Deloitte report suggests promotion and relegation would be good for U.S. soccer

Well reasoned backing for a major overhaul of the U.S. system

(Ben Fast)

In a report that could vindicate the ardent, grassroots support for promotion and relegation in U.S. soccer that has often been met with eye rolls from the gatekeepers to the American game’s top levels, Deloitte has laid out the benefits and dangers of implementing promotion and relegation in the United States.

With long-standing questions about public interest and the financial health of American soccer leagues, the promotion and relegation system seen in many other parts of the world has been ignored in the U.S. in favor of closed leagues, as seen in more established and American-centric sports. New franchises in top-tier MLS are now paying eight to nine figure buy-in fees to gain entry to a single-entity format that guarantees first division play for as long as the league stays afloat. Naturally, fears over changing the terms to these agreements and suddenly adding a great deal of risk to investors has prevented promotion and relegation discussions from going beyond the realm of hypothetical fan theories. But this new report from accounting and professional services firm Deloitte—the company behind the annual Deloitte Football Money League—might change that.

In a press release, Dan Jones, Head of the Sport Business Group at Deloitte, says:

“U.S. soccer has a major opportunity to capitalize on the nation’s growing interest in soccer. We believe the introduction of promotion and relegation into the existing league system could have numerous long term benefits, including increased attendances, increased broadcast audiences, improved commercial revenue and a positive impact on both elite players and grassroots participants.

“The current closed system has served MLS well in its early years, but as it matures it is reaching member capacity, preventing further expansion. Other challenges facing the current structure include growing fan interest in overseas leagues such as the English Premier League and a stagnation in the number of players annually registered with U.S. Youth Soccer. The number of registered players has barely risen since 2000 despite vastly increased rates of participation in high schools.

“Though the U.S. soccer league system may not be ready for such a move immediately and its implementation may not appear urgent, the topic is worthy of greater exploration and debate. U.S. soccer should properly consider the merits of introduction of promotion and relegation and a transition plan for its successful introduction in order to drive U.S. soccer forward.”

Though promotion and relegation would present challenges—especially since it would have to be implemented into a pre-existing structure—Deloitte says that the benefits outweigh the drawbacks. First, to address the biggest hurdle, they suggest instituting a phased introduction (playoffs to determine if a club goes down or remains) and parachute payments for relegated clubs, as the Premier League does, to mitigate risk for owners. Added regulations and minimum league standards would also be necessary, according to the report. The English Football Conference and Korea’s K-League are given as examples as once closed leagues that have successfully transitioned to a promotion and relegation format.

The stated benefits of promotion and relegation are far reaching. From increased fan interest and broadcast friendly storylines that, in turn, drive up commercial values, to an increase in owner motivation to succeed, improved player development (increased competition at all levels leading to more aggressive investment in coaching and training facilities), and infrastructure lending itself to natural growth.

(Deloitte Analysis of Promotion and Relegation in the USA)

A companion survey of more than 1,000 U.S. fans conducted by Deloitte demonstrates that there is an appetite for promotion and relegation in America. A whopping 88% of respondents said promotion and relegation would benefit the U.S. and 50% said they would be more likely to watch matches on TV if it were introduced. This increased interest would even extend beyond the club level to the U.S. national team, if this survey is to be believed (which could be a big “if”).

(Deloitte U.S. fan poll)

Another interesting potential benefit to promotion and relegation, according to Deloitte, is the possibility of reinvigorating the country’s stagnant youth player registration. Over the last 16 years, growth in this area has dropped off significantly and increasing competition would also increase demand for and investment in youth development.

(Deloitte)

The potential drawbacks, however, do not seem insurmountable. As previously mentioned, Deloitte recommends that promoted clubs would have to meet minimum organizational requirements to ensure competition, and player costs would likely skyrocket, as they have in Europe. What Deloitte repeatedly stresses, though, is that despite all the theoretical benefits, U.S. soccer might not be mature enough to handle such a transition just yet, especially with the question of fairness to those who have already invested to wide-ranging degrees.

(Deloitte Analysis of Promotion and Relegation in the USA)

And that’s been the primary reason behind American soccer’s most powerful shutting down the conversation in the past.

“We play in a country where the major leagues are really successful,” said MLS commissioner Don Garber at the Soccerex convention in 2015. “There is no promotion and relegation in hockey and basketball and they work really well. It is not happening in MLS any time soon.”

“We have a structure that intrigues the rest of the world, the idea that owners can come together and be partners off the field and try and beat the heck out of each other on the field has worked really well in the U.S. in other sports to make some of the most valuable leagues in the world. It is attractive, it allows for some ability to plan and invest over a long period of time.

“How does America benefit? Massive investment in bricks and a league that will be around in 100 years from now. It has become more of a seller’s market. There is more interest in investing in MLS than there are teams available.”

USSF president Sunil Gulati has also said that implementing such a system would be “frought with peril” and would require “very long discussions with many people with high LSAT scores [i.e. lawyers].”

At this point, it should be noted that Deloitte’s report was commissioned by Silva International Investments Ltd.—a company founded by Riccardo Silva, president and co-owner of one-year-old Miami FC in the second-division NASL. Surely these findings will be music to his ears, even though they present a less than iron-clad case, especially as the NASL’s future is once again looking less than certain.

https://www.whatahowler.com/tampa-bay-ottawa-voluntarily-relegate-themselves-from-league-without-relegation-d6e47ef9da00

Even with this report to fortify the argument in favor of promotion and relegation in the U.S., nothing short of a movement amongst MLS owners—the people with the most money on the line—is likely to bring about change on this front. And that would require a level of financial bravery that they seem both unlikely and unable to possess.

The full report summary can be viewed here: [MidfieldPress]


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