Record Transfer Fee Offers Definitive Proof MLS’ Revamped Strategy Can Work

Almiron

Newcastle United F.C. has agreed to pay Atlanta United FC $27 million for the rights to 25-year old Paraguayan midfielder Miguel Almirón, the largest transfer fee ever paid to an MLS club. The deal comes less than 6 months after FC Bayern Munich acquired Canadian winger Alphonso Davies from Vancouver Whitecaps FC for a then-record $13 million (escalators could increase that fee up to $22 million). The deals are representative of Commissioner Don Garber’s wishes “to become more of a selling league.” Prior to the sales of Davies and Almirón, MLS had just one (Jozy Altidore in ’08, $11.6 million) player in its 23-year history command an 8-figure transfer fee.

Howie Long-Short: Don Garber’s philosophical 180° on MLS’ position as a seller within the international soccer ecosystem will lead to a better product on the field and give the league’s teams a chance at some financial stability; Forbes reported that 15/22 (no data on LAFC) operated at a loss in 2018 and only 3 clubs (LA Galaxy, Seattle, Portland) made $3 million or more.

The sale of Miguel Almirón serves as definitive proof that MLS can be a viable destination for ascending Central and South American players with aspirations of playing in Europe – and it validates the league’s revamped approach to business. Almirón spent 2 seasons with the club – including last season, when he was arguably MLS’ best player and the team won the championship – and returned +237% on the $8 million Atlanta paid to lure him from Club Atlético Lanús. Atlanta can now use that windfall to replenish their academy program and increase the overall talent on the roster. There was no real case to be made to keep Almirón in Atlanta. 11/23 clubs generated less than $29 million in total revenue last season.

Glenn Crooks is the radio voice of NYCFC. I had the chance to sit down with Glenn to discuss the international transfer market, the Central/South American pipeline and the need for scouting resources/infrastructure across the league.

Why are MLS players commanding more money than ever in the international transfer market?

Glenn: MLS as a league is gaining more respect. MLS isn’t just producing better players, they’re drawing some of the games’ most respected coaches too. Almirón’s coach was Gerardo “Tata” Martino (coach of Mexican national team), but Frank de Boer (coached Crystal Palace & Inter Milan), Patrick Vieira (considered among best players of generation) and Guillermo Barros Schelotto (coached Boca Juniors) have all coached MLS clubs in recent years as well.   

What is drawing Central and South American players to MLS?

Glenn: Many of the cities that MLS occupies are outstanding places to live, MLS players make a decent wage and the competition is good. The players are also in pursuit of some stability. Many of the leagues in South America operate in seriously unstable environments.

While Almirón represents best case scenario for developing international players, Davies – from Edmonton – is representative of what the league would like to achieve with homegrown talent. Glenn told me that, “MLS’ goal is to develop American players through their academies, for them to become 1st team MLS stars and then eventually play their way out of the league in terms of market value. I don’t think it gets any better than that for a league that’s never going to the top league in the world.”  

NYCFC’s transaction ledger is representative of the direction the league is headed. When the club first joined the league, “it bought Villa. Then it was Lampard. Then it was Pirlo. They’re not inking those kinds of high profile deals anymore. They signed 3 home grown players over the last year. They also paid transfer fees of $4 million for Jesús Medina from Paraguay and another $8.5 million for Alexandru Mitriță from Romania – so it’s not that the club isn’t spending money, it’s just that they’re spending it wiser.”

NYCFC may be spending wiser on player personnel, but they’re currently operating under the league’s worst stadium agreement and as a result lost more money than any other team in 2018 (-$15 million). It’s been reported that NYCFC is paying $1 million PER HOME GAME ($17 million/season) to occupy Yankee Stadium.

Fan Marino:  If you’re going to be a seller’s league, the ability to identify talent early is crucial. Unfortunately, Glenn says that MLS teams lack the infrastructure needed to find needles in a haystack. “Most teams don’t have the kind of scouting network that they’d really like to have because it’s costly. In fact, some teams outsource the scouting process. There’s a company called Soccer Syndicate that developed a detailed scouting network and has managed to land Real Salt Lake as a client. RSL wanted to find young international players and they couldn’t because they simply didn’t have the staff to do it. The company looks for players on the club’s behalf.”

Interested in Sports Business? Sign-up for our free daily email newsletter list, here!

 

Author: John Wall Street

At the intersection of sports & finance.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.