For our final project, we would like to compare the Chinese Super League (CSL) and Major League Soccer (MLS) and title it “A Match of Leagues – MLS vs. CSL. ” Broadly, we will analyze the history of these two leagues and how their current corporate structures will shape their trajectory in the coming years. Our research will be guided by the overarching question of what role economic structure plays in determining the success of league, as measured by revenue generated, top players attracted, and media attention. We chose to investigate the CSL and the MLS because they share several fundamental properties including a positive growth rate and location, which will make our evaluation of the structural differences more clear and plausible. Although the MLS was founded in 1993, it did not gain much traction in the United States until 2002; 16 of the current 26 MLS teams have been added since 2002. The CSL was founded in 2004 and currently has 16 teams. Therefore, the growth rate of the CSL and MLS are comparable, with the CSL growing slightly faster as a result of increased investment in player salaries. Furthermore, the size and capital of the United States is commensurate with that of China. Both of these nations are economic powerhouses with access to large pools of capital and people who could potentially participate in the league.
Our preliminary research indicates that the structure of the MLS is very different from that of the CSL. The MLS is a single-entity structure, so the teams and players are owned by the league itself. This collaborative business model mitigates competitive risk because anyone who invests in a team is investing in the prosperity of the MLS as well. A single-entity structure further ensures that teams do not compete with one another for available players, which keeps salaries at a sustainable level and controls costs. The CSL, however, is a corporation that operates under the auspices of the Chinese Football Association (CFA). The member clubs and the CFA act as shareholders for the CSL, but the CFA plans to transfer its shares to the clubs who will become the management entity. This decentralized corporate structure is very similar to that of the Premier League in which the 20 member clubs are shareholders and the Football Association Premier League (FAPL) is not directly involved in day-to-day operations but does possess veto and oversight power during elections and rule changes. To further develop our understanding of these structural differences, we will research all of the, but not limited to, following topics: salary caps, transfer fees, relegation of teams, foreign players, recruitment, and revenue and expenditures.
To gather this data, we will read a variety of articles and sports blogs as well as the home webpages for the MLS and CSL. One limitation for our project is that the MLS and CSL are both privately owned companies, so the metrics we can collect restricted by what information is publicly available. We will evaluate the long-term economic viability of the numerical results and attempt to gauge demand for soccer in the United States and China. Thus far, we have used the MLS and CSL websites, the Medium, Lexsportivia blog, the Guardian, Business Insider, and The Football Group to gather information. The MLS and CSL websites are useful resources for the current state of the league and provide information on standings, players, teams, news, investors, and more. An article titled “Unpacking the Major League Soccer Business Model” on the Medium, an online publishing company, presents the MLS as an investor-operator model, provides flow charts for revenue and expenditure streams, and clarifies how the MLS expands. This article used a plethora of sources, including Forbes, Sports Business Daily, the San Diego Tribune, the LA Times, and ESPN FC, which may be useful to explore as we continue our research. An article titled “Major League Soccer’s Single-Entity Structure ” further describes the corporate model of the MLS. In particular, it provides details on how salaries are paid, transfer fees, and the Fraser v. MLS (1996) Supreme Court case, in which the MLS defended its corporate structure. Eight MLS players had filed an antitrust suit on the basis that the single-entity structure of the MLS devalued its players and restricted their services. The Supreme Court, however, declared that because the MLS is a single-entity, there cannot be a conspiracy against the players. Today, most of the criticism about the MLS’ corporate structure is similar to the argument made in Fraser v. MLS – the MLS benefits people who work directly for the league at the expense of the players. Unlike the Premier League or CSL, MLS players cannot choose which team they play for and face a salary cap. We will investigate this criticism further and take it into account when predicting the success of the league.
The Football Group, a sports oriented company and blog, published an article titled “Chinese Super League: The Strategy, The Money and the Future” is a particularly useful source for understanding the vision President Xi JinPing has for soccer in China. In 2015, President Xi created a 10-year plan to double the size of the Chinese sports economy to more than $700 billion, with state and private funding. In 2020, China met President Xi’s benchmark achieved to produce over 100,000 players and to create 20,000 new “football schools” and 70,000 pitches. A Business Insider article titled “China is Spending Billions to Take Over the World of Football” provides more detail on how money is spent within the CSL, with particular focus on transfer fees and player salaries. This article draws upon an assortment of articles, including ones published by the Financial Times, Forbes, and ESPN, that we will analyze as we continue with our research. Thus far, we learned that during the last transfer window, the CSL spent $280 million on new players, which is more than the Premier League. Additionally, CSL players have an average salary of over $1,000,000, which is double the salary cap for players in the MLS, excluding bonuses from additional funding. This drastic difference in spending between the MLS and CSL is an obvious discrepancy in the two leagues’ economic structures. China is evidently focused on creating several star teams with top talent, while the United States appears to be more focused on building a balanced league with distributed talent. The purpose of our project is to decipher which approach is more sustainable and can captivate public attention more effectively.
