Q&A with the SA Editors: July 30, 1999

Mark Hill Columbus, Ohio In your last Q&A session [July 23], Ridge Mahoney answered a question about pay-per-view television broadcasts of the Copa America and Confederations Cup. In his response Mahoney said: "I, too, find it disappointing that ESPN, which shows most U.S. matches, did not pick up the Confederations Cup, but U.S. Soccer has certainly dropped the ball in the past and has done so again." My understanding is that U.S. Soccer had no control of TV rights of this tournament. I have read that the rights were sold exclusively to a pay-per-view through a bidding process that included Telemundo (the Mexican TV conglomerate) but not ESPN. My question is, if this is accurate, how can U.S. Soccer be accused of dropping the ball? Was U.S. Soccer expected to join a bidding process in which ESPN declined to take part? Certainly, if Telemundo lost out on the bidding, U.S. Soccer would have had to bust the bank to get the rights. Would that be a wise thing for the Federation to do? Ridge Mahoney: Mark, I never said U.S. Soccer held the rights to the tournament. But the federation hired a high-powered marketing agency, IMG Sports, in part so it would increase U.S. Soccer's exposure on television. Unfortunately, as was the case for the 1996 CONCACAF Gold Cup and other events, the U.S. fans are blanked again. Your point of view is radically skewed from that of many other fans, who feel the federation should indeed shell out some money -- and all that cash from Nike has to go somewhere, right? -- to showcase its teams. I don't think even the federation could "go bust" with a few extra million per year in its coffers courtesy of Nike. It did spend a lot in the last few years on the women's team as well as the men's team, so finances are certainly a consideration. The federation certainly could have aggressively pursued the rights at an early stage. Its honchos, in many cases such as this one, dismissively say it's too expensive. They just ignore the situation and hope it goes away. The rights to U.S. games of the Confederations Cup may or may not have been available separately. The recent Copa America was televised on a combination of pay-per-view and Fox systems (Fox Sports World, Fox Sports World Espanol). If the federation and IMG had thought of it, as soon as the U.S. acknowledged its participation in the tournament, it should have started working aggressively to line up a TV outlet, or outlets, and advertisers. I'd rather see the fed try and fail, than just give up. ESPN probably didn't want to break up its exciting Wednesday and Friday night lineups that consist of World's Strongest Man competitions as well as NASCAR and NFL shows and baseball. I don't blame ESPN, but there are other TV systems. USA-Derby was on the Fox Net system, for example. My criticism of the federation is they can promote their own events -- friendlies, U.S. Cup, etc. -- but turn all timid if they don't have control of sponsorships, signboards, etc. Foreign tournaments take a lot more thought and creativity, which are two elements quite rare in Soccer House. Did it make any real effort to show the U.S. under-20 games in Nigeria, or the U-17 qualifiers? Nahh. As it turns out, the Confed games will be shown delayed on Fox Sports World and Fox Sports World Espanol. The worst part is, the pay-per-view deal was cut so late that many cable systems around the country -- mine included -- are not offering it. So, ultimately, yes, I do lay some blame on the federation. It is the organizer, publicist, administrator and driving force of American soccer. TV is a vital component of growing the sport, and when watching the U.S. men play Germany or Brazil in a competitive tournament is extremely difficult, it's an embarassment, regardless of the particulars. Michael Mackay Arlington, Va. What is the status of D.C. United's Project-40 player Jose Alegria? Pete Bailey: Alegria, who was living with an uncle in Northern Virginia, was discovered playing in a local Latin American league by former D.C. coach Bruce Arena. He is presently in his native Peru awaiting the approval of paperwork by the INS. According to the Washington Post, United hopes Alegria will be eligible to play in several weeks. Michael Pedone Forest Hills, N.Y. Some people think it was a mistake for the Miami Fusion not to play its home games in Miami itself. Apparently the team is not drawing enough fans from the city of Miami. I remember the Boston Celtics used to play a couple of their "home" games in Hartford every season. It seemed to work well for them. Wouldn't it be worth an effort for the Fusion to do the same and play maybe two or three home games in the Orange Bowl. It would be interesting to see whether attendance would spike for those games. What do you think? Mike Woitalla: Michael, that's an interesting idea. The downside? Season-ticket holders and the few regular fans that the Fusion draw to Lockhart Stadium probably wouldn't like it. If the Fusion played at the Orange Bowl and didn't get a good showing, it would be very embarrassing, considering that Orange Bowl capacity is 