Thoughts on Leiwieke comments and other CBA matters

So, AEG’s Tim Leiweke came out yesterday in the LA Times and let the players have it a little.

Now, first off, as it relates specifically to AEG, rather than the MLS owners collectively, Grant Wahl rather rightly calls BS on Leiweke’s claims of losses.

That’s a fair point, but the larger point about the owners not exactly making tons of cash out of this league is a fair point as well. On a league-wide scale, these owners are losing money. While there are markets that might make money (Seattle, Toronto, LA), there are many that are not profitable like DC United, San Jose, and Houston (guessing there because the Dynamo don’t own the stadium).

That fact changes the traditional dynamic of rich owners pleading poverty to squeeze the union. Now maybe, based on that, it shouldn’t have been Leiweke making those statements. If it was coming from an owner waste-deep in red ink like Will Chang, I suspect it would be a bit more powerful. But, the overall point holds true. Most of these owners aren’t just milking vast profits off the backs of the players (yet).

I have noticed that this fact, and one’s ability to notice it, seems to correlate with a person’s proximity to a money-losing franchise. I think that’s why we have seen such vehement pro-union backing out of places like Toronto and Seattle, where their teams and thus the league in general are viewed as big roaring successes. Meanwhile, those of us sitting in Washington, San Jose, Dallas, and elsewhere see otherwise. I don’t think any DC fan can imagine Will Chang swimming in a cash vault Scrooge McDuck-style while his soccer team plays in a decrepit stadium that he doesn’t own and that actively keeps potential fans away. To us, viewing through the MLS franchise we see every week, it’s easy to sympathize with ownership. Sitting at RFK, watching 14,000 rattle around in a 50,000 seat stadium that literally crumbles around them, it’s easy to see that this is losing money.

While DC may serve as a dramatic example, the fact is that most MLS franchises are closer to DC in profit than they to Toronto or Seattle. That’s why, at least in broad terms, I continue to side with the owners.

But, additionally, as I’ve said throughout this whole process, a lot depends on what the actual deals on the table are. In short, it really depends on if the players are asking for complete and total free agency and accepting nothing else, or if the owners are refusing to budge on any form of controlled movement or compensation.

Until we know just what it is that is that the players are refusing, I think people should wait before declaring the season “over” or the league’s business structure a “disaster,” or the sport “doomed.”

For now, as it’s been for months now, all we can do is wait.

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13 thoughts on “Thoughts on Leiwieke comments and other CBA matters

  1. It’s possible that both Lalas and Lieweke are right. Was ’07 Beckham’s signing year? The combination of revenue from Home Depot Center and Beckham jerseys might have put them solidly in the black. I suspect the economy has since taken the starch out of most operations.

    I don’t know – just trying to see how time and perspective might change the statements being made

  2. The Galaxy have been around since the league’s inception, they have their own stadium, they have arguably the two biggest names in MLS on their team, they are located in the second largest market in the country, their salary costs are essentially contained, and they aren’t making money?

    Sounds like Mr. Leiwieki isn’t very good at running an MLS team.

  3. I imagine that the vast majority of the ‘payout’ from the Beckham signing was always supposed to be front-loaded, and that reporting a ‘loss’ in the last couple years of the deal was part of the bargain all along. But if that were true, then Tim would be using the truth to mislead (which I suspect he is).

    But my other thought is that one of the reasons we’re so prone to speculate is despair of this:
    Do any of us believe we’ll ever see what’s on offer unless/until it’s there in a signed deal?

    At the end of the day, neither side is being forthright in presenting us with what their offer is, and it doesn’t seem likely that either will do so any time soon, so we flail at shadows.

    I’ve had the discussion before about the methodology that says “Side A makes calculated statement, Side B calculatedly calls bullshit, Side A doesn’t come back and defend original statement, therefore side B probably had a point.” As limited as it is to try to draw conclusions from what someone isn’t saying, both sides have chosen to go public (and I’m talking about the principals here, not some player or Tim Leiweke blogging out of turn) on some issues, but not on others, in order to get the version of the story they like the best out there.

    And while a computer can say “not enough information to compute” and stop there, that’s not really the way humans are wired. At the risk of getting too Gladwellian, we’re decision-making machines that, if we don’t have the specific data right in front of us (and sometimes even when we do), are going to resort to whatever prior notions we had in our head about how other maybe related things are supposed to go.

    And where it really gets bad is when this gets down to the level of articles-of-faith about unions vs capitalists. That’s probably exactly what the more populist part of each side wants us to do: assume that one side is evil and that therefore the other side is entitled to what they’re asking for, even though we don’t know what it is.

    I feel like the guesstimates are better than that, first because they are civil, and secondly because, somewhere in amongst all the speculation in 6000+ thread posts and probably another 1000 blog posts/responses, with enough people paying more careful attention to what is and is not being said . . someone out there is probably right. And not only that, but if they were right at the right time and place, someone on both sides is probably reading it.

  4. But I also want to agree with, and add something, to this point:
    I think a lot of the pro-union group of fans in this debate believe that a player victory makes the league better from a fan perspective (ie it would wind up one way or another putting better players on the field). Which, if we were all like Toronto and Seattle, would almost certainly be true.

    If you’re in the position of a DC or a San Jose, you’re much more likely to be worried about how attractive it is to buy an MLS Club (both for prestige and investment reasons), because that’s the necessary starting point for getting a good crop of players out there. In Toronto and Seattle, you can just take the attractiveness of ownership as a given. In most MLS cities, not so much.

