SUM's Role in U.S. Soccer a Contentious Part of Athlete Council's Election Survey

The role of Soccer United Marketing in the U.S. Soccer Federation is the biggest flashpoint in the detailed survey of all eight U.S. Soccer presidential candidates released on Monday.

The role of Soccer United Marketing in the U.S. Soccer Federation is the biggest flashpoint in the detailed survey of all eight U.S. Soccer presidential candidates released on Monday by the federation’s Athlete Council.

The Athlete Council, made up of current and former players, will have 20% of the vote in the election, which will take place on Feb. 10 in Orlando. With the campaign swinging into high gear and a candidate debate set to take place on Jan. 20 in Philadelphia, the publicly posted survey provides plenty of details on the stances of those in the race.

“The Athlete Council is committed to a robust and diligent evaluation process as we determine who we will vote for in this crucial USSF presidential election,” said Chris Ahrens, the chair of the Athlete Council and a former U.S. Paralympic player. “As a follow-up to our in-person sessions with candidates during an October meeting and countless 1-on-1 calls our members have fielded, we asked each candidate to answer questions on issues that are important to the Athlete Council and our constituents.

“The decision to make the answers public is to hold the eventual winner accountable and to spur further conversation during this evaluation process. In the coming weeks, the council will continue to hold calls with the candidates and collaborate with other councils and delegates.”

The current members of the Athletes Council are: Ahrens (chair); Angela Hucles (vice-chair); Carlos Bocanegra (vice-chair); Shannon Boxx, Brian Ching, Cindy Parlow Cone (advisor); Brad Guzan, Stuart Holden, Lauren Holiday, Lori Lindsey, Will John, Kate Markgraf, John O’Brien, Heather O’Reilly, Leslie Osborne, Nick Perera, Christie Rampone, Gavin Sibayan, Lindsay Tarpley and Aly Wagner.

Other voting blocs in the election include the Pro Council, Adult Council and Youth Council, which each have around 25% of the vote. But some observers think the Athlete Council’s vote could potentially swing the election.

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The Athlete Council survey included questions on how the candidates are funding their campaigns and asked their views on vision and mission; the role of the president; whether the president should become a paid position; how they would address the negotiations for men’s and women’s national team collective bargaining agreements; how they would improve gender representation and pay disparity; how their experience will help them run the organization; how they would address youth development and the pay-to-play system; and how many games they saw in 2017 involving the USMNT, USWNT, pro men’s and women’s leagues, and games involving the Paralympic national teams and beach soccer national teams.

The most heated topic in the candidate responses came to the question: What is the relationship between U.S. Soccer and Soccer United Marketing and how does it affect the players?

U.S. Soccer, a non-profit organization, has a lucrative rights deal through 2022 with Soccer United Marketing, a for-profit company owned by Major League Soccer owners. Questions have been raised over whether the relationship between U.S. Soccer, SUM and MLS is too cozy and has conflicts of interest, while proponents of SUM argue that its work has been crucial in providing the nearly $150 million surplus that currently exists in the federation.

One of the leading candidates for U.S. Soccer president, Kathy Carter, is on leave from her job as president of SUM and said she will resign that post if she wins the election.

In the surveys, two leading candidates, Eric Wynalda and Carlos Cordeiro, questioned the SUM-federation relationship:

Wynalda: “The mixing of business interests and non-profit sports governance is a recipe for disaster, as we have seen repeatedly in the soccer world in recent years. MLS has used SUM to have a de facto monopoly on US Soccer policy and power. This includes their ability to limit player movement, salaries, and access. How much? Without the ability to review the deal, it is hard to pinpoint the severity of the negative effects of the relationship.”

Cordeiro: “The unique ownership of SUM creates conflicts that need to be addressed. To avoid any and all conflicts going forward, USSF will need to ensure that any individuals with potential conflicts of interest are recused from any future negotiations with SUM that is why I have proposed a new Board-level commercial committee to be chaired by one of our independent board directors to oversee the entire process.”

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Candidate Hope Solo added: “The USWNT asked this question [about the relationship between U.S. Soccer and Soccer United Marketing] last year during the CBA negotiations. United States Senators Feinstein, Klobuchar and Murray asked this question, only to be contemptuously snubbed by SUM and the USSF. After five months of negotiations, the USSF finally told the USWNT that in exchange for the exclusive marketing rights to all things USSF, including both the USWNT and the USMNT, SUM pays the USSF $100 million over a four-year contract period. But we do not know how the USSF distributes that $100 million to the USWNT and the USMNT. As a result, it’s impossible to determine what impact SUM money has on either the USWNT or the USMNT.”

“In short,” Solo continued, “we need transparency with regard to SUM and its financial relationship with USSF. However, the conflict of interest between and among SUM and USSF executive officers and members of their respective boards of directors and in this presidential election are quite clear and troubling.”

