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McCarthy's Musings: Survival And Growth Dominate Decade In MLS

By Kyle McCarthy

Seven years ago, MLS teetered on the precipice of failure.

Losses accumulated with each passing day as teams struggled with bad venue contracts and poor auxiliary revenue sources. Red ink flowed profusely and black ink represented a distant dream. A federal court in Boston held the structural existence of the league in its hands. Flailing teams in Miami and Tampa folded, the victims of shoddy ownership and no ownership at all, respectively.

At that point, the future looked murky at best. The worst, well, it's not even worth contemplating even in hindsight.

Contraction marked the bottom for MLS in this (and probably any other) decade when it struck on Jan. 8, 2002. The galling action dealt MLS a crippling blow, but it also permitted league executives to plan for a brighter future. Slowly, but surely, MLS crawled out of its nadir.

Three particularly committed investors – Philip Anschutz, Lamar Hunt and Robert Kraft – carried MLS when others ducked out or shunned the league. Instead of folding up shop and writing off the massive losses, Anschutz, Hunt and Kraft carried the league and transformed it into a viable investment opportunity for others.

Contraction certainly helped, removing two of the league's weakest markets and curbing some losses in the process. So too did the First Circuit's decision in Fraser v. Major League Soccer, which allowed MLS to keep its single-entity structure in tact, limited player personnel costs and ensured the inaugural Collective Bargaining Agreement talks would produce a management-friendly pact.

Most of all, the future brightened because the infrastructure improved. Oversized NFL stadiums were gradually replaced in many markets by intimate, soccer-specific facilities. These stadiums eliminated the tenant sinkhole and broadened revenue streams for many teams. Profit, for the first time in league history, looked like more than just a distant objective on a piece of paper.

Hope inspired investment on multiple fronts. The improved financial landscape attracted a diverse group of investors willing to share the burden and ameliorate the losses. Sponsors were more willing to sign larger deals. ESPN and Fox Soccer Channel stumped up rights fees. Profits were still hard to find, but a couple of teams started to function in the black rather than the red.

Financial progress allowed MLS to push the boundaries of financial conservatism. Key players were handed deals above the salary cap in order to keep them in the fold. Expansion strengthened the league with integral markets in Seattle and Toronto now involved while relocation brought Houston into the fold. With the player pool stretched, MLS petitioned for more foreign player spots and devised a rule that could bring the brightest stars in world football to the United States. David Beckham's arrival in 2007 signaled MLS' intent to make a splash and turn away from the cost control measures.

As the next decade begins, MLS remains a unique entity on the world landscape. The quality of play continues to improve, though considerable strides need to be made on the field and in the wage packets before MLS joins the upper echelons of club football. A liberalized form of the single-entity structure – certain functions have devolved to individual clubs, while others remain under the auspices of the central office – ensures reasonable cost control even in the face of a CBA certain to increase those costs in some manner. Even with the single-entity structures in place, fissures have started to appear between large market and small market clubs as MLS plots its new trajectory.

Failure, however, simply isn't an option anymore. After an often tumultuous ten-year period in which the pendulum swung between the dual objectives of survival and growth, that's one point worth lauding as the next decade begins.

Kyle McCarthy writes the Monday MLS Breakdown and frequently writes opinion pieces during the week for Goal.com. He also covers the New England Revolution for the Boston Herald and MLSnet.com. Contact him with your questions or comments at kyle.mccarthy@goal.com and follow him on Twitter by clicking here.

For more on Major League Soccer, visit Goal.com's MLS page.