Each club can spend up to 25% of its turnover; $1 for $1 luxury tax starts at $3 mil

[Dust2]

Platini's proposals: Wages could be linked to percentage of club turnover

Proposals being considered by the Uefa president Michel Platini:

* Clubs should live within their means and spend the income they have.

* This may mean wages being linked to an audited percentage of turnovers.

Why 25%?

Total MLS revenue in 2007 according to Forbes: $166,000,000
Total MLS salaries in 2007 according to MLS Player Unions: $41,418,825

% of total revenue spent on salaries in 2007: $41.418mil / 166 mil = 24.95%

Why $1 for $1 luxury tax?

-to help small market clubs survive and be profitable. If they live within their means, they should also be profitable.
-another purpose of the luxury tax is to control spending. The higher the spending, the higher the cost.

What the 25% turnover chart would look like?

$10 mil revenue club = at most $2.5 mil salary
$12 mil revenue club = at most $3.0 mil salary
$14 mil revenue club = at most $3.5 mil salary
$16 mil revenue club = at most $4.0 mil salary
$18 mil revenue club = at most $4.5 mil salary
$20 mil revenue club = at most $5.0 mil salary

This mean that a club with $16 mil turnover could spend up to $4 mil on player salaries. However, each dollar over the $3 mil luxury tax threshold will be charged with a $1 penalty.

Are the 25% of turnover, $1 for $1 luxury tax, $3 mil tax threshold all adjustable?

-Yes, absolutely. MLS can tweak this to reflect its financial situation. As MLS generates more revenue, expect the % to increase. Per its CBA, 54% of NHL hockey-related revenue go toward players. NHL CBA: "The players' share increases if revenues rise. They get 55 percent when NHL revenues hit $2.2 billion, 56 percent at $2.4 billion, and 57 percent at $2.7 billion."

What about the DP rule?

-DP Rule will be the same as the past 3 years.

Could teams be profitable if they only spend at most 25% of their turnover on player salaries?

-What do you think?

[prizby]

ill take a pass, im tired of the 100 different salary cap rules...lets wait til the CBA comes out and debate the CBA

thx

[Oldtimer]

I doubt Don Garber will read this board to find out what to do...

[JonO]

Say it ain't so - I thought everybody read this board for guidance...

[TFCRegina]

Against the luxury tax but for the 25% turnover plank of the proposal.

[Oldtimer]

What would suck about a luxury tax is that Seattle pulls in 50% more than TFC, so it would make it even harder for TFC to win a championship...

TFC would be the Blue Jays, Seattle the Yankees of MLS.

[Beach_Red]

What would suck about a luxury tax is that Seattle pulls in 50% more than TFC, so it would make it even harder for TFC to win a championship...

TFC would be the Blue Jays, Seattle the Yankees of MLS.

I like the idea of the 25% (it would be a little tough to get accurate numbers of revenue for teams, but if everyone was willing to accept the Forbes numbers I guess that would work - some indie distributors in the movie business started paying out bsedon the Variety numbers and most people accept that).

As we've seen the luxury tax in baseball doesn't work very well. Cetrainly in MLS we'd see a few teams - and MLSE-owned teams would definitely not be one - become far more successful than others. Maybe the bottom few teams would go out of business, but maybe that's for the best. How many teams do you need to have a league?

I think a luxury tax system would only work in a league with the same kind of ownership for all teams - like the NFL which requires individual owners and not 'board of director' type ownership. I don't think it works very well to mix ownership types, and as so few individuals are willing to buy MLS teams they went for the single-entity structure.

But really, anything that increases the amount of money available to spend on players I'm all for.

[Dust2]

What would suck about a luxury tax is that Seattle pulls in 50% more than TFC, so it would make it even harder for TFC to win a championship...

TFC would be the Blue Jays, Seattle the Yankees of MLS.

Assume Seattle generate $32 mil a year and Toronto generate $20 mil in revenue. According to the 25% rule, Toronto can spend up to $5 mil salary and Seattle's $8 mil.