70,000 and a small crowd there looks terrible. Moreover, playing a few home games away from Lockhart would underscore the team's insecurity and perhaps send the wrong message. I'm not sure how well the Boston Celtics example would apply. For one, they have such a long tradition and strong following. Secondly, there are many, many more home games for an NBA team than for a MLS team Pete Bailey: Remember, too, that South Florida is a pretty fickle sports market. Even the NBA Heat have trouble selling out their games. If the Fusion was atop the Eastern Conference and playing sparkling soccer, there might be bigger crowds at Lockhart, and a game or two at the Orange Bowl might draw decently. But with the team's poor play this year (the recent win streak notwithstanding) and the departure of its one sure gate attraction in Carlos Valderrama, I can't imagine a good turnout at the Orange Bowl unless the game was part of a significant international doubleheader (i.e. Jamaica vs. Colombia). Kyle Dane San Rafael, Calif. In a recent [June 25, 1999] Q&A with SA readers, Ridge Mahoney gave the following responses to the question of whether MLS will survive the players' lawsuit. I believe he gives a totally erroneous answer backed up only by faulty reasoning and misconception. My responses to his statements follow: Ridge Mahoney: "Jim, fans should be worried, since the single-entity structure, in the absence of a collective bargaining agreement, is being challenged. Either by settling out of court or losing the case, the league would be endangered, since I don't think the operator-investors want a free, open player market and the players don't like the current setup." Mr. Mahoney, please tell your readers that you haven't been fooled by these billionaire owners into thinking that they will give up on this enterprise that they've pumped hundreds of millions of dollars into without a fight. You can't be so naive as to think that the owners don't have a plan for what they will do if this lawsuit doesn't go their way. The lawsuit was inevitable from day one. In no other sport has a salary cap been forced upon a group of players without their approval. That fact alone made a players' lawsuit or a militant players union an inevitability. The owners are too rich and smart not to have realized that. In any case, they've pumped a ton of money into the sport since the lawsuit began. There's no way they would do that if they didn't have a solid plan in place in case they lose in court. RM: "Unfortunately, if the case does go to trial, and the league sees it will probably lose, a settlement would be that much harder to hammer out. And if both sides dig in their heels, as they've done so far, MLS could be in jeopardy." MLS is only in jeopardy if the owners themselves fail to heed the warnings of the past and do a 360 once the players are free to move. By that I mean that the owners go from fiscally conservative to free-spending without an increase in revenues. Only the owners' mismanagement of their own finances can put the league in jeopardy. RM: "Ticket prices would certainly rise if the operator-investors must cede freedom of movement within the league to the players, as salaries would have to go up. And it might hurt attempts by the league to sign better foreign players, since more money would have to be paid to players already within the league." Sports journalists will never learn. Economists have proven conclusively that the causality between ticket price inflation and player salaries does not exist. Ticket prices do not rise and fall with player salaries. If you don't believe me, I'll quote the bible of Sports Economics, Quirk and Fort's "Pay Dirt": "The simple economic fact of life is that the ticket pricing decision by a profit-oriented owner is completely independent of the salaries paid to those players." (Chapter 6, page 220). Journalists continue to misinform the public by saying that player salary increases are the cause of ticket price increases. Do your homework, Mr. Mahoney and encourage your colleagues to do the same. Ticket price increases are driven by demand for tickets not increases in player salaries. One of the things that so few journalists mention, but which is always true is that players do not want to kill the goose that lays the golden egg. When the owners start to talk settlement, the players have absolutely no reason to ask for a settlement that will put the league in jeopardy. They will ask for what they think they deserve and if it's beyond reason, the owners will make it clear that what they're asking for will put the league in jeopardy. Once everyone sits down and starts looking at the situation objectively rather than adversarially, a compromise will be found that keeps the league in business. This will happen for one simple reason: having MLS go out of business is not what either side wants. Every player in this league understands what it means if MLS fails: about 200 jobs for American soccer players disappear in an instant. In other words, the answer to this reader's question should have been: No, Jim, the league is not in jeopardy because of