Promotion and relegation could unlock U.S. soccer's potential - Riccardo Silva
In June, international media rights company MP & Silva offered Major League Soccer $4 billion in exchange for 10 years' worth of global media rights from 2023, after its current deals expired.
The offer was at least four times higher than the value of the present contracts, but it had some important conditions: It included two lower tiers -- North American Soccer League (NASL) and the United Soccer League (USL) -- and, crucially, MLS would have to commit to a system of promotion and relegation across all three divisions.
MLS turned down the offer, stating that it was "not in a position" to engage with MP & Silva due to stipulations in their current broadcast deals but, in any case, it was not interested in the proposal.
Promotion/relegation has been a talking point in some American soccer circles for some time, with the likes of New York Red Bulls coach Jesse Marsch and New York City FC midfielder Andrea Pirlo arguing that it would help make the league more competitive. At the same time, opponents of an "open" system cite the up-front investment made by MLS owners, the potential for rising costs and U.S. sports culture, where the major professional leagues all operate in a "closed" franchise system.
Riccardo Silva is co-owner of the NASL's Miami FC and a founding partner of MP & Silva. In November 2016, Silva International Investments, which he established in 2015, commissioned a Deloitte report into promotion and relegation. In August this year, Miami FC and Kingston Stockade filed a claim with the Court of Arbitration for Sport to require the United States Soccer Federation (USSF) to adopt promotion and relegation. In September, NASL, on whose Board of Governors Silva serves, filed a federal antitrust lawsuit against the USSF, after the federation denied the NASL's application for Division II status for 2018.
I spoke to Silva in London last month.
Q: First off, four-hundred million dollars a season is a lot of money, far more than the current media deals. What makes you think it's worth that much?
A: We're among the top three media rights companies in the world, we've been distributing the world's biggest deals for many years. We know the market, we've analysed soccer in the U.S. over time and we believe there is huge potential.
The Chinese League is worth $250 million a season and professional soccer in China was born much later than in the U.S. I don't want to talk specific numbers, but we know what they are and we know how much it's worth. I don't see how, if the Chinese deal is worth that much, how the U.S. can be worth less. And consider too that the current deal is an eight year deal. So we're comparing, say, 2015 dollars with, say, 2030 dollars.
Q: But only with promotion and relegation?
A: Yes, we believe an open system could really unlock this potential. The most successful soccer leagues are based on competition. And that's what's probably missing in U.S.soccer. There is no motivation for teams to invest in quality because you can't move from the third division to the second or from the second to the first. We believe the increase in quality can be achieved from the bottom up, with teams investing in quality and we believe right now it's not really happening.
Q: Did you really expect MLS to commit now, when the current deal runs through 2022?
A: We make offers like this all the time, we just wanted to sit with them and engage in discussion. Of course, there's a restriction [on MLS and when they can discuss a new deal], but it was a way to start the discussion and make plans for the future.
We've been doing this for many years, we've distributed their content in the past, we know its content very well. We know the market, we know the product, we think we know how it can be improved, so we just did our business like we would do with any other league anywhere in the world.
Q: Back to promotion and relegation: why do you think it's necessary for a deal this size?
A: We know how soccer works and we believe there would be more fan excitement and the quality would increase over time. There is no reason why the United States should not be among the top five or ten countries in the world and it's a pity to see them struggling against Costa Rica and Honduras when they have all they need to be at the top level, competing with the likes of Germany, France or Spain.
Q: And you need promotion/relegation to do that?
A: We believe one of the reasons is the lack of an open system. The U.S. will only be able to compete when the third division in the U.S. is able to compete with the third division in Germany, France or Spain and the second division can do the same with the second division in those countries and the first and so on. The natural consequence will then be that the national side will be at a comparable level to their national teams.
You can't build a house starting from the roof. You have to build from the foundation. And the way you do that is to create motivation for the guys at the bottom to compete and possibly be promoted. It's about competition and if the system is non-competitive you can't increase quality.
U.S. soccer is at the highest level in terms of marketing, facilities and now even fan interest. What's missing is the quality. It's number 28 in the FIFA rankings, yet in 1996, when MLS began, it was number 18! I understand that a closed system works well in football, basketball and baseball, but in those sports the U.S. is already at the highest level. But in soccer, it' number 28. It's not there.
