Monopsony and Salary Suppression: The Case of Major League Soccer in the United States

By Twomey, John; Monks, James | American Economist, Spring 2011 | Go to article overview

Monopsony and Salary Suppression: The Case of Major League Soccer in the United States


Twomey, John, Monks, James, American Economist


I. Introduction

Professional soccer in the United States has historically found limited success. Prior to the founding of Major League Soccer (MLS), the North American Soccer League (NASL) was the only professional league in the country's history to attain status as a top tier league. While many European countries sustained first division leagues, as well as various subordinate developmental leagues, the United States lacked both the depth of talented players and the financial backing to support such a system. The NASL, established in 1968, found limited success, but eventually folded in 1985 due largely to wide financial disparities between the competing clubs, and a lack of centralized control. In 1988, the Federation Internationale de Football Association (French for International Federation of Association Football), known as FIFA, granted the United States Soccer Federation (USSF) the right to host the 1994 World Cup. As a provision for being awarded the World Cup, the USSF promised to re-establish a first division professional soccer league in the United States. Adopting a single-entity model, the MLS was founded in 1995 as a limited-liability corporation under Delaware law. (1) The league is managed by a board of directors and investor-operators who head the operations of individual clubs. Ultimately however, the league "own(s) and operate(s) all of the teams in the league, assign(s) players and team personnel, and set(s) local ticket and concession prices." (2) The League has grown and expanded in its fourteen seasons from seven to fifteen clubs and three more will be added by 2010. (3) While the league still posts an overall annual operating loss, some clubs operate in the black and the league appears to be trending toward profitability. (4)

The MLS adopted its single entity structure because of the stability and potential benefits such a system provides for a young, developing league. Under the single-entity structure, the league "can increase the value of its sponsorship agreements by ensuring league-wide sponsors that individual clubs will not enter into sponsorship agreements with competitor firms that dilute the value of the league-wide sponsor's investment." (5) This allows MLS to secure long term sponsorships with major corporations. In 1996, the first year of MLS play, sponsorships with Adidas, Budweiser and Pepsi were secured with long-term deals. (6) The corporate structure of the league also increases purchasing power and leads to economies of scale. Investor-operators make executive decisions to support the league's wellbeing as opposed to the interests of individual teams. Most importantly, and perhaps controversially, the single-entity structure gives MLS monopsony power over the U.S. professional soccer labor market while still protecting it against anti-trust laws. This structure reduces competition for players between teams and therefore lowers individual player's bargaining power for contracts with the league and is designed to suppress player salaries. (7)

In 1997, the players sued MLS, claiming various anti-trust violations against the MLS. The players claimed that the single-entity structure was simply a conspiracy among team owners to fix player salaries and therefore in violation of Section 1 of the Sherman Anti-Trust Act which states; "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." (8) The players also claimed that the MLS monopolized the market for first division professional soccer in the United States and colluded with the USSF to do so, a violation of Section 2 of the Sherman Act; "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Monopsony and Salary Suppression: The Case of Major League Soccer in the United States
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.