the players lawsuit. The only thing that can kill MLS is if the American public decides it isn't worth watching. So far, a large enough number of people have decided that it is worth watching that it will be around for a while, no matter what happens in the lawsuit. Ridge Mahoney: Kyle: Of course, the operator-investors have examined their single-entity structure to forecast its fate in court. They could certainly plunge ahead with plan B if they lose, which I don't think will happen. As I said, I see some sort of compromise being hammered out. As I said, and you pointed out, the players' would be foolish to cut their own throats. But would the NFLPA care? The NFLPA has no stake in the league or the players or the sport other than to test single-entity in court. Could the NFLPA force an impasse? It's possible. You might be interested in this: Lamar Hunt refused to put up the money for the Crew stadium without a five-year commitment from his fellow owners, and that commitment did not come easily. Unlike you, I can envision Horowitz, who is far short of being a billionaire, or Subotnick chucking it in if the losses continue to mount. The others might be solid enough, but at some point, the red ink has to slow to a dribble. The Krafts have a lot of money, but they aren't billionaires, either. Fortunately, Anschutz and Kluge are in that range, and the Hunts are close enough. Demand, nor greed, does not solely drive ticket prices. Again, your business citation does not take into account the dependence on ticket revenue of this league, which splits ticket revenue with the teams 50-50. If TV rights fees and sponsorship revenues climb and enough teams build stadiums in which the teams control operating revenues, significant salary increases can be absorbed and MLS may come closer to operating in the model of NBA, MLB and NFL teams. And you or I could cite several professional franchises to which ticket demand is stagnant or decreasing, yet ticket prices continue to rise. NHL ticket prices are level with the NBA, and the hockey league lost about $200 million last year. It is the very mismanagement of the past that the operator-investors must avoid, which is one reason the single-entity system was adopted. I do not share your disdainful, flippant dismissal of rich men losing tens of millions of dollars per year. I have to believe they are somewhat confident single-entity will stand up in court. If single-entity is tossed out the window, some current owners may pull out, as it is my understanding they are not bound to the MLS limited-partnership if single-entity is dissolved. Others could step in. Maybe. If anything, those men are careful about they do with their money, which is why they have a lot of it. If they do not see a plus bottom-line within the timelines of their financial projections, they could sell to cut their losses, if they can, or bail out. The long haul does not mean forever. I do agree with several of your points, many of which I stated in somewhat different terms. And, yes, sagging attendances and drooping TV ratings and lackluster sponsorship figures will sink the league. Nowhere did I say the lawsuit is the greatest threat to MLS, nor the only threat. But volatile player unrest is a threat. If a dozen top American players leave for foreign clubs in the next year or so, the league's image and credibility suffer. Hunt had to let Friedel go, D.C. lost Sanneh, the Mutiny lost Hejduk, Anschutz just lost Hahnemann. So the owners could be forced to pony up more money to keep the top American players, and in that scenario, ticket prices will rise, I can assure you, regardless of what you or your ecomonics mentors might think. The end effect would be the same, regardless if we agree on the cause or the rationale or whether or not it's fair. That is the important point. I said owners would raise ticket prices, and since this is an opinion based on forecasting the future, no economic model you cite is relevant. We don't know for sure. But I'd feel confident that if you told Bob Kraft or Phil Anschutz the league has to double its player salary budget and not jack up ticket prices, you'd better be able to point to some revenue streams that will pay for those increased costs. I'll finish by pointing out that hard-headed businessmen are indeed stubborn and resourceful, but they are also realistic. And remember, if Lamar Hunt hadn't jumped in at the start, MLS doesn't exist. I do not share your opinions and enjoyed reading them. But I'd question your use of the word "erroneous." I was asked for my opinion, not a statement of fact. My opinion is based on facts as well as certain feelings. If you contend my reasoning is faulty, you've given your opinion, and away we go. But neither of us can forecast what MLS owners would do in a given scenario. We can only guess. Flatlining attendances, spiralling costs, a labor deadlock and a nose-diving economy could be powerful negatives, just as rising crowds, increased revenues, and bright financial forecasts could spur additional investment. Thanks for your response.
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