Sounders S2, the Growth of MLS, and the Future of US Soccer
Back in October, the Major League Soccer team from my hometown of Seattle announced an ambitious player development project. The club broke the news of S2: the Seattle Sounders second team that will compete in the USL Pro Division. USL Pro operates as the third-tier of professional soccer in the United States below Major League Soccer and the North American Soccer League. The Sounders join the Los Angeles Galaxy, Portland Timbers, and Vancouver Whitecaps in forming second teams to participate in this up and coming league. In an effort to facilitate fan support, the Sounders have created the Sounders Community Trust, an official supporter group that will own 20% of the team. Membership comes with voting rights, discounted lifetime season tickets, and the ability to elect an executive committee member.
The goal of S2 and other similar MLS second teams is to give both reserve players as well as promising youth team players an opportunity to play in a structured professional league. Rather than MLS reserve teams playing on the weekends, these second teams will be competing against non-MLS affiliated professional clubs in a more competitive league. Major League Soccer has long recognized the value of USL Pro, with some MLS clubs signing deals agreeing to loan at least four players out to partner clubs in the lower division. This structure parallels the player development and second team structure of the Spanish La Liga and German Bundesliga. Both of those countries’ national team pools are conveyor belts for young world-class talent, so MLS clubs are attempting to mirror this set-up in hopes of bringing the same results to the U.S.
Jugen Klinsmann was hired back in 2011 as not only the head coach of the United States Men’s National Team, but also as its Technical Director. When Klinsmann managed the German national team from 2004 to 2006, he stressed a similar message of revamping player development. The German national team has enjoyed a high level of success in producing talented young players over the past decade that can only be rivaled by fellow international soccer superpower Spain.
Klinsmann has begun his plan to institute sustainable success in American player development. He completely revamped the U.S. Development Academy and Major League Soccer Academy systems back in 2012. This restructuring has led to a dramatic increase in MLS clubs signing former academy players to homegrown contracts, giving them the first shot at signing players before other clubs. The thought is that this will eventually lead to the end of the MLS Superdraft, a model the league can’t hope to hold onto if it truly has ambitions of being a top league world-wide. As a result, MLS clubs are pouring money into their academies in order to produce top-notch talent they can sign to inexpensive contracts and develop in a professional setting.
Some major constraints that MLS clubs must operate within are the financial structure of the league, coupled with a unique salary cap requirements that clubs must work around. As a league with an ambitious long-term vision, the owners have agreed to a financing structure aimed toward steady growth in a variety of markets rather than rapid expansion in key markets. This decision is influenced by the specter of Pele and the New York Cosmos, and the subsequent crash of the North American Soccer League after his departure. The current salary cap is a meager $3.1 million, with a restriction that the team’s highest-earner make no more than $387,500 annually. Within this agreement is the Designated Player Rule, which allows each club to sign three players to higher contracts that are not counted against the salary cap. Additionally there is the inclusion of allocation money in financing. Clubs can sell players, as well as Superdraft, Expansion draft, and allocation draft picks for this allocation money. In MLS, allocation money holds heavy importance in a conservative league built for expansion — it can be used for anything from player contracts, to improving youth academies and reserve teams, or even building state of the art facilities to attract top-notch players.
The important role of allocation money in MLS success makes sustainable youth development even more paramount. Clubs can sign players to cheap homegrown contracts, and receive massive returns on investments in the form of allocation money from transfer fees. The current financing structure of MLS is based on long-term sustainability, genuinely passionate local and global fans, and a foundation that markets the league as a brand with low risk and exponential returns for investors in the future.
The conservative financing strategy is aimed at sustainable growth with potential huge returns in the future. In the current situation, Major League Soccer has a contract with Adidas meaning each team receives a portion of this revenue. This allows each club in the array of American markets to have a similar foundation to build upon. If MLS develops into the league MLS Commissioner Don Garber hopes it will be, they can scrap the league-wide uniform sponsorship deal and allow each club to sign deals with whomever company makes them the best offer. This past year, Arsenal F.C. of the Premier League left their deal with uniform provider Nike to sign a five-year contract with Puma worth 150 million pounds. Individual uniform sponsorships, as well as official sponsors on the front of jerseys, present potential massive profits that no other American sport can offer to investors.
This strategy of diversified growth has seen passionate and sustainable support for clubs in smaller markets such as Seattle, Portland, Vancouver, Kansas City, and Salt Lake City. The overachievement of clubs in smaller markets combined with the rapid growth in both quality of play and reputation of MLS over the past few years almost makes the relative under-achieving teams in major markets appear as a potential positive. The combative Garber has already begun a diversified array of projects that could reap massive rewards if the league continues to grow. If MLS can grow into an attractive global brand to investors, money could start pouring into untapped markets such as Los Angeles and New York, representing an investment with a potential massive return.