However, to spend $5 mil, it will cost Toronto $2 mil luxury tax. To spend $8 mil, it will cost Seattle $5 mil luxury tax. Conclusion, Seattle will not spend to the allowable limit because it will cost them too much ($5 mil in luxury tax).




something to ponder:
--------------------------------------------
Should teams with poor attendance have equal opportunity of success as teams with high attendance?

Should good management be the deciding factor of a club's success?

It should definitely be A factor but should fan support (lot of fan support = high revenue = more money to spend on players) be a factor, too?

[Beach_Red]

something to ponder:
--------------------------------------------
Should teams with poor attendance have equal opportunity of success as teams with high attendance?

Should good management be the deciding factor of a club's success?

It should definitely be A factor but should fan support (lot of fan support = high revenue = more money to spend on players) be a factor, too?

It depends how important a soccer league in America is for you. It's possible that there are enough fans of only socer to finance a league, but chances are in order to be successful a soccer league is going to have to win a few fans from other sports, it's going to have to convince some ticket buyers of football or basketball or baseball to buy some soccer tickets, too.

What' the best way to do that?

[Carts]

ill take a pass, im tired of the 100 different salary cap rules...lets wait til the CBA comes out and debate the CBA

thx

Agreed...

The only reason question is are there more rules in the MLS Salary Cap than threads started by 'Dust2' about salaries etc...

Boring... Tiring... Done...

Carts...

[Fort York Redcoat]

It's not gauranteed that Seattle would be the Yankees in one year and remain a Man United for the next decade. I'd be willing to see the 25% and $1 for $1 luxury in place.

The likelyhood of MLS being that brave with Namerican Sports to contend with is slim.

[Fort York Redcoat]

Agreed...

The only reason question is are there more rules in the MLS Salary Cap than threads started by 'Dust2' about salaries etc...

Boring... Tiring... Done...

Carts...

Aww C'mon Carts, Dusty at least tweaks his salary proposals every time.

[Beach_Red]

It's not gauranteed that Seattle would be the Yankees in one year and remain a Man United for the next decade. I'd be willing to see the 25% and $1 for $1 luxury in place.

The likelyhood of MLS being that brave with Namerican Sports to contend with is slim.

There's a fine line between brave and stupid... oh no wait, that's between clever and stupid, isn't it?

I always like that Dust2 is so optimistic about this league. He's all about getting better players and I like that idea so I say keep trying till you find the formula that works.

Here's a question. How important is Champions League play to European leagues?

I mean, take Scotland for example, how important is it for that league to send teams to play in Europe? What would be the effect on the league if they didn't send any teams?

[london_tfc_fan]

What would suck about a luxury tax is that Seattle pulls in 50% more than TFC, so it would make it even harder for TFC to win a championship...

TFC would be the Blue Jays, Seattle the Yankees of MLS.

I beg to differ, we would be the Red Sox NYRB would be the Jays! attendance numbers are eerily similar as well lol!

[Carts]

Aww C'mon Carts, Dusty at least tweaks his salary proposals every time.

Its like listening to a CD with the laser skipping... Soo sick of it...

I miss the days of "...insert name here for DP..."

Those threads showed up every 2-days, but at least made you laugh at some of the names... These are just annoying...

Oh well, I drink...

Carts...

[Fort York Redcoat]

Here's a question. How important is Champions League play to European leagues?

I mean, take Scotland for example, how important is it for that league to send teams to play in Europe? What would be the effect on the league if they didn't send any teams?

In Scotland in means the difference of affording that one superstar or keeping him for the next year and beating your biggest rivals.

The money in Europe isn't big until you advance but making it when coming from a smaller league really helps you rise above the following year.

To not send teams to Europe would indeed get you closer to your Namerican parity dream. I just don't think the majority of people outside of our continent appreciate the parity movement.

[Lucky Strike]

In theory good, but in practice not at all effective.

Generally speaking, the teams owned by gazillionaires just pay the luxury tax and it doesn't affect them in the slightest. You hate to compare sports because often it's apples and oranges, but the Yankess have spent 165 million on luxury tax since it's inception since 1998 or whatever years it came in. It just doesn't matter to them and doesn't prevent buying a championship.

