Pro/rel, the look from the bottom up

Much of the talk about promotion-relegation has focused on the top. How do you compensate owners for their investment in MLS? How do you handle contractual obligations made based on a club's position in MLS? And how do you compensate public authorities for moneys spent on the basis that a club would be in MLS?

You still have to make promotion-relegation work for the investor at the bottom. For all the talk about sporting considerations trumping business considerations -- the essence of pro/rel -- that only works easily at the amateur level because there are no business considerations.

Until now, there are no plans for promotion-relegation because MLS won't consider it and there is nothing below the second division NASL and USL for a team to be relegated to even if owners were willing to take the fall.

The NISA is trying to launch as a third division league with plans for promotion and relegation with yet-to-be-determined leagues once it is fully populated (24 teams). It announced it had received applications from eight markets though media coverage in those markets about who has committed to invest was minimal.

Beyond those eight markets, one of the groups strongly considering the NISA is Chattanooga FC, one of the most successful teams in the amateur NPSL. But it is not an easy decision. Indeed, Chattanooga FC chairman Tim Kelly told the Chattanooga Times Free Press in July that a move to the NISA is "not a no-brainer."

As it exists now, Chattanooga FC is a sustainable business. Of the 28 independent pro teams in the USL and NASL, only 11 teams average more than the 4,911 fans Chattanooga FC averaged in 2017. (That includes a crowd of 12,484 for a preseason game against Atlanta United in February.)

Kelly, a successful Chattanooga car dealer, told the Times Free Press the move to a professional league would be "a financially riskier proposition, but on the other hand we'd be a legitimate professional team, whereas right now we're a glorified adult-league team."

It's not the only question Kelly and his CFC colleagues have to answer, but the essential business question is, whether for every additional dollar spent because it is a pro club -- salaries for players and coaches and additional front-office staff, increased stadium costs, travel expenses, league-office expenses, let alone costs of getting into player development -- will it made an additional dollar over the revenues it already brings in?

Kelly's interview with Midfield Press, a website that covers lower division soccer issues, provides some great insights into Chattanooga FC's thinking and the real-world issues it faces.

"We’ve struggled with it mightily, to be honest," he said, "but as the saying goes, you never cross the same river twice. We’ve had a remarkable record running an amateur soccer team, but there’s only so much we can do three and a half months a year, and we think our city and our fans want more. We feel the third division is a perfect fit for us, and NISA has a great structure and business proposition."

Kelly's confidence in making the jump is based on Chattanooga FC's success to date and the club's ability to do more with less. (He considers U.S. Soccer's staffing mandates for Division 3 "oddly arbitrary, though I understand them as proxies for commitment and stability.") He adds more going forward -- as in more staff -- will actually make the club's job easier.

An extended season would present new opportunities for Chattanooga FC -- 15 homes dates vs. 10, on which it's almost impossible to operate a minor-league sports team -- as well as new challenges -- scheduling issues and competition from football in the fall.

Chattanooga FC is an extreme example, contemplating the move from amateur to pro, but also an established soccer club in its market. It also has the luxury of choosing -- and choosing on its own time frame.

Chattanooga FC is not deciding whether to ramp up its operations because it is seeking promotion. (It would have not gained promotion in 2017 if it existed because it lost in the first round of the divisional playoffs to Inter Nashville FC.) And it is not having to ramp up within a four-month window triggered by pro/rel, between the end of one season and start of the next season. Its decision is being made based on a 2019 pro launch, 19 months down the road.

Still, Chattanooga FC is attracted by the pro/rel concept. Until it is implemented, Kelly told Midfield Press, American soccer is "just whistling past the graveyard."

The argument for pro/rel is that it will trigger greater competition -- and all sorts of new spending as clubs seek to win promotion to the next level. And the concept has found an audience at least willing to listen: young soccer-savvy activists interested in spending money on soccer.

But on top of spending to win promotion, clubs will have to be committed to spending required at that next level, all the way up the ladder, from the bottom, wherever that is, to the third division to the second and to the first. In a certain sense, Kelly may be right: U.S. Soccer's divisional mandates are arbitrary. But there is no escaping that pro soccer operates in the bigger world of American sports and entertainment and requires operating standards and stadium standards -- FIFA's "licensing procedure" -- to have any chance of survival.

If six years ago, when NASL owners broke off from the USL, you had to wager who'd come out stronger, you'd have never bet on the USL. The USL has won out for many reasons, one of which has been its league model, raising the standards of its clubs and weeding out owners who could no longer make the jump, compared to the NASL's laissez-faire model.