Once we have collected adequate information, we will create our WordPress site. The viewer will first see a homepage with an overview of our project and our conclusions. Because our project is concerned with a comparison, we believe that it is best to display the different aspects of the CSL and MLS’ business models, such as transfer fees, salary, advertising, and league revenue and expenditures. The viewer will be able to click on each aspect to find information on the two leagues as well as our interpretation of the data. We will also include sections on the history of both leagues and how the leagues function, in terms of number of matches, seasonality, and other operational information. We may incorporate another section with information on the Premier League so viewers can make comparisons themselves. We want our site to be captivating, so within each subsection we will include a variety of media, such as radio interviews, video clips, and pictures in addition to our written analysis.
In order to achieve a fair balance of the workload for this project, each group member will focus on a distinct section. For example, one person will focus on transfer fees, another could research league history, while another could focus on advertising revenue. This will enable us to establish individual tasks easily and allow each member to become familiar with both the MLS and the CSL. The research will be conducted individually for each section, but we will meet biweekly to critique each other’s work and provide constructive feedback. Thereafter, we will then revise our respective sections to accommodate everyone’s input. Anyone who does not pull their weight will not have two adequate sections and will be voted off the team with a ‘shame’ march to follow through west campus.
“About Major League Soccer.” MLS Soccer. Last modified 2020. Accessed March 4, 2020. https://www.mlssoccer.com/post/2018/01/01/about-major-league-soccer.
“Chinese Super League Football.” Chinese Super League Football. Last modified 2020. Accessed March 4, 2020. https://www.chinesesuperleaguefootball.com.
“Chinese Super League: The Strategy, the Money and the Future….” The Football Group. Last modified 2020. Accessed March 4, 2020. https://www.thefootballgroup.com/chinese-super-league-strategy/.
Krasny, Isaac. “Unpacking the Major League Soccer Business Model.” Medium. Last modified June 7, 2017. Accessed March 4, 2020. https://medium.com/@isaac_krasny/unpacking-the-major-league-soccer-business-model-827f4b784bcd.
MLS Soccer Staff. “General Allocation Money.” MLS Soccer. Last modified February 2, 2017. https://www.mlssoccer.com/glossary/general-allocation-money.
———. “Targeted Allocation Money.” MLS Soccer. Last modified February 2, 2017. Accessed March 4, 2020. https://www.mlssoccer.com/glossary/general-allocation-money.
Reade, William. “Major League Soccer’s Single-Entity Structure.” Lex Sportiva. Last modified 2020. Accessed March 4, 2020. https://lexsportiva.blog/2019/10/09/mls/.
Ruthven, Graham. “TAM, GAM and Trades: Why MLS Is the World’s Most Overcomplicated League.” The Guardian. Last modified March 26, 2018. Accessed March 4, 2020. https://www.theguardian.com/football/2018/mar/26/tam-gam-and-trades-why-mls-is-the-worlds-most-overcomplicated-league.
Smith, Matthew Nitch. “China Is Spending Billions to Take over the World of Football.” Business Insider. Last modified July 28, 2018. Accessed March 4, 2020. https://www.businessinsider.com/how-china-is-spending-billions-to-try-and-take-over-the-world-of-football-2016-7.
What is the title and topic of your final project?
Chinese Super League vs. MLS
What is the key question (or key questions) that you hope to answer?
What are the structural differences/similarities of the Superleague vs. the MLS?
Franchise vs. meritocratic structure
Relegation of teams
Based on these competing structures, how do we predict these leagues will evolve?
Public perception of leagues
What sources will you be drawing on in answering this question?
We will draw on various articles/sports blogs that discuss history, structure, and news about the MLS and Chinese Super League, respectively
Will also use the league’s home site
Will also investigate the Premier League’s structure
Business model MLS
Major League Soccer’s Single-Entity Structure
What kind of interpretation and analysis will you use in answering the question?
Potentially will use the structure of the Premier League as a frame of reference for comparison and an example of success
We will analyze how the structural differences of the MLS/Chinese Super League and make predictions on the evolution of these two leagues (how does their current structure shape their future)
How do you plan to structure your site in order to make sure it is easy to understand and navigate and presents your material successfully?