Garber is committed to molding MLS into a top league in the world with a distinct American flavor. The MLS Commissioner hopes to have 24 teams in the league by 2020, with New York City F.C. (co-owned by Manchester City and the New York Yankees) and Orlando City set to join in 2015, as well as Atlanta and a restructured second Los Angeles team beginning in 2017. An ownership group led by David Beckham is awaiting stadium approval in Miami before plans for an expansion team can be finalized. In addition to these concrete plans, the league is also considering expansion into markets including Minneapolis, Las Vegas, San Antonio, and Sacramento.
As a league looking for long-term sustainable growth, Garber has dismissed any talk of a relegation and promotion system. Such a system could see new clubs bouncing around divisions without any consistency, which could financially cripple clubs in their formative stages. In order to attract a wide American audience, the league hopes to have a model in which passionate locals fans support their clubs throughout a competitive league season for the Supporters Shield title. They hope to attract a broader American audience by stressing the importance of a postseason playoff system with the MLS Cup, as well as providing the U.S. Open Cup with lower leagues throughout the year for a European domestic cup feel.
A success story that increased importance of youth development and the Homegrown Contract program is that of Seattle Sounders right-back DeAndre Yedlin, whose impressive performances at this summer’s World Cup led to a transfer to Premier League club Tottenham Hotspur. The reported 4.6 million pounds Seattle received from the transfer fee will likely be invested in the newly formed S2 and their youth academies. In a developing league with high ambitions and a restrictive salary cap, talented and cheaply produced young players are incredibly valuable assets. A club can sign a player from their academy to a contract ranging from 50 to 80 thousand dollars a year, and potentially sell them for millions of dollars.
This is how a successful USL Pro could be the final piece to the puzzle in a sustainable structure that produces talented American soccer players, and the U.S. National Team truly competing on the world stage. MLS clubs having both their reserve players and youth-team players training week-in, week-out in a professional soccer league could lead to producing world class soccer players. The United States dominates a variety of team sports on the international stage, which has led many to wonder why the Americans have never had a player on a club like Real Madrid or Manchester United. The increased emphasis on youth development under Klinsmann will ensure that less world-class American athletes abandon soccer at a young age. A successful synergy between Major League Soccer and USL Pro will provide young American players with a platform to build successful European careers upon.
The Seattle Sounders exemplify the ideal model for a Major League Soccer club. The club has led the league in average attendance since it’s inaugural season in 2009, and posted an average attendance of 43,144 in 2012. They promote local “Cascadia Cup” rivalries with Portland and Vancouver in order to give the fans a stronger emotional tie to the club. They have also demonstrated a strong commitment to youth development, signing former Stanford standout Aaron Kovar, U.S. U-23 striker Sean Okoli, Tottenham Hotspur right-back DeAndre Yedlin, and 17 year-old striker Victor Mansaray. They also have the option of signing 2013 U.S. Developmental Academy National Player of the Year Jordan Morris — a player Jurgen Klinsmann recently called up for a pair of international friendlies.
All of the Sounders’ homegrown players should be on displayfor S2 when they begin play in USL Pro. The beauty of this new infrastructure is that it allows local players to gain valuable professional experience, while also captivating the hearts of fans. Supporters who follow S2 will know about the club’s brightest prospects, and will be truly invested in the future of the club. This kind of holistic support of Major League Soccer clubs is a reality owners could never have imagined before, especially when the league lost over $600 million between it’s inception and 2004. This increasing trend towards the MLS operating highly successful models has also seen clubs seek their own stadiums in an effort to increase revenue from ticket sales. A pioneer in MLS since their inception, the Sounders hope that S2 will be the final piece of the puzzle towards being a club that provides top-quality soccer for a passionate fan-base while simultaneously operating a successful business model.
The United States Soccer Federation clearly has a lot faith that Klinsmann is the man to lead this revolution. USSF President Sunil Gulati offered the German a contract extension back in 2013, demonstrating that no matter the success of the World Cup they were prepared to back Jurgen for the long-haul. This level of faith demonstrated by the USSF has allowed Klinsmann to give opportunities with the Senior national team to young players such as Rubio Rubin, Greg Garza, Miguel Ibarra, Jordan Morris, and Emerson Hyndman.
The frustration with Major League Soccer has historically been that the quality of play, as well support of the clubs, pales in comparison to the dominant European leagues. Trying to get a league that can compete annually with the most profitable leagues throughout the world provides you with a “chicken or the egg” dilemma for expansion. Do you attract attention and aim to attract investors by allowing free-spending to bring the world’s best players to play in front of lucrative American markets? Or do you use a conservative, ground-up approach with the goal of achieving long-term sustainable success across a variety of markets in a genuinely competitive league? The latter option provides the potential for the intangibles of why people around the world love soccer: genuine support for local clubs, passionate rivalries amongst clubs that define you as a person, and a borderline unhealthy relationship with the success of your team. The United States Soccer Federation has demonstrated support for this plan with the long-term commitment to Klinsmann and his focus on player development. Garber hopes to have MLS be a top league by 2022. This ambiguous deadline coincides with the USMNT’s investment in youth and their hopes at the 2022 World cup in Qatar.
By Joseph Mondello
