The US franchise system...coming to a league near you?

The desire of English clubs' American owners to scrap relegation has been met with uproar. But would it be such a bad thing? Rupert Cornwell in Washington investigates

(Reuters)

Wigan Athletic have suddenly turned into Guildford Rovers because the local council in that well-heeled Surrey town has agreed to build a new state-of-the-art 30,000-seat stadium.

The Premier League players have gone on strike in protest at the clubs' attempt to put a cap on salaries. And homey little Fulham, helped by a transfer of revenue from mighty Manchester United and Chelsea, have just won their first ever league title.

The above of course is fantasy, while just how much evidence the League Managers Association chief Richard Bevan has to support his claim that some of the Premier League's foreign owners want to scrap promotion and relegation is unclear. From sundry US billionaires, Russian oligarchs, Indian poultry magnates and Arab zillionaires, thus far not a squeak. But if the plan ever came to fruition, English football would be transformed. The future might look all too similar to the major sports in America where leagues are set in stone, clubs are moveable franchises and stadiums gorgeous, and labour disputes are grinding and championships spread around.

If ever there was a role reversal, it is in America's and Europe's management of big-time sport. The US franchise structure and Europe's system of promotion and relegation stand national stereotypes on their head. America is the citadel of tooth-and-claw capitalism. Yet in terms of professional team sport, it is one of the most cosseted and protected places on earth, where cosy and immutable cartels, not the laws of the free market, reign. Baseball even has an exemption from the country's otherwise redoubtable anti-trust laws.

Here, Europe's sclerotic economy is held up as proof of what happens when soggy socialism and nanny states run riot, sapping the entrepreneurial vitality of their citizens. Not though where football, by far the continent's richest and most popular sport, is concerned. If tycoons from the world over want to get a slice of the action, squandering their fortunes to bid transfer fees and player salaries to the heavens, then so be it. Whatever the market will bear – and then some. And if an owner loses his shirt in the process, too bad. In soccer at least, the law of the jungle prevails.

The paradox stems from two different concepts of sport. In America a club, or rather a franchise, exists to please the fans and provide entertainment certainly, but above all as a business to make money. In Europe that order is reversed. As not a few Arsenal supporters might feel right now, what is the point of being profitable if the team is indifferent? "Football is not a matter of life and death, it's far more important than that," Bill Shankly is famously reputed to have said, evoking irrational sporting passions that across the Atlantic do not exist.

American owners make money by cornering the market. In France, Italy, and even England, teams can rise from nowhere. In theory at least, you can set up Tiny Town Rovers and watch your creation, if it keeps winning, rise through the various levels of the English game to the Premier League itself. In the unsentimental US, such Cinderellas cannot be.

Its major sports – gridiron football, basketball, hockey and baseball – all operate closed leagues. The same teams (either 30 or 32 of them, depending on the league) play each other, year in, year out. Only if their owners so decide is their number increased, in a process called "expansion", dictated not by the excellence of a new team, but the potential of a new market.

The same principle underlies relocation, whereby owners can move a franchise from one city to another. Chelsea supporters are up in arms at the notion of moving a couple of miles from Stamford Bridge; in 1958 Walter O'Malley moved the baseball Dodgers 3,000 miles from New York to Los Angeles. Brooklyn wept, but LA promised mega-dollars. End of story.

The merry-go-round can be bewildering. In 1996, the Winnipeg Jets, a financially struggling hockey franchise, moved to Phoenix, Arizona. A couple of years later the League awarded a new expansion team to Atlanta. It found the going tough in Georgia , so this summer the Thrashers left for Winnipeg, to be reincarnated as the Jets. Winnipeg got its hockey team back; in part thanks to fan demand, to be sure, but also because the rise of the Canadian dollar against its US counterpart has made the city a much more appealing market than a few years back.

