Mexico and Major League Soccer – over the wall and into bed

HOW confusing is the relationship between the US and Mexico? On one hand you have the US president calling for a wall to be built that would keep out the “criminals” and on the other hand, the three amigos, US, Canada and Mexico are co-hosting the 2026 World Cup.

Given the US will host 60 of the 80 games, it would seem the Canadians and Mexicans are partners of convenience.

Mexico is hugely reliant on the US, hence people like Trump seem to say what they like to antagonise their neighbours. Around 76% of all Mexican exports find their way to the US and 37 million people of Mexican descent reside across the country.

Bizarre

Most recently, President Trump announced that relationships between the two countries are “outstanding” after discussions with his Mexican counterpart, Lopez Obrador. It’s a bizarre world – it wasn’t that long ago when Trump said he wanted to fill the river that divides the two countries with snakes and alligators to deter would-be illegal immigrants.

Now we hear there’s some muscle behind the project to merge Liga MX and Major League Soccer, creating a North American super league that can compete with Europe’s top competitions. American sport has a history of mergers and consolidation and Mexico’s decision to create a closed top league for five years has a hint of Americanisation about it. Liga MX is the most popular football league in the US, largely due to the huge Hispanic population.

Mexico is a football-crazy nation but their clubs often lack the polish of US clubs who are not only soundly organised, but structurally well financed and invariably have good infrastructure to support their teams. In terms of playing resources, Mexican clubs are ahead of US clubs, so if there should be a merger, you would assume that there will be some benefits for both sides.

However, the gulf between MLS and Liga MX teams could mean any super league would be somewhat unbalanced. While the US has made great progress domestically, just look at the CONCACAF Champions League which has been dominated by Mexican teams for a decade and a half. The last team other than a Mexican side to win the competition was Saprissa of Costa Rica in 2005. DC United and LA Galaxy, in 1998 and 2000 respectively, represent the only US successes so far.

It’s clear, though, that the people behind the concept have dollar symbols in their eyes, particularly broadcasting and commercial revenues. Businessman Alejandro Irarragorri, the head of the Orlegi Sports Group which has a stake in both Atlas FC and Santos Laguna, is a fierce advocate of the merger, claiming there was a certain logic in combining forces given a high percentage of Mexican football’s income comes from the US.

Irarragorri, who was linked with Newcastle United in 2019, wants to see more international investment in Mexican football. At present, around 47% of companies on the Mexican Stock Exchange invest in football in some shape or form, with firms like FEMSA, Cemex, Televisa, Calienta and Omnilife all holding stakes in clubs. There is a strong feeling that creating a dual market league could access overseas investment and make the Liga MX more marketable.

It could just stop a talent drain in the Mexican game. Mexico’s top clubs have long been accustomed to losing their best players to Europe – half of the country’s World Cup 2018 squad was registered with clubs from Germany, England, Netherlands, Portugal, Spain and Belgium – but the US and Canada are now hunting down promising young players from Liga MX. At the same time, Mexico is the biggest importer of foreign talent in Latin America.

Crowd appeal

Would the merger make a difference to attendances? If the partnership’s latest venture, the Leagues Cup, was a litmus test, it may have been deemed a failure. The eight-team competition drew average crowds of less than 18,000 and just 20,000 to the all-Mexican final in Las Vegas.

Attendances at MLS and Liga MX games are more or less equitable, the average in the MLS in 2019 was 21,300 which suggests the league may have plateaued for the time being. However, MLS has a couple of seriously big hitters, with Atlanta United drawing almost 53,000 per game and Seattle Sounders averaging over 40,000. Conversely, 15 of the 24 MLS franchises have sub-20,000 crowds.

Mexican crowds have been falling for the past few years and the 2018-19 average was 22,896 with Tigres UANL the highest at 40,995. Cruz Azul and Monterrey both exceeded 35,000 and América over 30,000. América, who play at Mexico City’s iconic Azteca stadium, are followed by more than 30% of the population in Mexico, but they are also the most unpopular club – a scenario typical of many European countries.

Declining gates, along with lower TV revenues  – the clubs have the power to negotiate their own rights deals – and less sponsorship mean that Mexican football’s financial power is waning a little. The pandemic has exposed some of the economic shortcomings of a league that had ambitions to be the Premier League of Latin America.

The wealthiest club in Mexico is Guadalajara with a value of around US$ 300 million with Monterrey just behind them. These two clubs, along with América, were the only Mexican entities featured in Soccerex’s FF100 (Game of the People was engaged to provide the editorial content for the third consecutive year). Conversely, there were 15 US teams in that same report, underlining the solid foundations that typify so much of American top level sport.

But there are hurdles for a combined league to overcome. Travelling is a massive concern – Toluca to Los Angeles, for example, are more than 1,500 miles apart, and that’s just one of many long-hauls.

