MLS Oligarchy? Not if the Past is Any Indication.

With the importation of Clint Dempsey, Michael Bradley, Jermaine Defoe, and other high-cost players over the last seven months, there has been a lot of talk lately about MLS transitioning from parity to oligarchy. In this view, clubs in LA, New York, Seattle, and Toronto are destined to lord over any who don’t keep pace with the extravagant salaries paid to their stars. Clubs with large salaries are not a new phenomenon in America, though, and there is little evidence of dominance resulting from them.

Since 2007, MLS Players Union salary disclosures have revealed 18 times that a club’s total wages were North of five million dollars, while the salary cap sat below three million. Six out of these 18 missed the playoffs, and even the rich teams that performed well have scarcely resembled Bayern-style preeminence. Graphing total wages versus points per game for every club-season since 2007 illustrates the point.

Beyond looking at the spread of crests relative to the regression line, we can calculate how well all of the club-seasons correlate to one another. The R² of this graph is 0.03455, implying that only 3.455% of the variance in MLS clubs’ points per game have been explained by their total wages. That’s in stark contrast to European leagues, where player expenses have long been shown to be enormous drivers of league points. Soccernomics states that from 1998-2007 in the English Premier League and Championship, wages “explained 89 percent of the variation in league position.” More specifically and a little more recently, in the 2009-10 EPL (excluding Portsmouth, whose arbitration that year made study difficult), wages versus points per game yielded an R² of 0.7559.

The MLS salary cap provides a perfectly logical explanation for the trend on this side of the Atlantic. When a team employs three senior designated players (the mechanism for getting huge salaries onto the team), those players have a combined $1.095 million cap hit, leaving less than two million dollars to split among 17 other players: under $118,000 per player. A club without any designated players gets to spend $150,000 per. $32,000 on every player is an enormous advantage toward building roster depth.

As Chris Anderson and David Sally pointed out in The Numbers Game, dependable depth is traditionally more important than stars in the beautiful game. Moments of brilliance from Beckham/Blanco/Bradley types are great, but the like of Vanney/Wanchope/Richter have more frequent bouts of incompetence that unravel everything their high-quality teammates are fighting for. Take away the budget for depth, and these types end up playing 1,000-plus minutes out of desperation.

To be clear, high salaries can certainly be an advantage, and this edge is most pronounced when focusing on those teams who are well over the salary cap. Limit this study to the 24 club-seasons with wages above $4.5 million, and the R² shoots up to 0.257, much higher than any single season in the study. That still pales in comparison to Europe, probably because deep pockets in MLS are only a real asset for up to three roster (Designated Player) spots.

Going by the slope of the regression line for 2007-13 MLS, a team spending $3,000,000 could expect roughly 45.5 points over a 34-match season, while one spending $10,000,000 would fall around 50.5 points. Those five points can certainly come in handy, but one has to keep in mind, as the low R² figures represent, teams have fallen well above and below those expectations at both high and, especially, low wages. Star players in LA were key reasons that the Galaxy had great records (1.97 PPG both times) in 2010 ($10.98mm salaries) and 2011 ($14.66mm), but it is striking that the 2008 Columbus Crew (1.90) and 2012 San Jose Earthquakes ($1.94) reached similar heights on budgets of $2.37 million and $3.21 million, respectively.

Going forward, a large salary cap restructuring seems like the only potential reason this trend would change. If the new collective bargaining agreement keeps the proportions of minimum salaries, designated player cap costs, and salary cap limits roughly proportional to one another, there is little reason to think oligarchy will spontaneously rise up to triumph over parity. That is by no means guaranteed, though, and it should be one of the most closely-watched aspects of the next winter’s CBA negotiations.

We know what’s happened in the past, and have a feel for future dynamics, but what about the present? Quantitatively knowing that money is no guarantee of MLS success, qualitatively I can’t escape the feeling that Toronto FC will be the most disappointing big spenders in 2014. Over their entire history TFC have averaged only 0.99 points per game. Since the Reds’ creation in 2007, only 6 of the other 18 MLS clubs have had at least a single season that poor. If they can stay healthy, Jermaine Defoe and Michael Bradley should certainly help, but I have serious doubts about the rest of that roster being competent enough to make the club a legitimate threat for silverware. As always in MLS, we will all just have to wait and see how things develop, because success is not financially preordained.

5 thoughts on “MLS Oligarchy? Not if the Past is Any Indication.

  1. Good attempt, but you’ve committed at least one big error – You’re comparing MLS data over 7 years to 1 year of EPL data. By increasing the time span, you introduce many new factors, which reduce your correlation. Your Yearly R-square graphs are pretty much useless if they’re meant to show a trend over time, since we’re comparing against a single data point.

    • Thanks for the comment, because it helped me realize that my R²/p-value/slope graphs didn’t convey quite what I intended. Didn’t mean to imply trend over time, and wanted mainly to show the instability of MLS wages vs points in single seasons, and as a sidenote compare to the single EPL season.

      This morning I added a note and switched the graphs from lines to bars. Hopefully that makes it more straightforward.

      In the end, the overall point of the piece is the unimportance of total wages in MLS, with the EPL as a secondary comparative (which is admittedly limited). Sorry if that wasn’t clear.

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