As for an individual wage cap based on club turnover, that too sounds good but can set bad trends. Using stadium capacity as an example, the larger your stadium, the more tickets you can sell, therefore the more turnover you'll have and be able to spend more on wages. This could very well encourage clubs to go deep into debt in order to secure new or larger stadiums just so as to increase turnover. And the clubs who already have huge stadiums (like Old Traffod or Camp Nou for example) would simply have their already big advantage over smaller teams confirmed. It wouldn't address the problem.

And going specifically to MLS, it would encourage a trend back towards using behemoth NFL stadiums to have as many seats as possible. It's contrary to the vision of SSSs for all teams and would ruin an atmosphere that is already dead in some place like Columbus. I can't see any good coming from this proposal.

[Beach_Red]

In Scotland in means the difference of affording that one superstar or keeping him for the next year and beating your biggest rivals.

The money in Europe isn't big until you advance but making it when coming from a smaller league really helps you rise above the following year.

To not send teams to Europe would indeed get you closer to your Namerican parity dream. I just don't think the majority of people outside of our continent appreciate the parity movement.

I think parity is a lot closer to the reality all over the world, people just don't like to admit it. Since TV revenues have become the big money generator parity will either emerge on its own, or you can have a hand in how it's done, I just don't see many places where it's avoided.

It just depends on how you organize the teams. As you say, once you advance in Europe the money is big and that seperates those teams form the rest. There is pretty much a parity of those teams and it's tough for new teams to join that club. (it's not like any different Scottish teams are likely to get very far, so there are two levels of parity in the league, but it's there).

[Fort York Redcoat]

And going specifically to MLS, it would encourage a trend back towards using behemoth NFL stadiums to have as many seats as possible. It's contrary to the vision of SSSs for all teams and would ruin an atmosphere that is already dead in some place like Columbus. I can't see any good coming from this proposal.

Well said. Priority goes to losing all the shared stadia. It would give owners an excuse to remain second rate tenants.

[denime]

Agreed...

The only reason question is are there more rules in the MLS Salary Cap than threads started by 'Dust2' about salaries etc...

Boring... Tiring... Done...

Carts...

+1

[Fort York Redcoat]

I think parity is a lot closer to the reality all over the world, people just don't like to admit it. Since TV revenues have become the big money generator parity will either emerge on its own, or you can have a hand in how it's done, I just don't see many places where it's avoided.

It just depends on how you organize the teams. As you say, once you advance in Europe the money is big and that seperates those teams form the rest. There is pretty much a parity of those teams and it's tough for new teams to join that club. (it's not like any different Scottish teams are likely to get very far, so there are two levels of parity in the league, but it's there).

Did you just call me "the people"? Wicked.

I the people will admit to an extant that tv helps your parity but with smaller leagues it doesn't have the same theory behind it. It's not as often you see two minnows on tele as a team that brings in more viewers. This generates more money for dispersal. The smaller the league, the less variety shown. Check out how many SPL games you can see on Setanta w/o the old firm involved.

[Hitcho]

holy shit dust, you've really got a hard on for this cap structure with a luxury tax for MLS, but

can you please stop making threads galore about it? this is at least the third one you;ve spawned, and the others were merged. just keep it one thread, there's no need for this poll.

you don't want to become known as the next mighty. let it drop mate!

[Fort York Redcoat]

^I forgot about that.lol

Dusty must be just as sick of seeing the same 4/5 guys in his threads. Wondered when you'd show Hitcho.

[Hitcho]

Haha - wouldn't have missed you for the world Forts!

"I the people"... love it mate. Almost spat some Teriyaki over my desk when I read that.

[trane]

The current system stunts the growth in the leagues major franchises, TFC, Seatle, DC. If not change it will stunt the growth of the league.

[Beach_Red]

Did you just call me "the people"? Wicked.

