The dismissal of the European Super League symbolized the rejection of the Americanization of European soccer. Essentially, closed leagues are not desirable in the European landscape. Promotion and relegation and the possibility of intercontinental competition makes European soccer special.
However, European soccer has a crisis of competitiveness. Realistically, if only a fraction of clubs win the league over a 20-year period, how competitive is it? This stifling of theoretical possibility stifles the sport from reaching the highest potential of compelling storylines.
An open system can be married with features that help make American professional sports leagues more competitive than any of the top European soccer leagues. In theory, that could help European leagues rival the success of the NFL, NBA, NHL and MLB.
A hybrid between American sports and European soccer
A hybrid model that combines open systems and a pro-competitive feature from American sports is desirable. Now, the vast majority of soccer fans of the European game can only dream of their preferred club winning prestigious honors. That is, unless, they play the likes of the FIFA or Football Manager games.
Cognitive dissonance permeates on both sides of the Atlantic. U.S. professional sports is overly commercialized. Leagues, teams and fans smack of outward arrogance. Yet, Major League Baseball employs a looser model of restrictions than other U.S. professional sports. This applies to marketing, salary structure and even free agency. MLB possesses a far greater share of titles amongst member clubs than in top European leagues.
Thirteen different teams won the Commissioner’s Trophy over the last 20 seasons. That number is unimaginable in leagues such as the Premier League, Bundesliga, Serie A, LaLiga and Ligue Un.
Remarkably, professional baseball does not employ a salary cap like other American leagues. However, as we will explore, MLB has other mechanisms that ensure competitiveness and the health of all its clubs. One such mechanism – a luxury tax – is a great idea for professional soccer.
In the same period that baseball has enjoyed 13 different champions, the Premier League has had six different champions, the Bundesliga five, LaLiga four and Serie A just three in the same period.
The lack of winners becomes more pronounced when one adds into the equation the total number of clubs that have competed in the four leagues over the 20 years – 49 different teams in the Premier League alone, for example.
Salary caps in soccer
LaLiga implemented the salary cap ineffectively in their first attempt. The cap, established in 2014, differed for teams. It was insurmountable for the clubs already thriving, preventing any positive results.
However, recent developments are a major step forward for the Spanish league. COVID-19 reduced the cap, impacting teams like Barcelona and Real Madrid that already felt the impacts of financial loss.
READ MORE: Barcelona’s $1.5 billion debt: How a mega club fell into a financial black hole.
Consequently, this created more parity in the league. Undoubtedly, the implementation of the cap hurts certain teams more, especially Barcelona. Still, the concept will leave Spanish soccer in a healthier state when it runs its course.
Javier Tebas, the president of LaLiga, talked about how difficult finances can be on all teams, not just those at the top.
“It’s important we all understand that it will be difficult for new players to be joining the clubs. They are now looking to reduce costs. Some clubs will have to sell players or reduce their salaries. There’s no other choice.”
He’s right, and one added benefit is potentially more competitive league title races. However, salary caps also promote wage suppression in addition to their pro-competitive nature. Therefore, it may not be the best solution to the issue.
Luxury tax in professional sports
American pro sports rub many the wrong way. There are many instances of things that take away from the spirit of sports. For example, the manufactured stadium atmospheres, gaudy VIP suites, and publicly funded stadia. They all differ from European fan experiences.
Nonetheless, the U.S. achieved an incredibly even playing field across their major leagues. Let’s focus again on Major League Baseball.
MLB has revenue sharing without restrictive franchise-driven marketing that is imposed by the NFL, NBA, NHL and MLS. Moreover, MLB has a “Competitive Balance Tax,” commonly known as the luxury tax.
In addition, MLB, like other U.S. sports leagues divides general revenue between its teams. This offsets some of the general and inherent inequity between teams in different market levels.
In most seasons, only a handful of MLB clubs pay the luxury tax. But, it ensures competitive balance. This means if a team spends over a certain rolling amount on salaries, a tax is assessed on that club. That tax goes toward a fund for player benefits. Therefore, this allows other teams to equitably split the luxury tax paid by the team.
MLB distributes general revenue to all MLB teams. Luxury tax receipts are not distributed in the same way. In soccer, those receipts could be.
Prior to the implementation of the Baseball’s luxury tax in 1997, fears persisted that big-spending teams captured the sport. At the time, the New York Yankees in particular reigned over the competition. In fact, what transpired since 2000 is an incredibly competitive professional sport. Without the typical wage suppression like other American leagues, baseball’s parity thrived.
Applying a luxury tax to European soccer
There are plenty of questions on the practicality and practice of a luxury tax in European soccer. Certain factors, notably transfer wages, do not exist in American sports.
In our sport, the North American Soccer League (NASL) quietly implemented a luxury tax system in 2017. Had the league survived its sanctioning crisis with US Soccer later that year, competitive play could have existed. Controversially, the NASL did not use caps on spending. As fans of the former league know, New York and Miami’s big spending dwarfed the ability of other smaller market clubs to spend.
In time, the NASL may have become remarkably competitive. The league could have accomplished this without the hard cap set up by their MLS counterpart.
With Major League Soccer, clubs regress to the artificial mean instead of taking advantage of clubs investing more. In theory, this could have benefitted the competition among rivals.
A luxury tax, for example in the Premier League, could work to enhance revenue divided by clubs outside the proverbial “top six.” Consequently, there is an increased sense of balance.
The European Super League breakaway effort by those same six clubs could serve as justification for such a move. This ensures the long-term health of England’s top flight. Additionally, the competitiveness of clubs excluded from the Super League would grow.
European soccer pundits consider a lack of promotion and relegation as anti-competitive. English supporters and German clubs spearheaded the near-immediate destruction of the concept. However, the lack of promotion and relegation in US sports does not mean that other, pro-competitive measures can be studied from US leagues and implemented in Europe.
We already see the success of Spain’s salary cap. While hard caps are wage suppression techniques that should be avoided, luxury taxes offer something different. These taxes are efficient and progressive ways of creating increased competition. The Premier League benefits from having multiple clubs that win a title in a given season. Still, those clubs are practically the only clubs that can win a title in any given year.
When American pro sports features are often mentioned in Europe, the assumption is that it involves closed leagues and hard salary structures. However, the luxury tax idea is a softer landing which doesn’t require a closed league structure or wage suppression. Yet, it can make all the difference toward creating a more competitive landscape.
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