How often do Relegated clubs go bankrupt?

Today on Twitter I was asked to write a post about another common refrain from those who are worried that an Open Pyramid that features Promotion and Relegation in the United States would some how deal the death blow to professional soccer in the United States... "but every team will go bankrupt when they are relegated".

So I did a bit of simple research on the English pyramids top three, EPL, Championship and League 1 divisions. Firstly I listed all 10 teams, three from both the EPL and Championship and 4 from League 1 that were relegated each of the last 5 years giving me a total of 50 relegated clubs. I then compared that list of clubs to a list of clubs that entered in to Administration (bankruptcy) that year to give me a list of clubs that we can assume with a high probability were caused to have went insolvent by being relegated.

Out of those 50 clubs relegated in the last 5 years only 3 times have they immediately entered in to administration. Those 3 times have only included 2 different clubs with Portsmouth accounting for 2 instances in 3 years. So in 6% of the total amount of relegated clubs have we observed a bankruptcy directly because of relegation in the top 3 levels of English soccer over the last 5 years.

Year	Premier League	Championship	League 1	Administration
2013/14	Norwich City, Fulham, Cardiff City	Doncaster Rovers, Barnsley, Yeovil Town	Stevenage, Shrewsbury Town, Carlisle United, Tranmere Rovers
2012/13	Queens Park Rangers Reading Wigan Athletic	Peterborough United, Wolverhampton Wanderers, Bristol City	Scunthorpe United, Bury, Hartlepool United, Portsmouth
2011/12	Blackburn Rovers Bolton Wanderers Wolverhampton Wanderers	Portsmouth, Coventry City, Doncaster Rovers	Wycombe Wanderers, Chesterfield, Exeter City, Rochdale	Portsmouth
2010/11	West Ham United Blackpool Birmingham City	Preston North End, Scunthorpe United, Sheffield United	Dagenham and Redbridge, Bristol Rovers, Plymouth Argyle, Swindon Town	Plymouth Argyle
2009/10	Portsmouth Burnley Hull City	Sheffield Wednesday, Plymouth Argyle, Peterborough United	Gillingham, Wycombe Wanderers, Southend United, Stockport County	Portsmouth

If we use these numbers as a comparison to MLS contraction over the last 5 years we will observe that this 6% number falls right in line with the 5.26% of clubs contracted over the same period of time without the financial hardship caused by relegation. The main difference between these two numbers is that both Portsmouth FC and Plymouth Argyle are still in existence while Chivas USA is not.

Orlando City's SB Nation website publishes a #ProRelForUSA poll

Many may be surprised (not those who follow the Columbus Crew's great Massive Report podcast though) that a vast majority of MLS fans in Orlando actually WANT #ProRelForUSA.

At this moment 77% of respondents want Promotion and Relegation "In MLS" (even though MLS is not in charge of Pro/Rel as followers of this blog know).

Check out the numbers

The problems that Jurgen Klinsmann addressed at the 2010 World Cup for the US still exist today

Just listen to current USMNT Head Coach and Technical Director Jurgen Klinsmann speak on what the issue with the national team was at the 2010 World Cup ... and how to fix it.

One of my favorite soccer writers Jon Townsend (who is a must follow on Twitter) speaks on these very issues much more capably that I am able to in his new piece "Shattering the Broken Cycle" on FarPostFooty ...

The crux of the problem is open access to the game. What the means is the demolition of the current American system. Right now, too many young players and families are priced out of the game in a pyramid that is not only closed, but also upside-down. In the United States, some of the best players with the most potential are systematically priced out the game before a competent coach can even begin to help them develop. This is true for boys and girls, men and women. The number of players that hang up the boots at 22 is alarming. There are simply not enough professional teams to create a healthy and robust professional culture.

Thinking about these broad issues always brings me to a few questions, including... What exactly has changed since the 2010 World Cup systemically to fix the issues? and...  Who is fighting against these changes that are currently and for years have so obviously been needed in the United States?

In depth interview of Gary Kleiban by John Pranjic

A great interview by John Pranjic on his blogs podcast of Gary Kleiban of 3Four3 coaching that is must listen material for any individual interested on a high level coach's take on the US soccer landscape.

One interesting item among MANY is that there were multiple other investment groups vying for the MLS's LAFC franchise rights. This has now led to how many millions of dollars of potential "soccer investment" in the US to sit on the sidelines? This number could literally be 100's of millions of dollars in California alone... In how many other major markets has this lack of access to the top level sidelined major money that investors would willingly invest in to the game in the United States? Is this how we want the USSF to run our pyramid, closing off major investment?

Please visit John's blog, Gary's website and join in on the discussion in the comments and on Twitter using the #ProRelForUSA hashtag!

Effects of changes in FIFA regulations on US soccer

Recently FIFA has taken action on two different items that could have a major impact on how soccer in the United States and Canada are handled. The first being the introduction of "Club Licensing" in the CONCACAF region.

FIFA’s Club Licensing System is based on five key criteria: sporting, personnel and administrative, financial, infrastructure and legal. These criteria aim to safeguard the credibility and integrity of club competitions while improving the level of professionalism within the football family and promoting transparency in the finances, ownership and control of clubs.