For clubs to achieve the ultimate prize of pro/rel, promotion to MLS, the challenge will be that they will be MLS clubs-in-waiting, committed to MLS's ownership, stadium and capital requirements (player spending, staffing, promotion, stadium, player development) by the time they reach the second division without actually yet being in MLS or having any guarantee they will ever make MLS.

21 comments about "Pro/rel, the look from the bottom up".
  1. R2 Dad, September 12, 2017 at 1:30 a.m.

    One of the things MLS is not worried about is finding investment groups to cough up $150M for an MLS franchise. This fee used to be only $100M as late as 2015 (NYCFC), but perhaps MLS should consider what ownership groups might get for their $150M elsewhere. Michael Eisner just bought controlling interest in Portsmouth in England, spending only $7.5M and promising $13M more in investments. This for a club that as recently as 2008 was in the top flight where clubs are worth billions. Even if Eisner writes $10M checks every year for 10 years, he will have not reached the $150M figure Garber is demanding for new ownership groups (and that doesn't include the grounds). Because of promotion and relegation, the EPL gets the American billionaire's money and not MLS. Eisner is taking a flier that he can improve the club and get back to the top tier in a few years (from their current location in League 1). The most recent MLS club to require a bailout was Chivas, which only paid $7.5M in 2005 to MLS for league entry and sold it back to MLS for $70M in 2014. If the economy tanks, will MLS be on the hook for hundreds of millions of dollars if multiple clubs fold? Because of the single entity business model, MLS has reaped all the benefits as the entry fee has escalated. Will another tanking of the economy expose the league to financial risk they have so far avoided, after having promised their club owners a risk-free investment?

  2. Fire Paul Gardner Now replied, September 13, 2017 at 11:28 a.m.

    Sounds like you can't wait for MLS to go bust but it isn't happening. NASL on the other hand will be gone shortly it seems.

  3. R2 Dad replied, September 13, 2017 at 11:35 p.m.

    Fire, everyone said the US housing market was a sure thing and could never crash, either. I don't think anyone wants MLS to crater, but that doesn't mean it's impossible.

  4. frank schoon, September 12, 2017 at 8:59 a.m.

    R2, The way things are going in buying players in Europe , in another 5 years you won't be able to buy a decent defender who can walk and chew gum....

  5. frank schoon replied, September 12, 2017 at 9 a.m.

    R2, meant to say won't be able to buy a decent defender for 150mil

  6. Mike Polonski, September 12, 2017 at 9:30 a.m.

    As evident, there are a huge number of issues which have to be ironed out in order for pro/rel to work but I welcome it. It would be better for the sport and the fan base in this country. My biggest issue is that the playoffs be eliminated as a means of determining a league champion. Pro/rel and the fairness that it brings, will help to establish this.

  7. Kate Phillips replied, September 12, 2017 at 10:36 a.m.

    Would it be? Would it be worth having MLS clubs fold rather than relegate ("I paid 150 mills for this team, to play in MLS. MLS, dammit! I'll be damned if I'm gonna play in the USL/NASL just because we went 8-20-4!!!")? Would be worth having "one hit wonders" in MLS, who get promoted, spend like crazy for players and stadium upgrades, only to be relegated again, having having o either drop down to the NPSL or USL Premier, or even fold, because they were AA trying to be major league, and spent themselves into oblivion?

  8. Bob Ashpole replied, September 12, 2017 at 3:13 p.m.

    Pro/rel "fairness" is a myth. In amateur soccer match results are not a function of money spent. In professional soccer, however, results are a function of money spent. "Fair" ("consonant with merit or importance") has little to do with pro/rel unless one associates wealth with merit and importance. In the USA we have gone down a different path than England.

  9. Cory Leonard, September 12, 2017 at noon


    It's supremely unlikely that any club currently in MLS would choose to fold in the face of being relegated to a lower division. Owners and the MLS itself are making money off of these clubs and would continue to weather or not they got relegated. It might not be as much money, but it would continue to be a profitable business(so long as their business practices were still sound). Teams that face being relegated fight harder, and try to develop more than teams who see no major difference (other than pride) if they win the league or finish in second-to-last.

    Pro/Rel encourages growth, both for the game itself at home and for the players in the system. The major reason anyone knows who Jamie Vardy is is because of Pro/Rel, and he's just one example.

    It's a circle. The teams put more effort and time into putting a quality product on the field, which results in better matches for fans. Academies get stronger, more adept and finding and developing world class talent. From there the National Team gets better and more able to compete for world cups.

    I'm not saying it could happen overnight, but it needs to happen sooner or later.

