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MLS structure implicitly allows Chivas USA shenanigans

Sep 19, 2013, 5:45 PM EDT

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Chivas USA fired its president, the club announced late Wednesday night, naming Arturo Gálvez as José David’s successor. David was appointed president in October 2012.

The announcement marks another change in the merry-go-round that has been the “other” club at StubHub Center. Eight coaches in nine seasons, including two this year, and a handful of front-office hirings and firings seemingly every season don’t make for a steady ship.

Despite multiple calls for new ownership, franchise relocation or any combination of changes that basically amount to kicking owner Jorge Vergara out of the league, he remains at the helm of all the chaos. Amid allegations of discrimination that were documented in an incredibly one-sided HBO Sports story — borne of the fact that HBO projects little knowledge about soccer and Chivas did itself no favors by refraining from comment until after its release — Major League Soccer commissioner Don Garber has remained defiant of the idea.

Sports Illustrated’s Brian Straus wrote an excellent overview after Gálvez’s appointment last night discussing Vergara’s oversights and carelessness in charge. From his blind adherence to the Chivas brand, which only personifies his failure to transcend the Mexican-American audience gap, to his tactless communication in most situations, Vergara harks back to MLS’s desperation for new ownership and expansion in the mid-2000s.

Now that he’s in, he can’t be kicked out, no matter how far the rest of the league surpasses him and his club. Garber can’t say anything negative about Vergara because the two are intertwined in a multi-pronged partnership with no easy way out.

source: Getty Images

Chivas USA sits in last place in the MLS Western Conference with an average attendance of 8,230 in 2013.

“People who operate teams in [American] pro sports leagues are business partners. We decided to formalize that in a structure, commonly referred to as ‘single entity,’ ” MLS president and deputy commissioner Mark Abbott told Straus. “As a partner, you’re subject to all of the league rules and that’s true for everybody, from an operating investor to a particular team.”

As long as Vergara conforms to obligations the league sets out, he will retain his stake.

No league in the world can kick owners out without justification, but even finishing in last place doesn’t offer much incentive for improvement in MLS. Owners in the league share in every team’s revenue, meaning Chivas’ paltry average attendance of well under than 10,000 fans and Seattle Sounders FC’s over-40,000 mark don’t carry as much meaning as they would in other leagues.

Under the single-entity structure, Chivas will continue to be a stumbling block to MLS progress — as will its closest facsimile in the Eastern Conference, Toronto FC. For its drawbacks in the incumbent North American sports climate, a system of promotion and relegation could put floundering clubs such as them in position to improve quickly or die out.

With MLS’s desired expansion in the coming years, this reality becomes more relevant. It’s hard to imagine Vergara would stick around with his pocketbook hemorrhaging and his team playing in an inferior league.

But until his hand is forced, he will stay — as would any other businessman. If the league makes money, in spite of his club’s situation, he makes money.

MLS’s single-entity system is a great deal for Vergara, even though it’s a terrible deal for on-field progress in the United States and Canada.

  1. dfstell - Sep 19, 2013 at 5:53 PM

    So glad to see this topic come up. As a fan of a lower league club, I only think of the promotion side of things, but relegation is equally important. It’s a put-up or shut-up system and allows each club to find it’s own level and it very intolerant of BS.

    I know that there are billion reasons why pro/rel wasn’t part of the original MLS system, but I wish it is something that could be considered for 5-10 years from now.

    • randomhookup - Sep 19, 2013 at 6:00 PM

      But passing along an a-hole isn’t good business for anyone.

    • talgrath - Sep 19, 2013 at 7:23 PM

      The problem’s with promotion and relegation are numerous in the US and MLS; the same reason MLS can’t just kick out Vergara because his team sucks would apply to relegation.

  2. mdac1012 - Sep 19, 2013 at 7:11 PM

    I don’t believe the structure of MLS has anything to do with the state of Chivas USA. The club has not had good leadership and has not made good decisions from on the field personnel to off the field team policies. Yes, that comes from the owner on down, but what does the single entity structure have to do with that?

