUM, its new commercial arm, win its legal battle with the players over the legitimacy of the single entity structure and pursue expansion in a controlled manner.

The FFA’s first CEO, John O’Neill, arrived from Australian Rugby Union in 2003.  His three seasons in charge of FFA resulted in a brilliant reorganisation of soccer in Australia.  The men’s national team had a resurgence under O’Neill as he appointed head c0ach Guus Hiddink and the NSL was reconfigured as the streamlined, stronger, televised and more popular A-League.  Attendance climbed from 4,000 per game at the end of NSL to more than 11,000 per game in the first year of the A-League.

Ben Buckley, Lowy’s handpicked successor of O’Neill, maintained the A-League’s original model with less success.  The national teams have struggled and the FFA World Cup bid wasted more than $45 million somewhat controversially and ultimately without success.  A-League attendance grew during Buckley’s first two seasons, but then declined in the ensuing four years.  More troubling is the fact that almost as many teams have left (three plus Newcastle) as joined (four plus Western Sydney) the A-League since Buckley took over in 2006.

Lyall Gorman was hired from Central Coast Mariners in 2010 to serve as “Head of the A-League”.  Gorman has mainly been a hard-working bureaucrat handling operational issues, while leaving the policy making and important decisions and negotiations to Buckley and Lowy.

Crisis management

An important reflection of the Leagues’ structure and leadership is their respective success in crisis management.  After MLS’ new league novelty began to wear off, it expanded to Miami and Chicago in 1998.  Success in Chicago gave the League a bump, but bad stadium deals, little interest from mainstream media and disrespect from serious soccer fans led MLS to stagnated crowds, falling sponsorship revenue and little interest in expansion.  Neither the League nor any of the teams were generating the necessary revenue to offset operational expenses – not to mention mounting legal costs from a players’ lawsuit challenging MLS’ single entity status.

Despite six years of consistent attendance hovering around 14,000 per game, the League’s future looked bleak in 2001.  No team was close to breaking even, MLS was facing a critical labour-based law suit and there were few signs that the future would improve.  Three men owned 90% of the teams and the line to join them was shorter than the line for Clive Palmer fan club membership applications on the Gold Coast.

The 2001-02 offseason was MLS’ day of reckoning.  MLS owners seriously considered cashing in their chips and folding the League – and they really didn’t have many chips to cash in.  Visionary thinking and strong leadership from Don Garber and the League’s three main owners saved MLS that winter.

Several key milestones changed everything and set the stage for the process that ultimately led to MLS’ phenomenal growth over the next decade and its current stability.  Critical to moving forward was the owners’ decision in January, 2002 to contract Miami and Tampa, create Soccer United Marketing and adjust the team and League revenue sharing.  The clincher was MLS’ court victory March 20, 2002 against the players union.

These were the decisions that provided the necessary environment for the owners to begin building purpose-built stadia, grow interest in expansion and increase attendance, television viewership and team value.  I don’t believe MLS would be alive today without the courage, vision and leadership shown by Commissioner Garber and owners Phil Anschutz, Lamar Hunt and Bob Kraft.

The A-League has unfortunately had more than its share of crisis management the last couple years, much of it brought upon by its own doing.  The main one from two years ago involved the collapse of the North Queensland Fury.  The Fury returned its licence after just one season and the FFA funded its second and final year on the cheap.  The club was undercapitalised from the beginning and rather than closing shop after owner Don Matheson returned the license, the FFA did a disservice to the community and any potential buyers by running the club into the ground.

This season the FFA has very publicly lost two wealthy investors and made transparent a relationship with team owners that can be described generously as dysfunctional.  I won’t regurgitate the ugliness of the last two months as anyone who has read this far surely is all too well aware of the details in the bitter public dispute between the FFA and Gold Coast United owner Clive Palmer and Newcastle Jets owner Nathan Tinkler.  In a desperate attempt to save the League, the FFA and A-League owners have created an independent committee, including three owner nominated representatives, intended to address the dysfunction in their relationship.

Future

Well, the first five sections were the easy part… laying out what got us here for both MLS and the A-League.  This last section is the most difficult and most important.  Neither is simple, but let’s take MLS first.

MLS is positioned very well for long term sustainability.  Professional soccer has arguably finally cracked the long desired list of America’s big four sports.  The US now has the necessary soccer infrastructure and culture in place to be considered a true soccer nation.  The components of that infrastructure and culture include the kids and adults who participate, watch and care about the sport at all levels, the purpose-built stadia, the organisations that develop players, the media that communicates the sport and the professional teams that stage the games at the highest level.

