U.S. Soccer's Financial Standing a Wild Card With Regard to USWNT Lawsuit

U.S. Soccer went through a round of cutbacks and reportedly applied for a federal loan, so how could that impact settlement talks with the women's players?

There are many reasons to expect U.S. Soccer and members of the U.S. women’s national soccer team to reach a settlement in the players’ class action lawsuit over alleged violations of the Equal Pay Act and Title VII of the Civil Rights Act of 1964.

U.S. Soccer is under new leadership with president Cindy Parlow Cone and CEO Will Wilson. Both have publicly expressed a desire to settle. U.S. Soccer has also softened its legal arguments by removing controversial (many would regard as sexist) assertions about women soccer players and changing its legal team. In addition, the coronavirus disease pandemic—which has already caused a delay in the trial's date from May 5 to June 16—could necessitate additional delays that give the two sides even more time to talk.

Chances are, the two sides will strike a deal and avert a trial.

Yet there is a wild card factor that might prove disruptive: the impact of the pandemic on U.S. Soccer’s revenue projections.

Like other sports associations, U.S. Soccer faces an uncertain landscape for the future. In the United States and elsewhere, gathering restrictions, shelter-in-place policies, non-essential services closings and quarantines have led to a de facto shutdown of sports. This shutdown means that revenues for major sports associations have plummeted. No one is paying for tickets, and there aren’t games to broadcast on TV. The basic revenue model for sports has been upended.

The upending might last a while, too. While the health care industry is racing to develop effective treatments and a vaccine, the timetable for those achievements remains unknown. Soccer matches might not be played in the U.S. and other countries for many months. Even when the matches resume, fans might be barred from attending. U.S. Soccer could face substantially lower revenue for an extended period of time.

Within that context, U.S. Soccer recently announced layoffs, cutbacks and other cost-control measures–including the shuttering of the Development Academy and temporary shutdown of some youth national teams–designed to ensure financial stability. According to ESPN, U.S. Soccer also applied, and was approved, for a Paycheck Protection Program loan from the U.S. Small Business Administration. U.S. Soccer, a not-for-profit entity, appears to be well-financed. According to an audit of U.S. Soccer’s financial statements performed by the accounting company Grant Thornton, U.S. Soccer’s total assets as of March 31, 2019, were $187.4 million versus $37.6 million in total liabilities. However, the audit also shows year-ending total expenses ($131.8 million) exceeding total revenues ($104.7 million) and makes a point to indicate that "USSF currently is involved in multiple legal actions. Management believes that there are no pending legal proceedings against or involving USSF where the outcome can be predicted and the financial impact be estimated."

To that end, the players are seeking at least $66 million in their gender discrimination lawsuit. Settlements usually mean the two sides meet somewhere between the amount of money demanded by the plaintiff and the unwillingness of the defendant to pay anything. If U.S. Soccer determines revenues will remain low for the foreseeable future, it could become less willing to offer the type of settlement terms that would convince the players to accept.

A settlement that alters players’ compensation would likely necessitate changes to the collective bargaining agreement between the USWNT Players’ Association and U.S. Soccer. Their CBA doesn’t expire until Dec. 31, 2021. It contains numerous rules and procedures related to the players’ wages, hours and other working conditions—the very kind of conditions that would be impacted by a settlement where U.S. Soccer agrees to pay the players more money.

The pandemic has wreaked havoc in so many ways. We’ll find out if disruption to settlement talks between U.S. Soccer and USWNT players joins a lengthy list.

Michael McCann is SI’s Legal Analyst. He is also an attorney and the Director of the Sports and Entertainment Law Institute at the University of New Hampshire Franklin Pierce School of Law.