    MLB (Pirates); NBA (Clippers); NFL (Bengals)..etc… All these leagues have had teams that, because of bad leadership at the top, have had historically bad runs in their respective leagues. None of those leagues operate on a single entity structure like MLS. There is some partnering on certain levels with TV contracts and revenue sharing but each team is independently owned, not technically owned by the league like in MLS. All these leagues have had “rogue” owners who did their own thing and brought heat on themselves and their leagues.

    If anything, I would think the single entity structure would afford the league more influence over each team as since they are all shareholders in the league, and Chivas USA’s putrid on field performance, subsequent lawsuits and bad publicity effects all their bottom lines.

    • johnhall704 - Sep 19, 2013 at 7:21 PM

      The “single entity” part isn’t as important as the “revenue sharing” part – if one team makes money, every team gets some money so Chivas USA can continue to put out a poor product and it makes little difference to their bottom line.

      • joeyt360 - Sep 20, 2013 at 4:15 PM

        That’s true about the comparative part with other US leagues. The Clippers mooched off the NBA for decades, living off the TV contract and selling tickets only to see the opposition. The Miami Marlins aren’t a whole lot better, they spend money when they’re trying to talk the taxpayers into a stadium that they can’t really sustain on their own.

        In MLS, at least the salary budget isn’t your money to begin with, so there’s no incentive NOT to spend it–unlike the Clippers, you won’t get to keep whatever you don’t spend.

  3. mdac1012 - Sep 19, 2013 at 7:47 PM

    I agree with you, the revenue sharing part is more important than the single entity structure, which is a separate issue and in of itself not responsible for the state of Chivas. The revenue sharing argument was made for years in the NFL that because of the massive TV deal, every team, regardless of how bad they were, was making money. There was no real incentive to spend money to improve the product.

    I argue though, that as a single entity system, the league would have more direct influence over teams. If not on the field, at least when it comes to off the field team policies.

  4. talgrath - Sep 19, 2013 at 7:48 PM

    What the article failed to mention is that MLS could, technically, just fold Chivas USA; they would need a majority of the shareholders to agree with it though. What’s more important is that MLS could use the threat of folding Chivas as an awfully big stick. Of course, there are a lot of problems with that. When MLS folded the Mutiny and the Fusion they could show that neither team was making money, in fact they were hemorrhaging money and MLS was footing the bill; that isn’t the case here because Vergara is willing to cover any lost money. In order to make the threat of folding Chivas credible, MLS needs a credible reason to threaten it to show that the league is just protecting its interests so it can prevent a lawsuit against MLS from Vergara, or at least go into the lawsuit knowing they have a smoking gun to show. If Chivas USA loses these discrimination lawsuits, that technically could be just what MLS needs to try to force Vergara to sell. Of course, the MLS owners may actually be fine with Vergara, Vergara has tons of money to spend after all and going through the messy process of folding a team is both expensive monetarily and in terms of PR; perhaps more expensive than a discrimination lawsuit. Or perhaps Vergara already has a buyer, ink may have been put to paper, but the deal won’t be announced until after the season because it involves re-branding the club; whatever the case may be, it’s clear MLS needs to do something here, it’s just a question of when and how their hand is forced.

    • overtherepermanently - Sep 19, 2013 at 9:44 PM

      The Mutiny were “league” owned and operated when they were folded. The Fusion owner folded willingly because he was losing so much money. I’m not sure this model could be applied to Chivas, where Vergara has no intention of going quietly. As much as I’d love to see that horrid blight on MLS get canned immediately, I’m not sure the league has many options.

      • joeyt360 - Sep 20, 2013 at 4:16 PM

        And even if the contract with a franchise investor/operator allowed for the league to buy him out against his will, the problem is that once you’ve done that, you’ve set a precedent that makes investment less attractive for other teams.

      • talgrath - Sep 20, 2013 at 4:22 PM

        For the moment, I don’t think so. But if Chivas USA lose their discrimination lawsuits, then there’s a possibility MLS could say it is “damaging the MLS brand”.

  5. hildezero - Sep 20, 2013 at 1:41 AM

    This is a normal thing that happens in the Mexican league. A lot of hiring and firing. That’s why Jorge Vergara has that mentality. Even the Mexican team does it.

    • mlsconvert88888 - Sep 20, 2013 at 1:14 PM

      …and right now it’s working almost as well for El Tri as it is for Chivas

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