READ MORE ABOUT FIFA'S CLUB LICENSING HERE

What is not known is how these changes will effect MLS and it's single entity structure (READ MORE ABOUT THE SINGLE ENTITY STRUCTURE HERE). With the "clubs" actually being league owned outlets ran by owner operators of Major League Soccer LLC., will it meet the requirements to continue on in it's current fashion under these new FIFA regulations? As of right now that question has not been answered, but it is easy to see why some are starting to wonder if this structure will meet the requirements of transparency at the "club" level.


FIFA recently addressed "3rd Party Ownership" of players contracts as well (READ FIFA'S ANNOUNCEMENT HERE). This issue could also prove to be very problematic for MLS as these two quotes in Liviu Bird's article on SI.com show.

“It’s a fantastic market. Everybody has their eyes now on the U.S. market,” Marcos Motta, a Brazilian lawyer and member of FIFA’s working group on third-party ownership, said in a phone interview. “I think they need to have a major restructuring of the contracts in the U.S. not only regarding international players because FIFA, they disregard the local law if there were an international dispute.”

 and

“By definition, I guess the structure of MLS would be third-party because — again, by definition — the players are owned by the league, and also with the clubs, you have to go through both,” he said. “I’ve done quite a few transfers into the league and also out of the league, so it’s basically just an extra voice in the room where you have to agree with both the club and the league, and there are percentages that get split between the two.”

READ ENTIRE ARTICLE HERE

With every players contract being owned by MLS, having each owner operator having a say in player transfer decisions and with the splitting of payment and receiving of transfer fees among the two MLS/Owner Operator parties it would appear that MLS meets the requirements of being called "3rd Party Ownership".

The big "IF" from these two recent FIFA announcements is... If they do end up breaking the single entity structure of MLS, what will that do long term to soccer in this nation? Would this ending of the single entity structure then pave the way to an Open Pyramid with Promotion and Relegation? I would love to hear your comments below or use the hashtag #ProRelForUSA on Twitter!

The "Promotion and Relegation causes instability in leagues" myth

If you have ever discussed an Open Pyramid with Promotion and Relegation on social media or in person I am sure you have heard quite a few reasons why it will not work or why it is a bad idea to be implemented in the United States.


Today on Twitter I came across one of the very common reasons given in this tweet...

@burkelmt @DJCharlieBlac @dejenji @rambogooner Pro/Rel, by nature, is destabilizing. Not feasible until investors line up to provide extra.
— WrongSideOfThePond (@wrongsideofpond) January 14, 2015

So I decided to do some research on the subject. Has a national open pyramid soccer league system in the entire history of soccer ever failed?

What I found during the course of my (limited to Google) research was 15 failed closed national soccer leagues in the United States, 2 failed national Canadian closed leagues, 1 failed closed national Australian league and 4 leagues (a mix of closed and open regional leagues) in the UK that over the course of 130+ years folded in to the growth of the English pyramid.

What I did not find was a single national open pyramid structured league system in the history of world soccer that has failed. Not one... out of the 209 nations involved in FIFA not one has a history of having an open pyramid promotion and relegation system failing.

I think it is safe to say that this myth of an open pyramid with promotion and relegation somehow being inherently less stable than closed leagues can be put to bed as false. Well over 100 years of history shows that having an open pyramid actually leads to increased system stability. We have also here in the US had the chance first hand to see how even in closed systems clubs/franchises are not protected from failure by the recent contraction of the Chivas USA franchise and the litany of previous failed franchises inside of the closed MLS system. 

So the question must be asked now... Would you rather have a system that in over 200 nations has proved to be rock solid or our current system that has so far proven to have an extremely high rate of failure?

Join the discussion on Twitter using the #ProRelForUSA hashtag!

US Promotion and Relegation Day Feb 7, 2015

From our friends at the Promotion and Relegation Supporters Association I am pleased to spread the word about Promotion and Relegation Day 2015. 

Here are the details...

1. Go to your local soccer bar on Feb 7th or arrange a watch party at another venue
2. Take a picture of yourself and your new friends watching a league from a country that allows Promotion and Relegation
3. Post the picture on your social media platforms with the hashtag #PromotionRelegationDay

Organized watch parties are encouraged. Point is to get #ProRelForUSA supporters meeting face to face, while also raising awareness of the cause.


If you are wishing to organize a meet up in your city let me know in the comments and I will use my social media to help spread the word!

What does FIFA say about Promotion and Relegation?

I know many people all across the world are not fans of the secrecy involved in so much of what FIFA does. One thing they are not hiding is how they feel about the use of merit to decide who plays at what level and in international club competitions.

USL trademarks "USL D League"

What do you guys make of this? It would appear that the popular theory that MLS and USL-Pro will eventually be creating an expanded closed Promotion and Relegation system can be squashed for good.

This would also seem to put credibility behind the theory that MLS is trying to create a MiLS structure similar to Major League Baseball's MiLB minor league system.