I the people will admit to an extant that tv helps your parity but with smaller leagues it doesn't have the same theory behind it. It's not as often you see two minnows on tele as a team that brings in more viewers. This generates more money for dispersal. The smaller the league, the less variety shown. Check out how many SPL games you can see on Setanta w/o the old firm involved.

Yes, you the people.

And like you say, there is parity in the Scottish league - the Old Firm is one level of parity and then the rest of the premiere league is on the next. And that's not likely to change anytime soon. You seem to have some aversion to the word "parity" so we should callit something else - I like the line someoe on here had the other day about how all teams play by the same rules on the pitch - why not the same ones off?

But really, all Dust2 is trying to do with all these salary/tax/wahetevr plans is get better soccer and I agree with him on that.

The reason, I think, MLS can't have 3-4 dominant teams is because there's nowhere else for them to go. Sure, there's a Champions League, but really, it'll be tough to get American fans that interested in going against Costa Rica's best.

I would suspect that if it wasn't for European games, even fans of the Old Firm would get tired of beating up on everyone else in Scotland after a while.

[rocker]

My solution for getting better soccer? Raise the salary cap for everybody. Simple.

Creating disparity isn't the same as creating quality.

All the methods Dust2 proposes involve creating inequality in the name of increased quality. But really it's an illusion -- the big spenders certainly are better, but the league as a whole isn't. They probably will look even better against an opposition that cannot afford to keep up financially.

Just raise the cap, my friends.. just raise the cap.

[Dust2]

Should teams with poor attendance have equal opportunity of success as teams with high attendance?
Should good management be the ONLY factor in deciding a club's success?


Nov 1, 2009 playoff game Chicago @ New England. Announced attendance: 7,416.


.
.
.


Seattle has sold over 31,000 season tickets and has a 96% renewal rate.

http://www.soundersfc.com/News/Artic...n-Tickets.aspx

Season Tickets capped at 32,000

The Seattle Sounders FC announced today that less than 1,000 season tickets remain for the 2010 season. “They took their match day role very seriously and renewed their season tickets at a 96 percent rate.”

Should the Sounders growth be hindered for the benefit of a team like New England? Is the best way for MLS to grow is to be only as good as its weakest team? MLS have won about 4-5 games out of about 25-28 Concacaf Champions League games. This poor record is on par with league from Panama, El Salvador and Honduras. Is that good enough?

[Pookie]

How big could Seattle get if they didn't have New England to play against?

Way too much attention on the money paid to players. Teams with deep pockets can develop and exploit advantages that other teams don't have.

Toronto is dropping over $5M in a quality pitch. This gives them an advantage over teams that don't have it.

Toronto could develop the best training facilities. Toronto could hire a top notch scouting staff, a top Manager (willing to coach in MLS). They could fly the boys around on private jets. They could offer them TV segments on GOL TV to boost their profile. They could broker endorsement deals for them with any number of partners.

The teams that don't draw, don't have these opportunities. The advantage and opportunity already exists with the big clubs.

Caps just protect against an inept owner(ship) firing money at players to cover shortcomings. It raises the costs artificially for the rest of the businesses in this league.

[Dust2]

How big could Seattle get if they didn't have New England to play against?

Way too much attention on the money paid to players. Teams with deep pockets can develop and exploit advantages that other teams don't have.

Toronto is dropping over $5M in a quality pitch. This gives them an advantage over teams that don't have it.

Toronto could develop the best training facilities. Toronto could hire a top notch scouting staff, a top Manager (willing to coach in MLS). They could fly the boys around on private jets. They could offer them TV segments on GOL TV to boost their profile. They could broker endorsement deals for them with any number of partners.

The teams that don't draw, don't have these opportunities. The advantage and opportunity already exists with the big clubs.

Caps just protect against an inept owner(ship) firing money at players to cover shortcomings. It raises the costs artificially for the rest of the businesses in this league.

Is that why New England, a club that don't draw, made the playoff in the last 3 years while Toronto, a club that draw, did not? Oh, New England have made the playoff for the past 8 years.

Should good management be the ONLY factor in deciding a club's success?

According to you, good management should be the ONLY factor deciding if a team wins or not. Why can't money also play a factor?