Ever since its inception, MLS has been criticized for its single-entity ownership structure. The charge has always been that this not only limits competition, but also keeps American soccer from reaching the heights that the country’s population and resources have always suggested it could potentially achieve.
The forced shutdown due to the coronavirus pandemic, though, has cast that collective ownership into a new light. While teams and leagues around the world will likely be fighting just to keep the lights on, there’s a distinct possibility that MLS could come out of this in not much worse shape than it was before, according to Seattle Sounders majority owner Adrian Hanauer.
“I’m really glad that I’m part of Major League Soccer,” Hanauer told the Sounder at Heart podcast. “The ownership is rock solid. There’s been lots of criticism of single entity structure — no promotion-relegation, salary cap — heard over the years. But some of those principles are what will allow this league to survive and thrive coming out the other end.”
That doesn’t mean MLS — or the Sounders — will come out of this unscathed. The Sounders usually operate at a relatively close to break-even level, but Hanauer suggested they would likely lose tens of millions of dollars this year regardless of when or if play actually resumes. League-wide, the outlook is even more daunting.
“The losses at the team level in MLS will be astronomical,” he said. “Hundreds of millions, billions, really big numbers. But the MLS ownership is solid and committed to the league and their teams long-term. That is fantastic.”
What teams around the league will do in reaction will likely vary widely. Hanauer confirmed reports that the Sounders don’t currently have any plans to furlough or lay off employees and expressed confidence that the team will be able to access to the federal government’s CARES Act, which allows some companies to take as much $10 million in low-interest loans to help make payroll.
So far, the only pay cut anyone associated with the Sounders has taken is voluntary. Senior staff members and the coaching staff all chose to take voluntary pay cuts. Hanauer then matched those pay cuts with additional donations to the Sounders Relief Fund. That fund is designed to help small businesses, non-profits and individuals in and around the neighborhoods surrounding CenturyLink Field with grants up to $10,000. Hanauer’s family started the fund with $500,000 of seed money and he said it’s now close to $600,000 after contributions from staff, fellow owners, fans and about $30,000 generated from the upcoming Sounders Sports Science Seminar.
How the downturn will affect the on-field product also remains to be seen. Hanauer is still holding out hope that the league will find a way to play most, if not all, of the games remaining on its schedule, but also acknowledged there will come a point in the calendar where that is no longer possible (as such he was not ready to talk about how the Sounders might settle up with fans if they aren’t able to fulfill their season-ticket package). Similarly, the league is not at a point where players have been asked to take any sort of pay cut — nor does the CBA allow for owners to mandate one — but player values will inevitably be impacted.
Hanauer said he’s already seen anecdotal evidence of that teams are expecting lower transfer fees and that players’ wage demands are going down as well.
“I think this event will turn the sports industry, the soccer business upside down in that way,” Hanauer said, noting that the Sounders have not actively engaged in any negotiations. “We’re starting to get to that place where we’re talking about what the transfer market might look like, but we’re also talking about the reality of what our business, the MLS business, might look like going forward.”