Posted by John Vrooman on Thursday, October 20, 2016 in Major League Soccer.

Interview with 60 minutes.

I’m interested to hear your thoughts on USWNT’s case with the EEOC. What are the strongest arguments for USSF? How could a decision affect other industries and situations? What’s at stake?

As devil’s advocate for US Soccer in the pending EEOC case the equal-pay-for-equal-work defense should probably follow a strategy of “separate but equal” (for lack of a better and less foreboding phrase) pay for men and women.

The argument would be that the compensation for men and women is roughly the equal and so is the relative quality of  work.  

Equal Pay:

The compensation structures for men and women are determined separately for men and women in their respective collective bargaining agreements. According to US labor law grievances about salary structures agreed to in a CBA cannot subsequently be remedied in civil court litigation.

Overall the pay on the women’s team is less and incentive driven, but relatively more secure for fewer players than for the men. US Soccer would argue that the pay structures may appear to be different but that they are in fact “separate but equal.”

This is why, for example that almost all of the gains made by the NFLPA in their battles with the NFL owners (1987-91 and 2011) have occurred when the union actually decertified and pursued a solution in civil court.

The current salary structures for the top dozen or so men and women soccer players is roughly the same. A much greater inequity exists among the men and women taken separately than between them, especially for the top players who comprise most of the top slots on the men’s and women’s teams.

This is very similar to the plight of the pay inequities between men and women tennis players on the ATP and WTA circuits.

This was my recent quote in the Daily Beast that also applies to the national soccer teams:

“Men and women now receive equal prize money in all four Grand Slams, but the battle between the sexes for a shallow pool of prize money at the top seems somewhat petty when compared to the gross earnings disparity from top to bottom of both the WTA and ATP.”

Equal work:

The most compelling argument for the women is of course their remarkable success compared to the men on the world stage (pitch), winning three Women’s World Cup titles and four Olympic women’s gold medals.

Moreover there is strong evidence that the widely popular women’s team has generated more revenue than the men’s team in 2015 (as opposed to the recent past) and that this trend should continue in the near future.

So more recently the women’s team has virtually been carrying the men’s team rather than the historical converse. Over the same time span the US national men’s team has never made it out of the World Cup round of 16.

The counterargument (which has yet to have been made directly) is that the women’s team success on the world pitch is analogous to a big fish is a small pond, and that the men’s national team marginal success is like a small fish in an big pond.

There is strong evidence that adolescent if not nascent US men’s soccer has been cast in a sea of incredibly talented soccer being played on the world pitch world-wide, whereas the relative success of the US women reflects the world-wide struggles being faced by women’s soccer throughout the rest of the soccer universe.

This relative equal work quality measure is reflected more in the minimal marginal success in US professional club soccer leagues for both men (MLS) an women (NWSL) in terms of international competition and more importantly in terms of relative player compensation).

Ultimately the relative compensation problem for both of the US national teams derives more from the relative weakness between the US professional club soccer and the rest of the world than from the pay differences between US national men and women soccer players.

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Followup.

How might an EEOC ruling favorable to USWNT affect other industries and situations?  Society as a whole?

As I mentioned yesterday the seemingly simple equal pay for equal work argument in US Soccer becomes very complex very fast below its overtly discriminatory surface. This complexity and the unique circumstance of US Soccer in the world soccer market may limit the precedence of the EEOC decision for other infant industries.

On a societal level the gender gap problem and a possible pay equity solution for professional women’s soccer both demonstrate how far US women professional athletes have come relative to women in the rest of the world, but also how far they still have to go relative to men.

The critical issue in the separate but equal pay strategy of US National Soccer ultimately derives from the relative economic weakness of US professional club soccer when compared to the rest of the professional club soccer world.

In terms of most measures of the relative quality of soccer, the US women’s national team demand side success on the pitch clearly dominates the US men’s national team. More recently (2015-16) the women have drawn more revenue than the men, especially for the mega-matches surrounding the World Cup, and they have in a sense carried the men financially.

Valuing the compensation packages for the women players compared to the men is somewhat problematic because they are structured differently based on the different CBAs for men and women. The women on the national team are paid a base salary of $72,000 per 20-game season compared to the men’s base of $100,000; the women are paid $3600 per game compared to $5000 for the men; and the women are paid a $1350 bonus per win compared to $8166 for the men.

In the land of the bottom line the women profited $6.6 million in their World Cup year 2015 compared to $2 million for the men (EEOC Complaint). In 2017 US Soccer projects that the women will earn a profit of $5 million on revenues of $17.5 million compared to men who should lose $1 million on revenues of $9 million.

On a deeper more fundamental level, the gender pay gap in US Soccer ultimately reflects the underlying supply side weakness of US professional club soccer relative to the rest of the soccer universe. The MLS (men’s pro soccer) clubs had an overall team salary cap of $3,660,000 million in 2016 compared to only $278,000 for the women’s NWSL clubs.

The average compensation of $320,000 for men playing in the MLS is ten times the average pay of $32,000 for women in the NWSL, and yet still only one-tenth of the average salaries in the Big 5 European football leagues. The quality of US club soccer and the acceptance of the beautiful game in the US is approaching the rest of the soccer world at the speed of continental drift.

The professional soccer league owners argue that some form of player salary control is necessary to bolster the bottom line and insure the economic health of the fragile leagues whose economic fortunes seem to ironically rise and fall with the successes and failure of the US National Teams.

The average MLS franchise is worth about $150 million on annual revenues of $25 million compared to the average NFL franchise worth of $2.4 billion on revenues of $380 million. The 2016 salary cap in the NFL is $155 million.

The problem with the MLS argument for wage controls is that the average club has been increasing in value at rates in excess of 20 percent since the leagues inception in 1996 when the original expansion fee was $5 million compared to the current $150 million. Much of the explosion in franchise values has come from the exploitation of soccer talent derived from the monopsony (one buyer) power of the league

Given these unique circumstances and the current CBAs, the EEOC ruling would probably have limited precedence in an infant industry facing superior foreign competition.

The argument could be that the exploitation of talent is necessary (similar to an infant industry tariff argument) as a shelter to make the league competitive in the world market. Even the infant industry argument could not be used to justify the gender pay differentials between men and women.

The demand-sided revenue for the women’s game is slowly evolving in fits and starts in synch with the quadrennial World Cup success. The deeper supply-side problem with women’s professional soccer is that there are few acceptable wage alternatives to playing in the NWSL with the remote expectations of being called up to the US National Women’s team. The US men have a similar problem but just not on the current institutional 10 to 1 scale of professional women soccer players.

On a societal level the good news is that US women are playing the beautiful game at the highest level compared to the rest of the world, but this may be because of an even wider gender gap of women’s professional club soccer on the world pitch.

The bad news is that US women (with the exception of the top 20 or so players) are not adequately being paid to play the beautiful game, which is largely due to the  supply-side weakness of US men’s and women’s professional club soccer in relation to the rest of the soccer universe.

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