Site will first show the different league structures we want to analyze
Within each “click” there will be one for Superleague, MLS, and analysis
How do you plan to structure and divide work equally and fairly within your group, and how will you work collaboratively on the project?
In order to achieve a fair balance of the workload for this project, we are creating distinct sections that will each be in the form of a separate paragraph. This will enable us to establish individual tasks by splitting up each section and assigning two sections to each of the four individuals in our group. The research will be conducted individually for each section and then we will all meet and critique each other’s work and provide constructive feedback. Thereafter, we will then revise our respective sections to accommodate everyone’s input and meet again to put the paper into a condensed version and ensure that each section leads on to the next. Anyone who does not pull their weight will not have two adequate sections and will be voted off the team with a ‘shame’ march to follow through west campus.
Collaborative Business Model competitive risk is capped
Built such that investors are invested locally (team) and nationally (MLS)
MLS does not have owners, instead they have investor operators who invest in the MLS as a whole, not individual teams
Profits/losses generated by the MLS are split amongst investors
MLS takes directly revenue from national sponsors and broadcast rights, and merchandise sold online
Being an investor means you can operate one of the teams in the MLS
Earn revenue directly from this team (local broadcast rights, merchandise sold in stadium, local sponsors, parking and stadium revenue)
Some of the profits generated by the team are portioned to the MLS: 30% ticket sales and 25-44% of transfer fees
MLS pays players all normal salaries as well as the salaries covered under allocation money (TAM and GAM)
Individual-operators cover the operational costs
Player development mechanisms (academies and training)
Front end costs: staff and budgets for marketing, sales, operations, coaching, travel, and additional salaries for players who earn above the threshold
How does MLS make money?
Advertising revenue → Over 20 national sponsors
Create blogs, podcasts, articles to keep fans interest in the game
Broadcast rights (earned over $90 million/year since 2015) from deals struck with Fox, ESPN, and Univision
Allowed MLS to create TAM
Soccer United Marketing
Arm of the MLS
Against the MLS
MLS is a bubble
Only afloat because of new investor money each year
A private company, so we can’t actually see their earnings
General Allocation Money (GAM) and Targeted Allocation Money (TAM)
Money available to club in addition to its salary budget
Teams receive additional GAM if:
Failure to qualify for the MLS Cup Playoffs
Transfer of a club’s player to another club outside of MLS
Qualification for the CONCACAF Champions League
Funds strategically provided by the league to teams to add or retain players who will have an immediate impact
Started in July 2015 at $100,000/year
Raised to $800,000 in 2016, $1.2 million 2017, $1.2 million plus additional $2.8 million for optional, discretionary in 2018 and 2019
In order to use on a player, the player must be making more than the maximum salary of $480,625 in 2017
Can be used to convert a designated player to a non-designated player
Major League Soccer’s Single-Entity Structure
Teams and player contracts are owned by the league itself
MLS employs the players, not the teams as in Europe
Ensures that teams do not compete with one another for available players, which keeps player salaries at a sustainable level and controls costs
Beneficial to the teams and the leagues, but not to the players because it strips away their freedom of movement
Fraser v. MLS (1996)
Ruled that MLS can continue as a single-entity structure → they don’t have to worry about antitrust laws
8 players sued the MLS
Chinese Super League: The Strategy, The Money and the Future…
President of China announced 10-year plan from 2015-2025 that would make China into a soccer powerhouse
Unlimited spending on players → attracting top players globally
Bankrolled by corporate investment
Foreigners taking advantage of the large transfer fees China was paying
Led to a cap on number of overseas players each team can have (4)
Tax on signing players imposed
Problematic because teams aren’t profitable
Ownership model → unlike MLS
Sections for the Paper:
Outline Thesis and mention all of the points we are trying to compare with the 2 leagues.
History of both leagues thus far
When they started, reasons behind starting (culture etc), amount invested thus far, viewers (in stadiums and on tv). Lead this paragraph into a comparison between the 2 leagues as they currently are.
Comparison of the leagues AND their respective approach
Comparison of MLS / Chinese super league with premier league
Our interpretation on how effective their respective approaches will be
Outlining points and formulating closing statement
What is our prediction for the future of these 2 leagues
Which one do we think has gone about gaining popularity etc in a better way
You can observe the general outline and info regarding the project. I am humbly asking you to follow these and by the use of the guidelines at the end, help write the paper. Thank you
Preferred language style US English
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