Kyle Martino took the criticism a step further, making an assertion (unsupported by any previously known evidence) that SUM controlled the decision to stage the U.S.-Costa Rica World Cup qualifier at Red Bull Arena in Harrison, N.J., in September to prioritize profit from attracting the greatest number of Costa Rica fans. (The U.S. ended up losing the game 2-0.)

Martino wrote: “U.S. Soccer and MLS leaders one time sat on SUM board with an equity stake in the company, which could still be the case. I hope that as the campaign progresses my fellow candidate Kathy Carter will help make these relationships clear to the members and the soccer community. U.S. Soccer’s conflict of interest policy excludes SUM, which makes it possible for a SUM employee to be President of US Soccer or a US Soccer employee to be paid by SUM. Ethics authorities have told me that this arrangement is the reason conflict of interest policies exist. The contract SUM has with U.S. Soccer has never been bid out and the specifics of the deal have never been made public. All we know is the contract expires in 2022.”

Martino went on: “There are many perceived conflicts of interest but a clear way the arrangement affects the players was the decision to have a World Cup qualifier at Red Bull Arena against Costa Rica. Home World Cup qualifiers are crucial, which is why home teams go to great lengths to tip the competitive advantage in their favor. Even the length of the grass is meticulously planned. Having played Costa Rica in a WCQ at old Saprissa Stadium I can tell you this from personal experience, it was terrifying.

“SUM is the marketing partner for CONCACAF so it made a business decision, without consulting the coach of the National Team, to prioritize profit, which gave our competition an advantage by hosting a game in a location that would produce the highest turnout of their fans. Bryan Ruiz spoke in an interview after the game about how enjoyable it was to play in front of so many of their fans saying, ‘We felt very, very comfortable.’ This decision contributed to the U.S. failing to qualify for the World Cup in Russia, costing our federation tens of millions of dollars in lost revenue. It’s a decision that never would have been made without this conflict of interest.”

Carter, for her part, defended the role of SUM in growing the sport of soccer in the United States, writing:

“The relationship with SUM has been beneficial to U.S. Soccer, the game and the broader soccer community. However, poor communication by the current U.S. Soccer leadership has created significant confusion in this area. Therefore, in a straightforward manner, I will provide some background here to hopefully clear up that confusion, and I am happy to discuss it further.

“The first key thing to understand is that sports organizations have two choices: (1) they can either build up a large staff to manage their marketing rights internally and assume the financial risk that comes with that approach, or (2) they can outsource the management of the marketing rights to a third-party agency. In the outsourced model, the third-party agency typically pays a fixed guaranteed fee to the sports organization, plus the agency pays an upside share after threshold revenues are generated. With this model, the sports organization protects itself from downside risk and generates a guaranteed fee for itself. The third-party agency is bearing all of the risk because they have to pay the fixed fee no matter what. Both parties retain the potential for upside benefit.

“As an example outside of soccer, almost 100% of college athletic departments in the major conferences choose to outsource to a third-party agency (the majority are represented by IMG or Learfield). The deal between U.S. Soccer and SUM follows this business structure as well. As a result, the federation has guaranteed annual revenues that allow the staff to manage its budget, while maintaining upside opportunity as a result of the growth of U.S. Soccer. The clear value of the guaranteed revenue with no downside risk was evident during (1) the 2008 financial crisis when corporations cut spending, and (2) when the USMNT failed to qualify for the 2018 FIFA World Cup. U.S. Soccer was protected from losing money associated with any sponsorship, consumer products and/or media rights. SUM absorbed a multi-million dollar hit to its budget without any pass-through to the federation, and the federation received its guaranteed revenue despite the failure to qualify.

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“The second part of the question relates to how it affects the players. This is very straightforward—the deal with SUM results in more money and eliminates any risk that the federation won’t be able to meet its financial commitments to the players. The success of the SUM relationship can be seen in the $150 million surplus and exponential increase in financial returns to the federation based on my team’s work to market the sponsorship, consumer products and media rights.

“These revenues are then a part of what is included in any collective bargaining. However, let me be clear, no agency should be a party to the negotiation between the federation and its athletes. It is the federation’s sole responsibility to work with its athletes to determine the appropriate marketing rights that should be granted to the federation as a part of its CBA.

“Finally, if I am elected president, I will use my decades of experience to ensure that the federation and its members’ interests are protected in any deal with marketing partners and sponsors. And when it comes to future deals, there will be a competitive and open bid process that will lead to the best result for U.S. Soccer and the game.”

Based on the candidates’ survey responses, you can be certain that the role of SUM in U.S. Soccer will come up a lot in the weeks ahead.