At the end of the 2014 season, Major League Soccer consisted of 19 teams. With Inter Miami CF and Nashville SC beginning play next season and Austin FC, Sacramento Republic and a St. Louis franchise already announced beyond that, by 2022 there will be at least 29 MLS franchises. At the roster size of 30 active players each, that's 300 more spots to fill, an increase of more than 50 percent from 2014.
It's an expansion that's unprecedented in the top divisions of professional sports. Mature soccer leagues, by definition, don't expand; they have promotion and relegation. American leagues do add (and contract) franchises, but they've traditionally done so at a much more gradual pace. Major League Baseball has added only four teams since 1977, with the National Football League gaining six since 1976. It took the National Basketball League 21 years to go from 18 teams to 29, and then another decade to get to 30. The closest comparison, perhaps, is the National Hockey League, which added eight squads between 1991 and 2000 ... and then didn't expand again until 2017.
While expansion brings money into the league in the form of fees, it can dilute the on-field product if the process isn't managed smartly and effectively. For MLS to reach its stated goal of being one of the best leagues in the world, it needs to get bigger and better. That's difficult to do, and doubly difficult in a global market like soccer where players can choose from hundreds of teams (although the worldwide nature of the sport also means that there's more talent to pool from).
It's an ongoing project, one that's having some success. "In a vacuum, the MLS product is improving," AJ Swoboda, managing director, Americas at soccer consultancy 21st Club, says. "That's a very hard thing to do in and of itself."
In 2015, league executives assessed the potential for further expansion and took steps to address the growing need for talent. They started a project to grade every player in the league, an attempt at setting an objective standard upon which they could try to improve. What they found was that they were generally pleased with the level of the Designated Players and a few others on the roster, but they saw a talent drop off further down.
"What we determined was that we needed to get better, to invest in the roster down the line, and double down in youth development," Todd Durbin, MLS executive vice president, competition and player relations, said.
The solution, of course, was to inject more money into the system. The idea: to turn the players in the $250,000-$350,000 range into guys making between $750,000 and $1,500,000. Enter Targeted Allocation Money (TAM), which in 2018 and 2019 gave teams up to $4 million per season to buy down salaries so they fit under the salary cap and maximum salary budget charge.
"No move in our league has enhanced or changed our league more than TAM," Mike Jacobs, who joined expansion side Nashville SC as general manager after a stint as Sporting Kansas City assistant technical director, says. In 2018, 19 of the 20 highest scorers in MLS were DPs or TAM players. The allocation money worked as intended, helping teams new and old recruit a new depth of talent.
That's the good. The bad? "The league itself is performing better than it ever has," Swoboda says. "But relative to the rest of the world, it isn't necessarily performing on par year on year, at least to the pinnacle of the world."
Jacobs agrees. "Liga MX, who we're [MLS] always measured against, that gap is probably as wide as it's ever been," he says. "We're spending more as clubs but so are these other leagues."
That's concerning. So is the conclusion of a study 21st Club did, which found that MLS was one of the few leagues in the world with declining financial efficiency. Essentially, while the quality of play is improving, it's not getting better as fast as the financial investment would predict. Despite the allocation money, rosters remain too top-heavy.
The best, most efficient clubs spend around 40 percent of their budget on the best five players, 25 percent on players 6-10, 15 percent on players 11-15, 12 percent on players 16-20 and 8 percent on players 21-25, according to 21st Club. MLS, where two DPs can make more than the entire rest of a roster combined, does not follow this model. According to figures released by the MLS Players Association, the total guaranteed compensation for all players in 2019 came to $294,165,170.64. The 10 highest-paid players received $49,170,000 in wages, meaning less than a full starting XI earned almost 17 percent of the monies paid to the entire league.
In an age of continued expansion, the league needs to rethink how the money is being distributed. With a new CBA getting negotiated, it's something that's on the minds of many, including former MLS player and ESPN FC analyst Herculez Gomez:
But let's keep on talking about charter flights... 😴
— herculez gomez (@herculezg) September 16, 2019
Get rid of TAM (which mainly benefits players coming into MLS, instead of rewarding those who've earned it) and RAISE THE SALARY CAP exponentially! @MLSPA
CBA negotiations are right around the corner. https://t.co/VIKvgBeLK1
In fact, TAM might be on the way out as a result of the upcoming CBA negotiations, giving teams more flexibility in how they spend their money. "When it comes to the first team, we need to be thinking in terms of what's next," Durbin says. "More money is not necessarily always the answer. The TAM initiative is getting to the end of the second year of the full amount. We are going to really sit down and evaluate at the end of this year where we have landed. It's been enough time to see how the investment has played out."
The other piece of this improved quality puzzle is youth development. A young star who comes through an academy boasts three benefits.
First, he outperforms his salary cost. In 2018, Tyler Adams made about $150,000, but his on-field contributions to the New York Red Bulls -- 26 starts and more than 2,300 minutes as a midfield rock for the Supporters' Shield winners -- were worth many times that amount. And consider that Adams' stats fare comparably with Alejandro Bedoya, a player who made $1.2 million.
Second, having a player overproduce creates a knock-on effect, freeing up money to be spent elsewhere on the roster.
Finally, any player sales inject revenue into that individual team as well as MLS as a whole. Adams, who had a value north of $5 million at the time of the sale, according to Transfermarkt, went for $3 million and a 33 percent sell-on bonus, of which NYRB got $750,000 toward their salary cap. If MLS changed the rules to return a higher percentage to the selling team, this idea would pay even larger and more-lasting dividends. Basically, developing homegrown stars is the most cost-efficient way to increase quality.
"All of the clubs, we have to reassess how we're going to attack this global fishbowl of talent, compete in the global markets and get talent into our environments to be successful," Manny Lagos, chief soccer officer at Minnesota United, says. "That's through development and through revenue generation talent. It's also going to be going out into key markets and finding talent that can compete right away to be successful in MLS."
One thing's true: Further expansion is coming, and it's not going to stop for at least another five years. MLS teams, new and old, are going to have to continue to develop specific philosophies about how they want to play and what type of players fit into that system, while working within a strict -- but inevitably expanding and, likely, relaxing -- financial framework. There needs to be considered thought at the club and league level to prevent parity from becoming a stand-in for mediocrity.
"We have to absorb the next iteration of expansion teams, which ... could have even bigger budgets," Lagos says. "The great thing about MLS is that it's really pushing clubs to think about what they want their individual identity to be."