The scourge that is COVID-19 is leaving a trail of financial ruin in its wake. Clubs, leagues and even some individual players are swimming in truly uncharted waters — trying to pick up the pieces and regain their financial footing held prior to the health crisis that brought the sport and flow of cash to a screeching halt.
The negative ramifications for clubs in the transfer market are straightforward enough for us to imagine. With the bottom lines shrinking on clubs’ budgets, there’s simply less liquidity in the system to facilitate transfers like, say, Miguel Almiron’s $27 million move to Newcastle. That kind of transfer might still be on the table, but the same cash won’t be there — at least in the short term.
And that’s unfortunate for a team like Atlanta United, who’s splashed the cash on MLS record-setting transfers with the confidence that those players would continue to accrue value. Club president Darren Eales discussed the issue with reporters earlier this month about how he sees the market shaking out.
“Generally, my view on the transfer window on a macro level is — clearly in the short term — I think there’s going to be an impact in terms of transfer fees and even player wages,” said Eales. “But I must admit I’m more bullish in the sense that I think medium- to long-term the market is still going to stand up.”
And regardless of how the market looks economically, Eales hinted that the league might use its “agility,” as he calls it, to help its clubs try to capitalize on the situation relative to others in a similar predicament.
“The reality is we know that there’s going to certainly be some short term changes with transfer windows, whether that’s in Europe [or elsewhere],” said Eales. “I think there’s clearly gonna be a knock on effect of when we have the transfer windows here in Major League Soccer.
“With MLS we do have a situation where we can be agile. We’re a young league, we perhaps don’t have the weight of history that other leagues do. So in some ways I think that’s one of the advantages and opportunities we have. When we talk about transfer window, there’s no doubt the league is going to take a close look at when’s the optimum time for us to have those transfer windows available in terms of making the most strategic sense.”
Eales conveyed a sense of confidence — as he tends to do — when alluding to the transfer values of players currently on the books and that the club keeps its high-value assets on long-term deals.
While the deflation happening in MLS is obvious, it’s happening literally everywhere else, too. What really matters — as far as value to be had in the transfer market — is how MLS clubs stand relative to everyone else. And that standing might be better than we think. South American journalist Tim Vickery wrote about the mounting financial crisis facing the continents’ clubs — something they haven’t seen before.
The continent was able to shrug off many of the consequences of the 2008 financial crisis without too many alarms. This was thanks to the extraordinary growth of China, a process that was good news indeed for South America. The continent’s primary role in the global economy is as a supplier of raw materials. China was buying, South America was selling and booming. The phase has even been referred to in Brazil as “the little miracle.” Once China’s rate of growth began to slow down, South America caught a cold, which now threatens to become something worse. Demand for its raw materials is taking a hit, and its currencies are taking a dive. The region looks extremely vulnerable.
Atlanta United is just one of a host of MLS teams that, in recent years especially, has attached itself to the South American talent train. Whether it’s the high profile signings of Pity Martinez, Ezequiel Barco and Almiron or the more modest tranche of Franco Escobar, Matheus Rossetto and Leandro Gonzalez Pirez, lately there’s seemed to be a range of quality and price points for every shopper. And one of the reasons is that even before COVID, many of the region’s clubs weren’t exactly swimming in coin. You can only begin to imagine what they face now.
But to consider whether Atlanta or any other team in the league might be able to pluck this player or that player out of Argentina or Brazil is thinking too small. COVID-19 just wrecked the soccer world order. While the behemoth European clubs will remain at the top, MLS has a chance to utilize the strength of its owners and, to a broader extent, the American economy to help vault MLS higher up the financial ladder in competing to sign top talent.
The famously successful investor Warren Buffet once said “The best thing that happens to us is when a great company gets into temporary trouble...We want to buy them when they’re on the operating table.”
The best investments are often the ones that feel scariest at the time. MLS has an opportunity here.