'It Is Simply a Cartel': The Story Behind MLS Winning the Labor Wars Against Players

Last week, Major League Soccer fined Real Salt Lake owner Dell Loy Hansen a league-record $150,000 for speaking publicly about the current labor turmoil. Yet while Hansen is now a bit poorer, we are all richer for having our long held assumptions about these talks confirmed: The goal of the league in its CBA discussions with the MLS Players Association is to continue tramping down payroll through the single entity structure.

"The perennial issue [from the players] is that, 'We want free agency,' but that can't exist where everyone's employed by the same employer," Hansen told a Salt Lake radio station. "How do you have free agency when you're going to go talk to yourself at the next employer?"

It's obvious that MLS owners enjoy their quasi single entity status, and owners believe any changes begin a gradual deterioration of that business model, which would eventually turn MLS into something just like every other sports league in the United States: That is, a league with added costs and risks, a league with complete and total free agency where teams openly bid against one another for players, thereby leading to increases in payroll.

Currently, players are contracted to the league, which then disperses them to teams through various allocation methods, hence the single entity tag.

The owners have felt empowered with this system, which has existed since the creation of the league, and was entrenched with the result of the Fraser vs. MLS antitrust lawsuit. The suit pitted eight players—each representing a different MLS team—against the league in an attempt to obtain free agency, or to at least gain some sort of negotiation position with which they could bargain for higher salaries. MLS argued then—and still argues now—that single entity and cost control were imperative for the league's survival.

The case was filed in 1996, and a final verdict was not rendered until 2002. The end result was that the court—in its initial decision, and then in a separate appeal—ruled in favor of the owners. However, the Court of Appeals didn't necessarily agree that MLS was by legal definition a perfectly modeled single entity. But it didn't have to make a ruling on that issue. The court simply said that MLS—single entity or not—did not have the power to restrict the worldwide soccer market.

"MLS is not a single entity," antitrust attorney Mark Levinstein said. "It is simply a cartel with a reserve clause that is executed by the teams agreeing to let the league be the signatory on their contracts."

A key result of the Fraser case was that it delayed the creation of the players union for nearly six years while the lawsuit played out in court. In order to file the lawsuit, the players by law could not be organized as a union, otherwise they would have been required to collectively bargain in good faith with the league.

The league's victory in the case was important in that it helped reaffirm its status, but perhaps it was more important for what it did to set back the player movement. The owners had been handed a huge psychological edge in future negotiations with the players.

"It's probably fair to suggest that Fraser emboldened MLS, in a way that extends to today," said Ted Philipakos, a professor at New York University's Tisch Institute for Sports Management, Media, and Business, and whose upcoming soccer law book, On Level Terms, dissects the Fraser case.

Due to the wording in the appeal ruling—"We also find that the case for applying single entity status to MLS and its operator/investors has not been established"—a future case could be made against MLS's antitrust status. But players, as a result of the Fraser case, are now more wary than ever of a lawsuit that would be a long, tough, costly slog, which would again require them to be without a union.

"I feel frustrated by how long everything took," said former player Mark Semioli, one of the plaintiffs in the Fraser lawsuit. "We projected that it would take two years. It took close to six years."

That's why there has been little talk of a lawsuit during these CBA discussions.

"I don't think there is even a one percent chance of this union starting down that road," one source close to the negotiations said.

Yet Fraser continues to dictate negotiations between players and owners to this day.

Each player from that early era of the league could relay stories of their struggles, especially those who eventually lent their name to the lawsuit.

Sean Bowers was making $45,000 per year at the time that the Fraser lawsuit was filed. He had taken a $30,000 pay cut from his indoor soccer salary in order to play in MLS, and was selected by the Kansas City Wizards in the third round of the MLS Inaugural Player Draft in 1996.

Bowers, despite the pay cut, had been eager to sign up for the new domestic league since it had seemed to spawn a soccer rebirth in the U.S. Yet when it came time to challenge MLS's business practices, Bowers—as Kansas City's player representative—had no hesitation about lending his name to the cause. In Bowers' mind, he was fighting for the little man.

"Being a soccer player—unless you're an elite player—isn't an easy plight," Bowers said. "For me, it's about the whole, not the 20 or 30 or 40 players that you can see on TV. It's about the other 80 percent of the players who are trying to make a living out at playing soccer."

Semioli was a 27-year-old law school student when he attended the initial draft combine. He knew he'd likely be making close to the league minimum of $24,000 if he was selected. Yet the former Stanford star was also eager to give soccer another try. He was picked in the fifth round by the Los Angeles Galaxy.

"You signed for what they offered," Semioli said. "Only the players who were allocated did better than the rest of us."

He added: "Players believed they would get taken care of if they played well."

Semioli was disappointed to learn he would not be getting a significant raise despite a good rookie season.

