Examining the Ramifications of MLS’ Force Majeure Power Play

If you cast your mind back to January and February of this year, you’ll remember that it wasn’t an absolute certainty that there would be a 2020 Major League Soccer season, or that it would start when originally scheduled if there was one. MLS and the Major League Soccer Player’s Association were locked in negotiations regarding a new collective bargaining agreement, and the negotiations were taking a long time.

Clearly, the two sides were eventually able to come to an agreement, because the 2020 season wrapped up earlier this month. With the CBA that was agreed upon back in February due to last until 2025, there wasn’t any reason to think we’d be talking about the subject anytime soon. COVID-19 changed that when the February CBA had some additions made to it in June, but once those changes were agreed it looked like things were on solid ground moving forward. However, that all went out the window earlier this week.

On Tuesday a report surfaced from ESPN’s Jeffrey Carlisle that MLS planned to invoke a force majeure clause in the CBA that could result in its termination. The reasoning for this move is pretty simple. MLS says it lost almost $1 billion in revenue during 2020, and can’t afford a similar hit next year. After the basis of the CBA was agreed upon back in March, it was never actually ratified. The league was then shut down due to COVID-19 from March 12 to the start of the MLS is Back Tournament.

MLS used that shutdown to renegotiate some of the CBA terms due to financial hardship brought on by the pandemic. Chief among those were a $5 million cap in performance and individual bonuses and a 7.5% reduction in player salary for the 2020 season. Something else inserted in that June CBA was this force majeure clause, so the league had a contingency plan if further financial losses looked likely in 2021, which is exactly what has happened.

To be fair to MLS, by the time June rolled around a good chunk of change had already been lost due to not being able to collect gameday revenue, which is a major source of profit for the league and its teams. On the other side, the players deserve credit for recognizing that sacrifices needed to be made in order to complete the season, and they accepted the cuts and hits to their wallets.

After the MLS is Back Tournament finished, all teams used charter flights to get to away games, costing the league more money, and only a few teams allowed limited numbers of fans into games. The continued dents in the revenue stream and the likelihood that larger capacities at stadiums won’t be permitted until the back half of 2021 bring us to where we are now.

When the league does invoke the force majeure clause it will start a 30-day window in which the two sides are able to negotiate a new CBA in good faith. If an agreement isn’t made during that window then the CBA agreed upon in June can be terminated and the league could potentially lock out the players to try to put pressure on them to ratify a new CBA. For its part, the MLSPA is far from amused with the league’s move, and it released the following statement:

There are several different things that could happen here. In theory, the league could play without a CBA, or MLS could make the aforementioned move to lock out the players. If a lockout does occur, the MLSPA could challenge the legality of the lockout or actually decertify the player’s association and sue the league as individuals, all of which you can read about in more depth here.

The foremost thing that occurs to me with all this is that the league has some sound reasons for wanting to renegotiate, while the players have plenty of cause to feel aggrieved. When the changed CBA was agreed upon in June there were plenty of players who weren’t happy with the money being taken out of their pockets, and bad feelings that came as a result of the June negotiations will almost certainly carry over to this situation.

Back in June, an unnamed player said he thought the relationship between the league and players was even worse than it was in 2015 and said that he thought the June negotiations had done “irreparable” damage. Plenty of the players seemed to feel that the June changes were presented as either being MLS’ way or the highway, and I don’t think it’s likely that the MLSPA will take whatever monetary cuts the league wants to impose without a bitter fight.

One thing to consider is that the issues of allocation money, charter flights, and player benefits could very well be brought back into play, and that will make already difficult negotiations even more complicated. Changes to the CBA that cut player salary further will also probably have an effect on player recruitment and negotiations with players who are out of contract with their current teams now that the 2020 season is over.

Brian Rowe, for example, might be able to make more money going abroad than signing a new deal with Orlando City and having his wages cut in 2021. You’re almost certain to see few signings announced until a new deal is agreed on with teams unsure of what sort of money will be at their disposal and players not knowing how big of a hit their wages will be taking in 2021.

Unfortunately for the players, I don’t think there’s any way around them eventually accepting another wage cut. The league can simply stall negotiations or lock the players out and avoid taking further financial losses while making its money last a lot longer than plenty of the players can. Orlando City’s wage bill looks pretty healthy, with Jordan Bender the lowest paid player on a $63,225 base salary before the June cuts, but there are plenty players in the league that make less than that. [Note: These are not official numbers, as the MLSPA has not released salary information since September of 2019, but we may be able to use them as a baseline, even if a few of these (Pedro Gallese’s, for example) seem off.]

I do think an agreement will ultimately be reached, but I don’t think it’s likely to be a long-term one. Both sides have too much at stake to not play games this season, but I think the new iteration of the CBA will be a bit of a patch job with the players and the league both having their eyes on what will happen post-pandemic The players won’t want to be locked into a situation where their salaries are reduced for the foreseeable future after making a lot of positive gains in that area over the last few years, while the league desperately wants to protect itself at a time when its hemorrhaging money. Its a very real possibility that a short-term agreement is reached only for the league and its players to find themselves back at the negotiation table again after the COVID-19 pandemic is over.