Patrick Emerson PhD ,
Oregon Economics Blog
Excited about the return of the Portland Timbers? Well, temper that enthusiasm because it appears more and more likely that the MLS is headed toward a work stoppage with the key sticking point free agency for players.
Under the current system, a player who is released by a team or whose contract runs out must enter the MLS re-entry draft and then be allocated to the highest team in the pecking order who wants him. The players want unrestricted free-agency – they want players in that position to be able to sign with the team of their choice.
The players are right. Unrestricted free agency would improve the level of play in the MLS by allocating the best talent to the teams who will make the best use of it. The draft system, while a decent way to ensure a level of parity is not efficient. Teams and player are often not matched optimally. For example, a team who has the first option on, say, a wing player who might already have a couple of decent wingers might just pick up the option to provide cover or to prevent the player from helping out a rival. On the other hand, a team in desperate need of a winger is prevented from signing that player.
But the beauty of markets is their efficient allocation of resources. In an open bidding process, the team that expect to make the best use of the player will bid the most of the player thus ensuring the team with the highest valuation of the player gets him. Players will be more likely matched to teams that fit their skills and teams will improve.
There are two counter arguments that I can think of.
First, a team might have a high valuation on a player because they are simply weather. This is true in the Designated Player market but the re-entry draft does not affect that. Salary caps or, much better, NFL style revenue sharing (or both) are the way to deal with income inequality seeping into player. MLS has salary caps. Problem solved.
Second, in the re-entry draft process teams can use the mythic ‘allocation money’ to trade picks and move up to get a player that want. But the ability of teams to do so is limited and this method is inefficient and likely leads to many instances where the efficient outcome was not reached.
So I hope the MLS comes to its senses and grants free agency to players because the on-field product will be improved by so doing.