MLS needs to continue to manage its growth.  Unlike its NASL predecessor, MLS has been very careful to crawl before it walks and walk before it runs. Controlling expenses, expansion and expression has allowed an evolution of soccer if not a revolution.  Slow growth, good internal and external partners and being opportunistic has been a key to MLS’ current position and will continue to be important for its sustainability and growth.

Now the future of the A-League…OK…rather than reinvent the solution, I’m going to tweak or clarify David Davutovic’s plan in last week’s Herald Sun:

5-STEP PLAN TO FIX THE A-LEAGUE

1. GET WEST SYDNEY RIGHT

This team now becomes the most important piece in the history of Australian soccer – if it fails, the A-League may not die, but another radical reform would be required.

2. A NEW TV DEAL

Crucial for both the short and long term. Clubs now receive a $1.2m TV subsidy from the Fox Sports deal, but they’ll get a larger dividend from the new deal which is likely to include a Free-to-Air (FTA) component. FTA coverage is crucial for the game’s exposure.

3. EMPLOY AN AUTHORITARIAN A-LEAGUE CHIEF

Rumours are rife the head of A-League, Lyall Gorman, will be deployed to run west Sydney, but either way a new A-League chief must be recruited. A commanding but respected figure is needed, who can repair relations with A-League clubs, take the heat off Frank Lowy and Ben Buckley and become highly visible.

4. IMPROVE STADIUM DEALS

Most clubs are hampered by poor stadium deals, including Brisbane Roar and Sydney FC. It’s difficult for the clubs to negotiate individually, hence FFA needs to engage in negotiations and use Socceroos and national team games as a bargaining chip.

5. GIVE CLUBS GREATER AUTONOMY

The independent A-League committee, which will include three club chairmen, must work. FFA says it will allow clubs a greater voice and the owners are genuinely excited at the prospect.

This is a very good plan, although it should be noted that three of the five steps (#1, 2 and 4) are self-evident and easier said than done.  The success of #5 is dependent on the person who fills the shoes of #3 and the authority he or she is given.  If it’s a Buckley puppet, I’m afraid the committee’s purpose will fail.

Effective communication using consistent, honest and intelligent dialogue is required for the committee to succeed and for the owners to shape and embrace the future of the A-League.  This is their league as much as it is the fans’.  If the owners are not engaged, consulted and used to drive the A-League, the League will fail.  Palmer and Tinkler may have been abrasive, arrogant and disrespectful, but they had the resources and at one time, the desire, to set the A-League on to the path towards a prosperous future.

Lousy communication eliminated two of the nation’s few people who have the ability to assure a solid future for football in Australia and New Zealand.  That is much more than unfortunate, but it cannot be the focus of this winter of reckoning.  The A-League must look forward not back.  The A-League must engage, not put off.  The A-League must connect with all its stake holders to create a league that will be around for our children, for our children’s children and for their children.

“If the owners are not engaged, consulted and used to drive the A-League, the league will fail.  Palmer and Tinkler may have been abrasive, arrogant and disrespectful, but they had the resources and at one time, the desire, to set the A-League on to the path towards a prosperous future”

 


  • Pico300zx

    Fans of the a-league are screaming for this guy to be brought in. He isn’t in the country nor does he know our football back to front, but he listens and learns from what people say. The FFA is notorious for there ego, they have said and I quote “they will not be dictated too by the fans”. Soo many issues in the a-league are due to the FFA not willing to listen to fans or the club owers.
    There is a real feeling in the eyes of fans, of no passion for footballs reputation from the FFA. When issues surface in the media the FFA doesn’t comment unless social media berates them for some kind of response to defend the games reputation.
    We need leaders that stick up for the game and want it to succeed. The current leadership seem like they just want there Xmas bonus and want to keep there noses clean long enough to cash out before they get found out.

    Peter, fingers crossed you are down under one day to help us get out league right. There is no quick fx, it’s got to be done right and over time.

  • Oz_football_fan

    Thanks for your analysis Peter.
    I am completely shocked that you applied for positions but was not appointed in a position with FFA. We really need someone like you! We are blessed to have your interest, let alone your willingness to get over here and get your hands dirty!

    I think you raised some necessary points. A competition can’t consistently have new and then defunct teams. If anything has been learnt about what happened with North Queensland Fury or the Gold Coast United, it’s been the complete disrespect of those local communities. Buckley has been saying that West Sydney will be a ‘bottom up approach’, well that’s what we always needed and still need across the league!!

    Thanks again Peter.
    PS. I honestly think the FFA should buy you a private jet so you can come over here any time to discuss your perspective on the game and the business side of it.



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