Q: But Major League Soccer's first duty is to its owners, not to developing soccer in the U.S. I mean, they're running a business. It's not really their job to worry about the U.S. Men's National Team is it?
A: If MLS' main priority is the owners and they want it to be about having a system that's entertaining and that minimises the risk to the owners, then fine: the current system is better. But if we dream of the U.S. competing or even winning a World Cup we should change the system to something else.
Q: OK, but if I'm an owner and I've spent a hundred million dollars on a stadium and franchise fee why would I sign up to a system that's going to be more expensive for me and will cost me huge amounts if I get relegated?
A: Of course, you'd want to come up with a system where those who pay expansion fees are protected. And there are many ways to do that. First of all, it's mostly a problem for clubs that entered the league more recently, most of the owners paid a relatively low amount a long time ago. You could charge a fee to promoted teams, you could have parachute payments to those who get relegated.
Q: But would someone want to buy a club that puts their investment at risk?
A: There's an open system in England, France and everywhere else in the world just about and it doesn't stop billionaires from investing and buying into it. This can't be an excuse. The U.S. has everything: it has the markets, it has the financial possibility, it has the interest and the passion. We need to work on the quality rather than protecting the interests of a few owners which, in any case, can be protected.
Q: MLS is a very tightly controlled single-entity. Wouldn't opening this up increase risk? What if you had clubs spending beyond their means to get promoted and then folding, without paying their debts? Didn't the original NASL go bust due to overspending?
A: Yeah, well, that was a closed league, wasn't it? We don't believe a whole [open] league can fold, maybe some teams, sure. And, by the way, it happened in MLS too.
Q: They called it "contraction."
A: Exactly. But an "open system" doesn't mean it's the Wild West. You can still have requirements on stadiums, financial requirements, economic assurances... but the point is that first you earn your place on the pitch and then you comply with the parameters and benchmarks. Of course, you would need to have stringent controls to avoid bad situations.
Q: And yet can MLS afford the risk? In December 2014, commissioner Don Garber said it was losing $100m a year.
A: Well, if that's still true, then maybe it's another point in favour of an open system. Because maybe it's not working as well as they hoped it would.
Q: Right now, with no risk of relegation, if I'm an owner I can simply cut costs and I know I'll be back next year. With an open system you're going to make me spend more aren't you? And because there are limits on non-U.S. players, won't it simply mean I'd be paying American players more?
A: It has to be a gradual process. But in time, with an open system you will increase the quality of young players because teams will be motivated and incentivised to develop them. And not just in the 22 MLS academies, but around the country. With an open, competitive system any town can grow and is motivated to invest in quality rather that in quantity as is the case now with "pay-for-play". Because if they develop players, it will make their team better and they can get promoted or they can sell their players and reinvest the money. Right now, that's missing.
Q: Have you pitched this to owners?
A: I have huge respect for [MLS Commissioner] Don Garber and [USSF president] Sunil Gulati but when I speak to owners most of them say they're open to discussing a different system. Some are in favor, some are not, some are open to discussing it. It's about setting priorities. If the priority is increasing the level of soccer, both in terms of quality and competitiveness, while protecting their investments, we should discuss how we can do it, perhaps gradually. But if we don't think it's a priority, by all means, keep the current system.
Q: You're a stakeholder, you own an NASL club, why don't you take this up with the USSF?
A: That's not my job. And I'm not into politics. It's up to the people who run the game to make that decision. Garber, Gulati, many of the MLS owners... these are my friends. I respect them. I'm just so surprised when I see this situation so clearly and others do not.
Q: Do you think players, coaches and others in the U.S. game are in favour of an open system? Because while some fans may be, other than a few exceptions you rarely hear dissenting voices with the status quo.
A: Maybe knowing that MLS is against or the USSF is officially neutral but maybe unofficially against... maybe they don't want to go against the mainstream. I do wonder why there isn't more of a discussion.
Gabriele Marcotti is a Senior Writer for ESPN FC. Follow him on Twitter @Marcotti.