  10. Kate Phillips replied, September 13, 2017 at 12:10 p.m.

    So, you think that a team, say, like Philadelphia Union, for example, will stay just as financially stable playing teams like Bethlehem Steel, New York Cosmos, Charleston Battery, or Indy Eleven, as they would playing Sporting KC, Atlanta United, Seattle Sounders or NYCFC? Better yet, how long do you think a team like the Cosmos (who almost didn't make it to 2017), Indy, or even FC Cincinnati would last in MLS, without having to nearly bankrupt themselves in order to win just a few games (and end up right back where they started, or worse)?

  11. Steve Turner, September 12, 2017 at 12:29 p.m.

    The major difference between the two is that the MLS team does not yet exist, while Portsmouth already has a stadium, sponsors, and established fan base. I understand the comparison and you raise a good point, but expansion MLS teams dilute the player pool which means teams need to spend more to upgrade the rosters, and along the lines of NASL's failures they have to make sure that an ownership group is fully committed and can afford the costs of top tier soccer - so it's really more of an investment in the league than it is buying a team. So instead of $7.5 million for one team they're paying around $160 for a league of 22, which is roughly the same investment.

  12. frank schoon, September 12, 2017 at 12:38 p.m.

    I think before Pro/Rel is to become a reality the structure of the USL or NASL or what ever other leagues are used must first be on solid foundation. For example those cities with new teams must first build good solid FAN support ,which took the MSL quite a few years to achieve, and have a good stadium/and facilities. With good fan support relegation with not hurt the box office, hopefully, even though TV money might not be as productive income. Currently , pro franchises are popping out left and right and we don't know how well these new cities are able to support the teams in the long run. This is why ,I think, we first need to build a stable leagues, like we have done with the MLS, then we can proceed with a Pro/Rel.

  13. don Lamb replied, September 12, 2017 at 3:22 p.m.

    I think you are right, Frank. Add player development systems to the list of things that need to be in place for the lower tier professional teams before we are ready for them to have a chance to earn promotion to the big leagues.

  14. Scott Johnson, September 12, 2017 at 4:57 p.m.

    Take a look at the teams in the Champsionship (England's second division)--they average more than 20k fans per game at the box office (compared to 36k for the Premier League); it's quite a viable league on its own. Compared to that, many of the lower tier leagues in the US would have problems filling a high-school stadium. Most if not all current Championship teams can easily meet the technical requirements of the Prem, even if they might not be able to afford the sort of payroll necessary to reach the top of the table. And likewise, relegation to the Championship is not a death sentence for Prem teams.

  15. frank schoon replied, September 12, 2017 at 5:32 p.m.

    SCOTT , that is a good point. I don't see this Pro/Rel come around for another 50 years

  16. Kent James replied, September 13, 2017 at 12:06 p.m.

    You make a good point; I think the primary difference is TV revenue. Maybe the EPL should share some of that largess with the Championship so the drop would not be so great (where the relegated team loses most of its players, e.g.).

  17. W Holman, September 12, 2017 at 9:45 p.m.

    As long as SUM exists, promotion & relegation will never be a part of US Soccer.

    ...and SUM ain't goin' anywhere but up.

  18. don Lamb replied, September 13, 2017 at 10:53 p.m.

    What if SUM was invested in the second and third divisions as well? If they have an ownership stake or some other sort of buy in, there is no reason SUM wouldn't want to grow those leagues along with the first division. In many many ways, SUM could actually be the primary figure in the build up of a system that leads to promotion and relegation.

  19. R2 Dad replied, September 13, 2017 at 11:43 p.m.

    MLS has already co-opted USL, so pro-rel for USL will never happen. The fact that Garber and Sunil are both on the board of SUM should tell you that. I think all this cross-contamination of ownership is a bad idea, and the only way out is if Sunil gets flushed. Because Garber will never give up his golden goose and the status quo wants Sunil to stay in place because of CONCACAF duties/representation.

  20. don Lamb replied, September 14, 2017 at 11:36 a.m.

    R2 - SUM could stand to gain a ton if there was not just a profit generating first division but an entire system of leagues that could generate a lot more revenue and lead to a lot more media contracts among other things.

  21. Scott Johnson replied, September 15, 2017 at 7:03 p.m.

    One-way pro/rel COULD happen is if the MLS split into tiers; with only the upper teams eligible to contend for the MLS Cup/Supporters Shield. Not sure why owners or supporters would want that, though--people may like it in the abstract, but fans will scream bloody murder if it's their favorite team which is relegated.

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