  5. I call total, complete, and utter bullshit on Leiwieke’s comments. AEG’s ownership of MLS sides has been a business proposition from the beginning, though making money specifically on soccer was never really what they were in business for.

    And they, as MLS as a whole, have treated their players accordingly.

    Leiwieke makes one valid point only: without ownership on board, there is no league. Which is precisely why the players have been taking it in the rear from MLS ownership pretty much from day one. Everybody knows that every MLS owner could, if he wanted to, easily walk away from this league without losing anything that they’d miss much. But this “we’re soccer fans, this is about our soccer fandom” is crap. There’s a profit motive. But it isn’t MLS soccer that they’re primarily in the business of profiting off of. Most particularly in the case of AEG.

  6. Part of problem here is that because MLS keeps its financial operations behind the curtain, then the fans and players are left to speculate on how things operate. And it’s because of the lack of transparency in the process that leads the players union to distrust the League’s offers.

    If the League says, “we just can’t afford, as a league, to grant you these two points,” and the players don’t believe them, then they will not meet eye-to-eye.

    However, if the League were to say, “Here are our closely guarded secrets. And this is our operating model, including future investment plans. And, this is why we can not afford guaranteed contracts at this point in time,” then the Union may react differently.

    The main problem is that the information that is made available is hard to reconcile to the League’s statements:

    We’ve been told that the league/teams are losing money every year. Part of this is due to the fact that several teams do not own their own stadiums and cannot control revenues. But that is changing. New England, Toronto, Columbus, New York, Chicago, Dallas, Los Angeles, Salt Lake, Colorado, and Philly all own their own stadiums.

    Kansas City is building their own stadium and Seattle appears to be selling enough tickets to likely cover the cost of renting Qwest Field (although I think one of the owners of Seattle may own part of the stadium).

    So, is it really that DC, Houston, and San Jose are bring the league down?

    Plus, there’s this expansion fee that Portland and Vancouver have happily paid, with Montreal pleading with MLS to take their “wannabe Euros.”

    All that combined with Adidas contracts, television rights, SUM revenue from hosting Mexico friendlies, and merchandise that is beginning to enter the mainstream… it makes you really wonder.

    In the end, it would be nice for the League and Union to sit down and look at the numbers. How much would guaranteed contracts actually cost. How much does the league save by limiting free agency to only those players with big enough egos or good enough agents.

    ‘Cause the comment, “I’m a little amazed at the lack of respect they show for the commitment that we all have made to get the league to where it’s at today,” is about as effective as a player like Emilio complaining for getting cut for lack of production over the last two seasons.

    “What have you done for me lately,” doesn’t only apply to players.

  7. Let’s see, what is the going rate for a MLS franchise these days? 50 million?
    So AEG could have covered all their losses just by selling their franchises today-no ticket sales, no promotions, no Pan-Pacific Cup.
    Yeah shut up Leiwinkedoodle

  8. Thank You. I find it hard to believe how many MLS fans are eating up Leiwieke’s blatant BS. AEG are ultimately in the real estate/development business. His investment in the Los Angeles Kings hockey club is a prime example of how he leverages a sports team into a development and outside revenue stream bonanza.

    While there are some differences in the Galaxy model, Philip Anshutz is not a moron and does not invest in things that don’t make him money in the long run. He was willing to take a chance and invest in the league in its infancy and while he did certainly spend alot of money, he made alot of it back and then some.

    The idea that AEG is an owner/investor in the league only because they are “passionate” about soccer would have bailed out long ago if it was about money, is at best laughable, and at worst an insult to anyone who cares about the league and pays attention. If they were so passionate about soccer they wouldn’t have regular concerts during the season at Home Depot Center, nor would they hold the X Games there every summer as well as hosting the Los Angeles entry in the pro lacrosse league since among other problems, all of these interfere with scheduling and the like and completely ruin the field for most of the season as any Galaxy fan can tell you.

    The reality is that all these things provide a revenue above and beyond any that the Galaxy directly provide, and while AEG would claim that this is not revenue directly attributable to the Galaxy, it simply would not be possible without the Galaxy existing in the first place and is the ultimate reason why they own the Galaxy.

    Along these lines remember that AEG was a 50% investor in the new Red Bull Stadium in New York (Jersey) and was insisting that a stage be built into the stadium seating for concerts etc. Red Bull said thanks, but no thanks, we want a soccer stadium not an outdoor concert arena and they eventually bought AEG’s interest in the stadium out. If anyone can claim soccer is a passion for them it’s Red Bull, certainly not AEG.

    Ultimately AEG’s own actions put the lie to Tim Leiwieike’s words. It wouldn’t be the first time either.

  9. Man why cant these knuckleheads just figure out a compromise, wtf??? Im not even remotely sure what this is all about but all i know is MLS has to start like in a week or two or its screwed big time, and its fragile enough as is.

  10. Investment cuts both ways. Some of the players could make more elsewhere playing soccer, some could make more selling insurance here. I am happy Uncle Phil has made the investments he has. That is different from saying the players are greedy ingrates for not accepting artificially depressed wages. Nobody is gonna buy tickets to watch Tim Leiweke play soccer. And, as for Chung, he wants tax payers to make his capital investments for him, and he wants to plead poverty to the players.

    The players should respect the Single Entity Model. It is the model that makes it possible for their world to exist in competition with all the other, better-established and ingrained options.

    In return, the owners should allow for more rights within that controlled world.

    That’s the Grand Bargain.

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