Removing the dream

Major League Soccer is run on a closed league basis, but Mexico has initiated that no promotion and relegation structure for the next five years. The US has restrictions on salaries and transfers in order to maintain competitiveness. The players who have moved from Mexico to the US have been bought through the Designated Player Rule (also known as the Beckham Rule) or Targetted Allocation Money, which allow clubs to sign up to three players outside their salary cap. The average MLS wage in 2019 was less than US$ 350,000 which was around 25% lower than the average in Liga MX where there are no salary caps.

While many folk like Irarragorri claim Mexico is a very competitive league with no class divide, clubs such as UNAL, Monterrey, Cruz Azul, América and Guadalajara are pulling away from the rest of the league. Moreover, the league has started to become a free-for-all mfor players out of contract.

Will the marriage of MLS and Liga MX materialise? Closed leagues actually go against the spirit of football in that the “dare to dream” aspect of the sport is compromised by a competition with no real losers. Promotion is all that some clubs can play for, they may never be league champions, but they can achieve their own “little victory” by securing a place in a higher division. The comfort of knowing you will always be safe also breeds stagnation and complacency. There is also the danger of such a league being a fad rather than something people want to exist indefinitely. From a commercial perspective, it may work for a while, but whether it improves the US teams remains to be seen. If it goes ahead, of course…

 

@GameofthePeople

Photos: PA Images

 

Watch the money – Turkey’s currency crisis may make its clubs vulnerable

IT has, in relative terms, been a quiet summer in the Turkish transfer market. The country’s major clubs, usually active traders, are less able to flex their wallets due to Financial Fair Play and the Turkish Football Federation’s ruling over holding clubs and their owners accountable for over-spending. At the last count, around € 23 million had been spent in the market. Clubs have, instead, been relying on better scouting and also signing young, potential-rich players.

There’s a big worry, however, for everyone in Turkey as the local currency, the Lira, continues to suffer a tailspin and to date, its value has slumped 45% in 2018. Although Turkey’s relationship with the US, deteriorating due to President Trump’s tariffs on steel and aluminium, has been a contributory factor, analysts believe the country was heading for a downturn. Over the past five years, Turkey’s economic growth was virtually keeping up with the likes of China and India.

Turkey’s top division, the Süper Lig, is the biggest revenue generator in Europe outside the “big five” leagues (England, Spain, Germany, Italy and France). Total revenues reached € 734 million in 2017, but half of that is dependent on TV fees. The average revenue level per club is € 41 million, but wages represent 71% of income, a high figure versus Turkey’s peer group.

Fenerbahce president Ali Koc Photo: PA

Turkey’s big three, Galatasaray, Fenerbahçe and Beşiktaş, have been heavily in debt for some years. Recently, Fenerbahçe’s new chairman, Ali Koç, the youngest son of Turkey’s wealthiest family, revealed that the club was in debt to the tune of € 621 million. The big issue is that a large slice of that debt is short-term, which means it has to be paid back within a year or so. With Turkey mired in a possible economic crisis, it is not inconceivable that the debt will need rescheduling with maturities extended.  Much will depend on how the crisis develops and if it does become contagious.

Fenerbahce are not alone – Galatasaray have 2.9 billion Lira of debt (€ 591 million), but as they are playing in the UEFA Champions League in 2018-19 (Group stage qualifier), they should be able to make some inroads in that deficit. Fenerbahçe are also in the Champions League, but they have to get through the qualifiers to earn that lucrative money.

Galatasaray are Turkey’s best supported club, with gates in 2017-18, a season in which they won the Süper Lig for the 21sttime, up by 91% to 41,000. The club’s vice president, Abdurrahim Albayrah, has spoken out about the current problems in Turkey and how it has prevented a spate of new signings by the champions. “There is a man in America…God damn him…he ruined us,” he said, referring, of course, to Donald Trump. The result of the ongoing currency crisis is that Galatasaray’s debt has increased by 25%. One assumes this is a moving target as the Lira continues to lose value.

Galatasaray have consistently fallen foul of Financial Fair Play rules. In 2014, they were fined € 200,000 by UEFA and were told to break even on football-related trading over a three-year period. In 2015-16, they still hadn’t balanced their budget and were banned from European competition in 2016-17.

Beşiktaş, who have also breached FFP in the past, are still being monitored by UEFA, hence they have been unable to spend big in the summer. Their debt level amounts to € 418 million. They have been in selling mode for some time, but transfer activity seems to be flowing one way. Nevertheless, the club has been acting more prudently since a financial crisis threatened to engulf it a few years back. A new stadium, a couple of league titles and an ambitious strategy of extending the Beşiktaş brand on a global basis all bode well for the future. Fikret Orman, the club’s president, is taking a long-term view: “Becoming a global club is not going to happen overnight but everything has a beginning. He who dares wins. We have a long-term vision and the steps being taking today will lay a foundation for the future.”

More immediately, Turkish clubs have to monitor the country’s currency issues. Servicing high levels of debt that starts to grow could become a major problem for football clubs, no matter how big they are. A lot will also hang on the measures the government takes to combat a growing problem.