Soccer vs. Football
Written by: Emma Tollenaar
Should the continent a person lives in determine their salary? European football players are earning on average, 7.4 times the amount of money that a Major League Soccer(US and Canada) player would earn in a year. This is due to the fact that the US has a salary cap on the amount of money each team in MLS(Major League Soccer) can spend on players. It is crucial that there be investments made to better the teams of MLS as a whole, so that there is more money total to be split among players. European clubs have overspent their budgets to buy and pay for the best of the best players, helping their entire team, and making a large enough profit to cover their overspending. Although this is a risky technique, it shows remarkable results.
The tables below depict the degree of difference in the annual salaries of the top 20 highest paid athletes. These amounts are only what the club pays and do not account for endorsements or other money the individuals might be making from different organizations, but they do highlight the vast differences in the two worlds of soccer.
If MLS wants players that are as good as Messi or Ronaldo, money is going to have to be spent. A choice must be made: invest in a player that will increase the skill level of your team or be cautious with money and never take a chance? When you choose to invest, the opportunity cost is what you could have spent that extra money on, like a new field or broadcasting the games on better channels. On the other hand, choosing to save your money and renovate fields won’t benefit the club or league if there are no everyday individuals that will pay to attend games or buy jerseys, etc. Increasing the skill level will be an advantage to the team and will bring in a new number of fans that will attend games and buy apparel. When the apparel and tickets are bought, the club is gaining back the money that they risked and much more. The US and MLS have chosen the cautious route and are not seeing as much growth as in Europe. The sports clubs from Europe are growing and improving immensely because the owners took a chance and gambled for amazing players like Ibrahimovic, Ronaldo and Messi. The separate clubs in Europe all have a huge number of fans and dedicated supporters that will pay a lot of money for good seats at select games. Because there are a large number of people interested in watching these intense games, the tickets become scarce. There is high demand and low supply, so the price increases and the teams continue to make more and more money, that they can then spend the following year to increase profits again.
This graph, although it is dated, shows the improvements in the clubs. In 2003, Ronaldo transferred to Manchester United. This switch of clubs greatly aided in the advancement of the club. When he moved to Real Madrid, more money was spent to buy him and to pay him yearly, but it made the club better. Robin Van Persie moved to Arsenal in 2004, and then moved to Manchester United in 2012. He was paid $16 million USD in 2014. Ibrahimovic has bounced around clubs like Barcelona, Juventus, and Milan, but he was, as of 2014, being paid $30 million dollars by Paris Saint-Germain. The clubs that paid Ibrahimovic excessive amounts of money believed his skill was worth that money to improve the team. The costs and benefits are weighed by potential buyers and when the benefits are better than the costs, transfers occur and clubs spend millions of dollars to create the ideal team.
The US and Canada have put restrictions on the amount of money each club in MLS can spend on players per year. This budget is called a salary cap, and is explained in this video. Each team is allotted three designated players that can be paid more than $387,500, but only count as $387,500 in the budget. Other players must be paid less than that amount and the total amount spent on the first 20 of the 30 total players must not exceed $3.1 million dollars. Europe is a prime example of what the MLS could look like if more money was spent on the salaries of players. In order for the MLS to flourish like the leagues and clubs in Europe have, this has got to take place. If you look back at the European salary chart, all of the top 20 players make more than the amount allowed for an entire team in MLS. In conclusion, I think that MLS needs to raise the amount of money spent on the salaries of their players in order to become a great league like the European leagues.
( I also think it is ridiculous that any professional athlete makes as much money as they do)
Works Cited
"Top European Players Make Seven Times More Than MLS’ Top Earners."Business of Soccer. N.p., 04 Sept. 2014. Web. 07 Feb. 2015. <http://www.businessofsoccer.com/2014/09/04/top-european-players-make-seven-times-more-than-mls-top-earners/>.
"David Beckham Blasts Salary Cap." ESPNFC.com. N.p., n.d. Web. 07 Feb. 2015. <http://www.espnfc.com/major-league-soccer/story/1770788/david-beckham-says-mls-salary-cap-needs-to-goreport>.
"Real Madrid And Financial Fair Play." Football Manager 2015 Tactics Wonderkids Tips RSS. N.p., n.d. Web. 07 Feb. 2015. <http://www.fm-base.co.uk/forum/rest/77260-real-madrid-financial-fair-play.html>.
"How Much Money Do MLS Players Make? - Online Soccer Academy."YouTube. YouTube, n.d. Web. 07 Feb. 2015. <https://www.youtube.com/watch?v=L_mcMxG83Y4>.
"Zlatan Ibrahimović." Wikipedia. Wikimedia Foundation, n.d. Web. 07 Feb. 2015. <http://en.wikipedia.org/wiki/Zlatan_Ibrahimovi%C4%87>.
It appears that because the quality of the products – the players – in the MLS market is not excellent, people are not willing to spend a generously profitable amount of money to further the success of the MLS. Even if salary caps were abandoned in MLS, the initial costs of paying players $40 million salaries might be too extreme for what the increased revenue would be for even the next ten or twenty years. In order for the prestige of MLS to be genuinely increased, other aspects might need to be included, such as greater advertising and publicity. But I don’t know much about soccer. Anyway, this is an intriguing post.
ReplyDeleteA famous phrase in investing is “you have to spend money to make money”. While some may argue that since the U.S. does not have to spend as much on players they are making more profit, they are wrong. The more popular a team becomes the more money the team makes. The only main way for a team to gain popularity is to have success which is done with A level players. The A level players know however that this is the case, thus they will not join a team unless the team is able to come up with enough money. This causes teams to analyze which players are worth the high investment depending on what their expected return on investment will be.
ReplyDeleteI never would have taken the time to think of soccer with an economics standpoint, but it is interesting how soccer and all other sports revolve so greatly around economics. Athletes nowadays are getting paid millions and millions of dollars, which I find crazy because world leaders do not even make that much. I liked how you wove in scarcity, demand, and supply into buying tickets because it is something we can all relate to, but never take the time to think about. Your first question was an effective way of pulling in an audience and it also helped that you incorporated images. Good job, Emmie!
ReplyDeleteI really liked your post. I think part of the reason that there is such a gap between Europe and the US is due to the fact that Soccer isn't the nations sport like in almost all European countries, here it's football. Also the MLS hasn't even been around for 20 years whereas the top clubs in Europe have been around a hundred years. I think with time we will see soccer grow on Americans and MLS get higher caliber players. David Beckham is a good example of a player who came to the MLS even though it was later in his career he still initially drew in bigger numbers for the galaxy, and now after retiring he decided to start n MLS team in Miami, FL. Also since the world cup last year many quality national team members are coming back to play in the MLS like Dempsey and Altidore which helps with popularity. It would be exciting though to see a team take a gamble on top 20 player.
ReplyDeleteAlthough it will be hard, I believe that the MLS could, eventually become as popular of a league as the English Premier League. However, soccer as a whole in the United States isn't very popular, with the rivaling sport of baseball it is hard to fill the seats in most of the games that the MLS has. In order to create more profit more people need to purchase merchandise, and lately that has been the key. The MLS has brought in older players such as Kaka, Frank Lampard, and Steven Gerrard which may promote the league hopefully making this a popular league.
ReplyDeleteWhen you think about it, how much a player makes all comes down to their talent. Ronaldo and Messi are ten times the player Clint Dempsey is, but putting a limit onto how much money can be spent is confusing. If other sports in the United States are allowed to spend as much money as wanted, why can't soccer? It would be interesting to see if there would be an increase in attention internationally if such things would be added in the next years.
ReplyDelete