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Cost-cutting could become factor as new MLS season approaches.By Robert Wagman
WASHINGTON, D.C. (Sunday, January 7, 2001) -- Three Major League Soccer stories surfaced in the past week and all are worth examining. The one thing they have in common is money and MLS’s desire not to keep losing it at the same pace as it has over its first five years.
The first story is the appearance of a philosophical difference emerging within the league’s owner\investor group. My sources do not indicate any kind of sharp split, but rather that some of the MLS investors, like Chicago, Los Angeles and Colorado operator Philip Anschutz, want to continue pushing forward at an aggressive pace. Others, such as the Kraft family, which controls New England and has an option to operate the San Jose franchise, would like to find ways to immediately cut operating loses.
In the recently completed antitrust trial brought by the league’s players, several MLS officials testified under oath the League has lost about $250 million in its first five years of operation. Of course, the accountants were assigned to crunch the numbers to paint as dire a picture as possible.
As first reported by colleague Jeff Bradley on ESPN.com, one form this debate has taken has been serious discussions, at the highest level, of a "temporary consolidation" of the league. In other words, there was talk of shuttering one or two of the teams with the worst fiscal performance for the coming season and playing the 2001 schedule with 10 or 11 teams instead of 12.
San Jose and Miami seem to be the league’s biggest money losers and would likely top any closure list.
No one in the league office is willing to even publicly admit such discussions have been held. Privately, several sources say that they don’t think commissioner Don Garber would back such a move, because of the negative publicity that would ensue. Still, the sources indicated that the fact such discussions occurred shows the level of concern from some investors that operating loses must be cut.
On the one hand, Anschutz, among the wealthiest Americans, runs franchises in Chicago, Colorado and Los Angeles, and is said to have told his fellow investors he is willing to take over D.C. United's operating rights which have been for sale for the past two years. The team’s ownership group has disintegrated and the league is now running United, but would prefer to bring in new investors and might turn the team over to Anschutz, at least on an interim basis.
At the other end of the spectrum are the Krafts who run New England and have been operating the San Jose franchise on what has amounted to an interim basis. The Krafts must make a decision by January 31 whether to keep running the team or turn it back to the league.
Anschutz, 60, is MLS's most influential and aggressive investor and is moving forward with plans to build medium-sized stadiums for each of his three teams. It's unclear whether he would pursue a new stadium in the Washington area should he take over United.
One source says that the way the owners are grouped, the Krafts, the Hunts (who control Columbus and Kansas City) and Horowitz are pushing hardest for deep cuts on operating expenses until revenues increase. Anschutz, along with the MetroStar operators John Kluge and Stuart Subotnick are for significantly increasing investment in the expectation of increased revenue. Two sources stressed there is not a deep rift on the board of directors, and the entire ownership group continues to be committed to the future of the league. Rather, this amounts to a philosophical difference as to how to deal with losses over the short term.
One area on which there seems no disagreement is that salary levels are going must be watched closely in the coming year. MLS has now achieved a certain maturity where big-name players who were signed at inflated levels to help get the league off the ground are now coming up for new contracts. Some, perhaps many, are no longer contributing at levels that justify lofty paychecks, so they are not being offered new contracts or being asked to take large pay cuts.
One such player is D.C. United’s Salvadoran striker Raul Diaz Arce. Although the league’s second all-time leading scorer, he had a mediocre year last year after rejoining United and his contract was not renewed. Instead, he has been offered maybe half the estimated $200,000 he made last season and he has expressed a willingness to take a pay cut.
It is believed his agent Cory Clemetson is near completing a deal, but since Diaz Arce’s contract ended last Sunday and he had to return to El Salvador because his visa expired along with his contract.
If he re-signs, he will have to reapply for a P-1 visa from Immigration and Naturalization Service, a formality which still takes several weeks. Thus, Diaz Arce is not expected to be available to United during the CONCACAF Champions Cup which starts in Southern California on January 17.
This is probably not a disaster for United, because it is likely that Diaz Arce would not have been a starter anyway with the place beside Jaime Moreno on the front-line going to Chris Albright. Diaz Arce’s either will be used coming off the bench or be traded once again.
Another way this drive to cut operating loses is being felt is the overall salary cap, which apparently will not be increased from last year.
One team who has felt the squeeze is the Chicago Fire which traded All-Star defender Lubos Kubik to the Dallas Burn for Sergi Daniv. This is the kind of transaction D.C. United has had to make nearly every year, jettisoning highly-paid veterans to stay under the cap.
Senior correspondent Robert Wagman's "It Seems To Me . . . " appears regularly on SoccerTimes. He can be
e-mailed at email@example.com..
Senior correspondent Robert Wagman's "It Seems To Me . . . " appears regularly on SoccerTimes. He can be e-mailed at firstname.lastname@example.org..