America First Didn't Work for Major League Soccer

(Bloomberg View) -- Sports are often an interesting prism for larger societal debates. As the U.S. considers a course of economic nationalism, a sports league that was founded with such inward leanings, Major League Soccer, is moving the other way -- becoming a buyer and seller of international talent. Its nationalistic approach failed. Perhaps that's a warning sign for lawmakers.

Major League Soccer was founded in 1993 as a way to grow American interest in soccer and to develop U.S. talent. Yet every move the league has made since to grow and stabilize its finances has been to globalize. American-centric rules for play, such as using a countdown clock, were dropped because they alienated traditional soccer fans. In 2007, recognizing that American talent alone wasn't enough to improve the league, MLS created the designated player rule, allowing teams to spend extra money to attractive international players. Initially set at one player per franchise, which let the legendary English player David Beckham to join the Los Angeles Galaxy, the rule now allows three designated players per team, with the money allotted for each slot increasing over time.

Rule changes can take a while to translate into revolutionary changes in strategy. The National Basketball Association first introduced the three-point shot in 1979, but it took until the 2010s for the Golden State Warriors to win NBA championships by gearing their offense around it. And just as the Warriors changed the NBA, Atlanta United may have changed the MLS with its strategy as a first-year expansion team in 2017.

Rather than building its team around American talent or aging international stars, Atlanta took advantage of the designated player rule to create a high-scoring team with young South American talent. For its coach, Atlanta hired Gerardo "Tata" Martino, who previously had led the Argentinian national team. For its three designated players Atlanta signed Josef Martinez, a Venezuelan, Héctor Villalba, an Argentinian, and Miguel Almirón, a Paraguayan, all in their early 20s.

The strategy bore fruit. Atlanta was the second-highest-scoring team in the league and made the playoffs. It set the league record for attendance in a season and a single game. The three designated players accounted for 42 of the team's 70 goals, with no American on the team scoring more than three. And two of those three players were in the top three in jersey sales, with Almirón's being the best-selling MLS jersey.

With the Atlanta model proving a success, other teams are looking to apply an even more extreme version of it. The Los Angeles Football Club, an expansion team in 2018, has signed Uruguayan teenager Diego Rossi, the second-youngest designated player in MLS history. For its part, Atlanta has tried to acquire 18-year-old Ezequiel Barco from his Argentinian club team, willing to pay an MLS-record $12 million transfer fee to acquire him.

A spending spree on young South American talent isn't just about wins and losses. It's also about the potential for profit by reselling players to wealthier clubs in Europe down the road. After their successful season with Atlanta, offers came in for both Almirón and Martinez. The club is willing to pay $12 million for Barco because of the potential to sell him for tens of millions of dollars down the road.

MLS may still be in the talent development business, only it's likely to be South American rather than U.S. talent. Although the league can't offer the money that wealthier European club teams can, it can offer young players more money than it could in the past and starting roles, rather than secondary positions they could expect in stronger leagues. For the time being, promising American players like phenom Christian Pulisic are better off developing in stronger leagues in Europe.

MLS is betting its future lies with fans in Seattle, New York and Atlanta cheering on young Paraguayans, Venezuelans and Argentinians for a few years before they're sold to Europe. For this American sports league, globalization represents the best path forward.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Conor Sen is a Bloomberg View columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.

To contact the author of this story: Conor Sen at csen9@bloomberg.net.

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