MAJOR LEAUGE SOCCER AVOIDS CATASTROPHRE- A LABOR LOCKOUT

BY: JOE BENINCASA

Prior to the COVID-19 pandemic, Major League Soccer (“MLS”) was in the process of negotiating a new Collective Bargaining Agreement (“CBA”) with the MLS Players’ Association (the “Players’ Association”).[i] Due to the progression of the pandemic, the CBA was not ratified until right before the season began in June of 2020.[ii] The MLS was sure to incorporate a force majeure clause, allowing the MLS to opt out of the CBA in case they were unable to abide by the terms of the agreement due to the COVID-19 pandemic.[iii] On December 29, 2020, the MLS informed the Players’ Association that they intended to exercise that force majeure clause before the start of the 2021 season.[iv] By opting out of the current CBA, the MLS triggered a thirty (30) day window to renegotiate a new CBA with the Players’ Association.[v] If the parties could not come to an agreement within the thirty (30) day time limit, the league was facing a potential lockout.[vi]

The MLS enforced the force majeure clause because they claimed to have lost one billion ($1,000,000,000) dollars during the 2020 season, seven-hundred-twenty-five million ($725,000,000) of which was directly attributable to the COVID-19 pandemic.[vii] Since the MLS’s “TV rights deals” are far less than the other major sports leagues (and professional sports leagues generate a large sum of their capital through TV rights deals), they heavily rely on game day revenue, such as ticket sales, concession sales, and apparel sales.[viii] Once negotiations reopened, MLS made a proposal to the Players’ Association. In exchange for no additional pay cuts to the players (they took a 5% pay cut in the 2020 CBA), the MLS and the Players’ Association would extend the CBA they completed in 2020 for an additional two (2) years.[ix] If the Player’s Association were to agree to this proposal, the salary cap would freeze, thereby impacting the minimum and maximum amount a player could earn, and the current cap would remain in effect through the 2022 season.[x] The MLS expected to save between one hundred to one hundred ten million dollars ($100,000,000-$110,000,000) with this cap freeze.[xi] These savings would be in addition to the one hundred fifty million dollars ($150,000,000) the Players’ Association claims the MLS saved when the players took a five percent (5%) pay cut in 2020.[xii]

Needless to say, the Players’ Association was extremely unhappy with the MLS’s proposal, and a series of counter offers commenced from January to February of 2021.[xiii] On February 8^th, 2021 the parties had come to an agreement and the 2021 MLS CBA was finally ratified.[xiv] Under the new CBA, the term of the agreement was extended an additional two (2) years, expiring in 2027, not 2025.[xv] Additionally, the salary cap increased by only 1.1% for 2021 and 2022. Therefore, instead of increasing the salary cap by much more in 2021, and then again in 2022, the league will remain at its current limit for the next two years until 2023.[xvi] In exchange, the Players’ Association obtained an increase in “senior player” minimum payments, and “reserve player” payments, both becoming effective in the 2022 season.[xvii] Also, they secured an accelerated growth rate in terms of the league’s salary cap; in 2026 the salary cap is set to increase 7.5%, and then to 10% in 2027.[xviii]

The Players’ Association ultimately conceded and extended the term of the CBA because their main goal was securing the future of their players and their players’ families during these unprecedented times. First, the Players’ Association was adamant that the players not realize any additional pay cuts under this CBA, referencing the five percent (5%) pay cut the players saw in 2020.[xix] Second, they made it mandatory for all MLS teams to honor any and all player contracts that run through and beyond 2022. Therefore, the MLS cannot ask the players to take additional pay cuts in later years under this CBA.[xx] Third, they were steadfast that the player bonuses increase each year through the end of the 2027 season.[xxi] The MLS agreed to all of these terms.

The Players’ Association felt like it was in the players’ best interest to agree to the extension in order to avoid the bigger problem of a lockout.[xxii] Both parties, the MLS and the Players’ Association, believe this agreement will prevent them from sitting at the bargaining table next year.[xxiii] However, the slow roll out of the COVID-19 vaccine may prevent clubs from having fans at their matches. This could drastically affect the revenue the MLS is able to bring in during this season, which may cause the MLS to enforce the force majeure clause again—ultimately having the parties back at the bargaining table after the 2021 season.

[i] Chad C. Smith, MLS Threatens to Lock Players Out; Season Starts in Jeopardy, SBNATION, https://www.thebluetestament.com/2021/2/2/22253458/mls-threatens-to-lock-players-out-season-start-in-jeopardy-major-league-soccer-work-stoppage-strike (last visited Jan. 18, 2021).

[ii] Id.

[iii] Id.

[iv] Jackson Lewis P.C., Major League Soccer To Exercise Force Majeure Clause to Reopen Negotiations With Its Players To Address COVID-19 Financial Realities, Newstext, Dec. 30, 2020.

[v] Smith, supra note 1.

[vi] Id.

[vii] Gabriel Fernandez, MLS bracing for potential lockout ahead of 2021 season, per report, CBS Sports, https://www.cbssports.com/soccer/news/mls-bracing-for-potential-lockout-ahead-of-2021-season-per-report/ (last visited Jan. 18, 2021).

[viii] Smith, supra note 1.

[ix] Id.

[x] Id. Under the MLS’s CBA, the salary cap was supposed to increase every year until the end of the agreement. Id.

[xi] Fernandez, supra note 7.

[xii] Jackson Lewis P.C., supra note 4.

[xiii] Smith, supra note 1.

[xiv] Jeff Carlisle, What the new MLS CBA deal means for owners, players and the ’26 World Cup, ESPN, https://www.espn.com/soccer/major-league-soccer/story/4311118/what-the-new-mls-cba-deal-means-for-ownersplayers-and-the-26-world-cup (last visited Jan. 18, 2021).

[xv] Id.

[xvi] Id.