Let us know what you think in the comments or on Twitter with the #ProRelForUSA hashtag!

Say one thing... do another

This past October MLS commissioner Don Garber called an impromptu press conference to complain about US Men's National Team coach and USSF Technical Director Jurgen Klinsmann saying top US players should explore all options on where to continue their careers, including Europe.

"Sending a negative message to any player — and obviously to U.S. players — that signing with MLS isn't going to be good for their career or good for their form is incredibly detrimental to MLS," the commissioner said.

READ MORE ABOUT DON GARBER'S RESPONSE TO JURGEN KLINSMANN HERE



One would expect Don Garber, as a league commissioner so intertwined with the USMNT via his USSF affiliation (being a board member) to back up this big talk and bravado by signing the brightest young players in the country.

FOR ALL OF THE TALK in the upper echelons of American soccer about getting the best amateur players in the United States into pro soccer, this winter there seems little inclination from Major League Soccer to put its money where its mouth is and actually sign the top amateur talent.

As a result, the league is having tremendous difficulty signing many of the top players in college soccer, including Stanford sophomore Jordan Morris, who last month became the first college player in two decades to be capped by the U.S. national team.

Many of the top prospects in the country including current USMNT member Jordan Morris as mentioned above, have been low balled on their initial MLS contract by dollar figures in the range of $40-50,000 each according to THIS ARTICLE ON AMERICASOCCERNOW.COM.

When you mix these actions with the reports that MLS picked up $750,000 dollars of the 18 month contract of Liverpool star Steven Gerrard (READ MORE HERE) even though MLS rules expressly state that each club signing a Designated Player much pick up the salary above the salary cap charge.

It becomes hard to see how MLS and by extension Garber, are actually committed to developing the brightest young players in the nation in our currently closed system. The MLS paid $750,000 over the next 18 months would have covered the necessary extra $50,000 a year for the three years of contract for five of these top young players to join the league.  

Even according to Duane Rollins of CanadianSoccerNews.com

Talked to a few people over past few days. The reports of MLS teams being pissed at league for being cheap w/ GA class aren't exaggerated.
— Duane Rollins (@24thminute) January 4, 2015

Did MLS sacrifice this years crop of potential stars just to hurry up and sign Steven Gerrard to cover up the debacle that was the Frank Lampard "signing and loan"?

It would appear that the league is picking up $750k of a contract no one franchise in the league was prepared to meet the requirements of. It also appears that several teams are ready to meet the contract requirements of these young players but are not being allowed to do so. Is this what we want from our top nations top league... a league more concerned with PR moves than creating an environment that allows the US to have the best league it can possibly have? 

Also as fans of the USMNT should we not want the USSF designated league structure that is going to allow us to have the best young players and the best development situations possible? An open pyramid featuring promotion and relegation as has been DISCUSSED HERE can deliver that for us. Please join the discussion in the comments on Twitter using the #ProRelForUSA hashtag!

Are they missing the point about Lampard?

As every soccer fan in the world knows by now Frank Lampard is not coming to NYCFC from Manchester City. There are now dozens of pieces, some of them very sternly written, about how foolish this whole ordeal has made MLS and US soccer in general look.

INCLUDING THIS ONE FROM AMERICASOCCERNOW

That says ...

If this is confirmed, MLS once again has egg on its face. How could Major League Soccer let NYCFC make such claims? Being signed to Manchester City is not the same thing as being signed to NYCFC. The club used Frank Lampard's celebrity, not to mention his face, to help sell season tickets—and he's not even signed to the club?

This is a serious, serious problem but it speaks to a larger issue with the league. Garber was adamant from the start that Manchester City had its own independent vision for New York City FC. That promise has now gone up in spectacular flames.

It does speak to a serious problem with the league if you view this solely through a MLS tinted lens but not of the real problem with the structure of US soccer and how the USSF runs its "pyramid".

If US soccer was restructured in an open way a brand new club would never have the chance to buy in to the top flight of American soccer. They would have had to earn their way to the top from the lowest levels of play in the country in some regional or local league. Even if the Sheik and the Abu Dhabi United Group were to buy a club already existing in the US First Division of the open pyramid future there would be repercussions for not fielding the strongest team possible and telling lies to your supporters and soccer fans in general.

Namely that the losses of this weakened team could/would lead to relegation out of the top flight not having the protections afforded to MLS franchises by the USSF in our currently closed system. Add relegation to the (even now likely) loss of support from fans caused by the lies told to them by club and league and you have a death spiral for your club. Right now, what do NYCFC's owners have to look forward to? A big fat check from SUM marketing, a MLS PR machine doing what it can to mitigate the damage (notice the timing of the Gerrard to LAG/MLS rumors) and the continued push to paint the picture of the only soccer that matters in the US is MLS by the media.

Is this what we really want for soccer in the US... a league, with full support from the USSF, who will take a 100 million dollar check from any investor with the money to write it in charge of the direction the game will take in this nation? or do we want a system in place that allows the best and brightest minds in the sport to build clubs, players and fan bases through hard work, smarts and dedication leading our charge forward to being a world class soccer nation?