"To be under an illusion that they were going to be taken care of somewhere along the way I think is not true," former MLS commissioner Douglas Logan said. "I certainly didn't make any of those references."

Mark Dodd was the MLS Goalkeeper of the Year and an All-Star for the Dallas Burn during the inaugural 1996 season. He made $55,000 that season, but he expected a substantial raise as a result of his stellar season. It did not come.

Players were also angered that they did not have 401K's and medical benefits like most team employees. Soon, the outrage turned into a movement. Players organized and began holding informal talks about unionizing.

After months of meetings, players were presented with two options: Form a union and collectively bargain with the league or file a lawsuit to challenge the MLS's antitrust status.

The second option had come from an unexpected place. The NFL Players Association had floated the idea to the MLS players of funding a massive antitrust lawsuit as a preventative measure in case the NFL ever attempted to structure themselves as a single entity.

Highly respected labor attorney Jeffrey Kessler was offered up to represent the players.

"We thought we had a very good chance of winning that case, especially the single entity issue," Kessler said. "If we would have won that case, the teams would have had to compete against each other like every other league in the United States and that would have created a much better environment for the players."

Player representatives were brought to the NFLPA offices in New York to meet with then executive director Gene Upshaw about the case.

"Some guys were mesmerized by that environment," Semioli said.

Certain players were hesitant to align themselves with the NFL. But others believed it would be much more difficult to unionize at that moment because there was such a disparity in salary and stature between the average player and the star players—a theme that continues today.

"You had some players that had a tight relationship with U.S. Soccer and didn't want to bite the hand that fed them," Dodd said. "There were a lot of players that hid, and big name players that could have lent their name to this."

Dodd declined to name names.

"It was highly disappointing," he said. "That I think was a prime example of the downside of having U.S. Soccer and MLS so intertwined in management. A lot of those players have financial incentives with regards to the national team. Some of those players offered their support privately, but when it came down to it, they were nowhere to be found."

Team representatives held informal talks with several MLS executives and mildly broached the idea of a CBA. But ultimately, the players voted to join up with the NFLPA. Bowers, Semioli, Dodd, and the five other team representatives—Iain Fraser (for whom the lawsuit is named), Steve Trittschuh, Rhett Harty, David Scott Vaudreuil, and Mark Dougherty—lent their names to the lawsuit. None of them were household names.

"Were we weakened by not having bigger names on the lawsuit?" said Alexi Lalas, a star player then for the New England Revolution and the U.S. national team. "You could probably make the case for it. But I certainly don't look back in any way shape or form and regret anything I did or didn't do along the way or my participation. I certainly made my views very clear along the way. I supported the players that were named and all of the players for their efforts to try to get a better situation."

Lalas acknowledges that MLS and U.S. Soccer had a very close relationship back then. But Lalas said he never felt pressured by anyone to stay out of any labor dispute. He said that perhaps lending their name to the lawsuit might have seemed too much for some national team players.

Additional requests for comments from other U.S. national team players from that time were not returned.

"We didn't have a lot of leadership from the U.S. national guys," Semioli said. "But the top guys had a lot to lose. But they had leverage. They needed to be empathetic. The disparity is too wide."

U.S. District Judge George O'Toole Jr. dealt the players an initial blow in 2000 when he ruled in summary judgment that MLS should be defined legally as a single entity. The case faltered from there, even though the Court of Appeals in 2002 left that window open for a future case.

To this day, MLS officials from that time believe the players simply became the NFLPA's pawns in an esoteric labor dispute.

"They got drawn into a battle that was larger than soccer players' starting salary being $32,000," former MLS commissioner Logan said. "It went well beyond that and it cost us millions of dollars in that lawsuit and that's unfortunate."

He added: "The MLS players that are playing in MLS today should thank their lucky stars that it started as a single entity and that it's stayed single entity, otherwise they would not be playing in the United States."

The Fraser case laid the groundwork for all future labor disputes.

The players unionized eventually in 2003. But the owners still had the upper hand because they had a significant court ruling on their side. Players have made strides with each subsequent CBA, but they have not broken the league business model, nor have they been able to obtain true free agency.

And as Hansen's comments show, the owners still rely on the single entity argument in current CBA discussions.

Without another legal case looming, single entity is here to stay for the foreseeable future, thanks to the Fraser case.

"If I was on the other side I would have certainly have been happy for the immediate, but for also what it represented going forward," Lalas said. "I'm not saying it was completely demoralizing because we understood the risks, we understood that it wasn't a slam dunk when it came to the lawsuit, by any stretch of the imagination. But things haven't changed. There's still a recognition the single entity in certain ways keeps players from making as much money as they could. That was part of the same conversation that we had at the beginning. And it's still continued on."