I'd venture the worry has been that coming to MLS could taint the goods. However, that perception is likely changing and we could very well see teams try the buy low/sell high ventures in the (near) future.
2017 Summer Signings
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The problem is that while a club gets back its transfer fee if it sells at a profit, it only gets a portion of the upside beyond that. So, there is only a limited ability to hedge the losses that will inevitably occur when a guy gets hurt or otherwise doesn't pan out.
This is mostly off-book money for DPs only. I don't think you can pay a $6 million transfer fee for a non-DP even when prorating the cap hit. So I think the primary concern is making or losing actual money, not Garber bucks.
This is correct. An Almiron fee of $20 Million puts $4 Million the pockets of MLS and an $8 Million profit in the pockets of Arthur Blank.
Even though the entire transfer fee to acquire him was paid by Blank?
Someone can correct me, but I believe the profit is split
I don't know. It just seems wrong. Makes sense for MLS to get a cut when cap dollars or GAM/TAM is used to pay the fee because that's MLS sourced dollars. When a club pays the entire fee the club should get any and all profit. But just because I think that's how it should work doesn't mean it is that way.
I believe the 65/35 split is after expenses, including acquisition costs.
I wonder if they can expense front office/scouting salaries and travel as part of the acquisition costs.
I had to double check Dos Santos' salary. I really want to like the Maxi signing, but the fact that Dos Santos is only making a little bit more than him is another data point that makes Maxi look like a low value/efficiency move. (I realize LAG paid a transfer fee too, so not saying we should have signed him specifically, but someone of his caliber.)
How about Ki Sung-Yueng next year? His contract expires at Swansea next summer. May be able to get him on a free if there's no Chinese Super League interest driving up his salary demands.
I like KI. But he disappears for extended periods. Unless he shapes up he's become a bit of an albatross for Swansea. He could be a very good sub on a better team who could afford a player like that, who shows quality in limited bursts. That does not make him a good DP in MLS.
http://reason.com/blog/2017/08/13/if-mls-is-a-ponzi-scheme-taxpayers-will
Saw this article over the weekend that seems appropriate to the discussion. Seems a bit extreme to me but the author uses the rising expansion fees to make a case that the MLS is a bit of a Ponzi scheme. The idea of 65/35 profit split on the sale of a player even when the team/owner paid all the acquisition costs only adds to the Ponzi scheme case.
That article is garbage. It dismisses soccer as "weirdly popular."
I also don't think that some profits going to the league treasury makes it a Ponzi. Just because a group of individuals pool some money and profits doesn't make something a Ponzi in the slightest. By that standard, my health insurance is a Ponzi because someone else in my group got cancer and was funded with my premiums.
I work in biotech banking and invest in cryptos. There are tons of completely rational and sound investments that may not be earning money today.
MLS is a lot of weird things, but a Ponzi scheme is not one of them. There is no "owner" of MLS that is profiting off of all this and paying early adopters off with later adopters money. The league is owned by the team owners. A ponzi scheme by definition has to fail, otherwise its just a business that succeeded using investment capital. If the league fails, all the owners lose their investments.
The gamble is that soccer will catch on in America and be the biggest league in the world because we have the most people and the most money. That's why the big players want in.
I agree this isn't a Ponzi scheme but the success of MLS is irrelevant. Madoff operated a Ponzi scheme from Day 1. If it hadn't failed and were still operational, it would still be a Ponzi scheme.
One big difference is that all parties in MLS know the rules and agree to them. Ponzi victims don't kmow they are victims until it's too late.
Another big difference is that Ponzi schemes don't create value. They only give the appearance they do. That's not the case here either.
OK, who is running the MLS Ponzi scheme?
My first sentence said I agree with you that this isn't a ponzi scheme.
I just don't think success/failure is relevant.
MLS is a regular business not a Ponzi scheme. Nor is it even a pyramid business model which is a Ponzi scheme's legal cousin. But it has short term elements of a Ponzi in that the expansion fees of new teams are currently a very significant source of income for the league overall and represent how the early adopters gained most of their profit. But it also is a real business that sells a product and can do so at a profit which is why it is not a Ponzi. Of course the headline calls it a Ponzi scheme outright while the actual article says it is a "little like" a Ponzi scheme which is all too typical. When new investment is your only source of income that is a Ponzi. When new investment is very large compared to real income, and some of it is distributed to early investors, that's a business with some Ponzi-like elements, but can still be completely legitimate. MLS is using the new investment to pay off early investments and to grow the business with a goal of being profitable on an ongoing basis by the time expansion is over. They might or might not succeed. Either way it's completely OK, but yeah, is a little like a Ponzi scheme.
The piece also never said soccer is "weirdly popular."It says it is "weirdly super-popular" in two specific cities, which basically means they like it more than other North American cities, and that is very different. I'm not sure that's true of Toronto (one of the two cities) but that's a different criticism.
The piece also never said soccer is "weirdly popular."It says it is "weirdly super-popular" in two specific cities, which basically means they like it more than other North American cities, and that is very different. I'm not sure that's true of Toronto (one of the two cities) but that's a different criticism.
