Last winter the United States Soccer Federation (USSF) granted the North American Soccer League (NASL) and the United Soccer League (USL) provisional division two status. Both leagues didn’t meet the D2 requirements. The USL didn’t meet the stadium size requirement and the NASL didn’t have 12 teams.

Now we find ourselves in the same position – the NASL fights to survive and the USL applies for a D2 sanction without provisional status. According to a Sports Illustrated article USL President Jake Edwards has said that all USL clubs will improve their stadiums to meet the D2 requirements by next season. The article, of note, calls out that Mr Edwards is perhaps misrepresenting their claim to be able to meet standards. There are two tiers of standards that the USSF mandates: universal and division-specific. What Edwards is claiming is that they will meet the Division Two specific standards, he does not claim to meet some universal standards, which are unlikely to be met by the start of 2018 for a number of the franchisees. These will likely require waivers. In addition, it’s been intimated that some of the Division Two specific standards may be met by dissolving reserve teams or possibly demoting them to Division Three.

The United Soccer League operates as a franchise model. One USL rule that sticks out is the non-compete rule. Franchises in the USL or any other team that uses the teams marks are not allowed to participate in a rival league. It’s also very interesting on how the USL defines a rival league – “…a soccer league that directly competes with Franchisor and/or its individual leagues for current and prospective teams, owners,sponsors, players and/or stadiums, arenas and other playing facilities within the United States, Canadian and/or Caribbean soccer market avoidance of doubt, expressly includes, but is not necessarily limited to: North American Soccer League (NASL); National Premier Soccer League (NPSL) or the American Soccer League (ASL). Should the Franchisor at any point,no longer have a formal relationship with Major League Soccer (MLS), MLS is to be included as a rival league.”

Another interesting rule the USL has in place for its franchises is an upward movement fee. If a beneficial owner or any collection of beneficial owners, owns, acquires, or acquires the right or option to acquire, a five percent (5%) or greater ownership interest in an MLS Team with a commercial operating territory including any part of the protected territory, the acquiring party shall pay to franchisor an Upward Movement Fee. The Upward Movement Fee is equal to seven percent (7% ) of any expansion or acquisition fee paid or payable to Major League Soccer, Soccer United Marketing, or their affiliates (collectively,”MLS Entities”) for the acquisition of the right to operate a Major League Soccer team in a particular territory which, for the purposes of calculation, includes any foregone distributable proceeds from MLS entities and the fair market value of any other tangible property transferred or transferable to MLS Entities. Franchisee shall pay to Franchisor such pro rata amounts as and when they become due to MLS Entities. Franchisee shall also pay to franchisor a lump-sum payment equal to the participation fees For the remaining length of the franchise agreement.

The biggest difference between the NASL and the USL is that Major League Soccer franchises staff their reserve and affiliate teams alongside USL’s independent franchisees. The reserve teams rosters are filled with prospects from their MLS parent – either as an contractual arrangement, or the MLS parent owns the reserve team outright. Most of the independent franchisees have a desire to join MLS, and they see the tighter connections between the USL and MLS as a motivation to join the USL (or start a new brand within it).

The North American Soccer League is a second division league comprised of independent clubs, each owner owns a stake in the league and a say on important league issues. Clubs in the league sign a range of talent – from quality international players from their respective National team players, to young players with a bright future. The league provides their players a great salary, which allows them to focus on their role in a professional manner. In the USL, some players have to work two or three jobs to support themselves and their families. According to a source, NASL players earn on average three times the typical USL player salary.

U.S Soccer finds ways to avoid seeing how the clubs in the NASL are a crucial part of the American soccer landscape. Should the USSF be successful in forcing the NASL to cease operations, hundreds of players will have to face unemployment, displacement and the inevitable outcome of too much talent joining the market too quickly. Players wouldn’t be able to earn a good salary to support themselves or their families. They will face a choice between playing abroad; playing domestically outside the MLS for less pay, or to leave the profession behind entirely.

Major League Soccer has a marketing arm called Soccer United Marketing (SUM). Soccer United Marketing sells the broadcast rights of the U.S Mens and Women’s National Teams, and packages them alongside MLS and the Mexican National Team to their preferred broadcast partners. Through this relationship between USSF, SUM and MLS, SUM is now valued at two billion dollars, with many hundreds of millions of cash on hand – resources that never reach the lower divisions.

An interesting letter has been circulating in recent months that highlights how MLS and USSF – with cross-pollinated leadership sitting at both – use the carrot to keep aspiring expansion clubs onside with the status quo. Written in January 2017 by the MLS President and Deputy Commissioner Mark Abbott, addressed to Paul Edgerley, the chairman of the SC Saint Louis, it extended an offer of intent to ensure an All-Stars game is hosted in Saint Louis within a number of years of Saint Louis joining the MLS. This was sent during a time when Saint Louis was encountering resistance from the local government on funding a stadium, and interpreted to add some motivation to an owner that might otherwise have started to look at other options.

On October 31st the North American Soccer League and the United States Soccer Federation will face off in court, with the NASL seeking temporary relief from the USSF’s decision to remove the D2 sanction from the NASL at the end of the 2017 season. If they can obtain this, the clubs of the NASL may survive long enough to see the results of the NASL’s search for permanent relief – the end of the USSF’s ability to sanction divisions and unilaterally set standards.

Future coverage of the lawsuit’s progress can be found here at First Team Podcast.

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