Expansion and relocation give owners massive powers of ransom, even over their national capital. Here in Washington, baseball teams have come and gone ("First in war, first in peace, and last in the American League," the old joke ran). The latest one materialised in 2005 when Montreal's Expos moved south to become the Washington Nationals. But the price was an agreement by the city to build a $600m stadium, plus financial sops to the existing Baltimore Orioles franchise 40 miles away to compensate for any shrinkage of its market. The new stadium is terrific. Too bad for DC taxpayers less than crazy about baseball.

But if you have an immutable group of teams, what about competition? How do you prevent the richest of them, like the New York Yankees in baseball or the Dallas Cowboys in the NFL, dominating every year, relegating most teams to irrelevance? The leagues have solved that by devices such as revenue sharing and collective salary caps, and by European standards they have succeeded.

In the last decade only three teams have won the Premier League. By contrast, the last 10 World Series have seen nine different winners. There have been seven different Super Bowl champions, six NBA champions, while nine different teams have lifted the NHL's Stanley Cup. Many more teams make the play-offs, a final stage of the season involving three or four knockout rounds. Even so however, for roughly half of them, competitive hopes are dead halfway through the season. With neither play-off nor relegation places at stake, late-season games can be meaningless.

And then there are the labour disputes. First came the owners' cartels, then powerful players' unions, to negotiate league-wide contracts to prevent owners doing entirely as they pleased. In most sectors of the US economy, unions are weak. Not so in sport, where millionaires bargain with billionaires in a cross between trench warfare and a child's game of chicken.

Strikes and lockouts are commonplace. In 1994, baseball lost the final two months of its season and the World Series, while the entire NHL 2004-05 season was cancelled because of a dispute over salary caps. Now it is basketball's turn. The first two weeks of the NBA season have already been lost, in a familiar argument over money. The owners say 22 of the 30 franchises are loss-makers, and want to reduce the players' share of overall revenues – currently $4bn – from 57 per cent to 50 per cent. The players are naturally resisting. Millionaires too don't like pay cuts, and prospects for a deal are uncertain.

Could such a system take root in the Premier League and other top European leagues? History, tradition and national character all say no. But money in sufficient quantity and over sufficient time can subvert anything. The US owners at least have not bought Manchester United, Arsenal and Liverpool as mere vanity investments, to throw away their money on grotesquely bloated wages and transfer fees. Their dream, surely, is to replicate the NFL model on a global scale.

The National Football League is the world's richest sports league, with revenues of $9bn annually – even though despite repeated attempts it has never managed to take root outside North America. Soccer by contrast is the world game; Manchester United, Barcelona and Liverpool are already global brands. As permanent franchises in the World Soccer League they would be worth their weight in gold.

Pros And Cons: Is American model the one to follow?

Relegation

For

1) Any team can rise from bottom to top (and vice-versa)

2) Relegation means fewer meaningless end-of-season games.

3) Overall the product for fans is more exciting.

Against

1) The spectre of relegation forces teams to overspend on players.

2) This means that stadiums can be sub-standard.

3) The excess spending power of a few clubs has reduced competition.

Franchise system

For

1) Teams are on a more level financial playing field.

2) More teams have a realistic chance to win championships.

3) Stadiums and spectator amenities are excellent, even when the resident teams are not.

Against

1) The cartel structure of the leagues blocks new entrants.

2) Regional monopolies allow owners to charge excessive prices.

3) Communities can lose their team as a franchise moves markets.

Living the American dream: US owners in England's top flight

Stan Kroenke: Arsenal

Estimated worth: £1.6bn

Owner of Kroenke Sports Enterprises which includes:

Denver Nuggets (NBA), Colorado Rapids (MLS), Colorado Avalanche (NHL), Colorado Mammoth (National Lacrosse league), St Louis Rams (NFL)

Randy Lerner: Aston Villa

Estimated worth: £1.6bn

Cleveland Browns (NFL)

Fenway Sports Group: Liverpool

John Henry, Tom Lerner, Estimated worth: £2.19bn

Boston Red Sox (Major League Baseball)

Malcolm Glazer: Man United

Estimated worth: £1.6bn

Tampa Bay Buccaneers (NFL)

Ellis Short: Sunderland

Estimated worth: £1.2bn

Unlike the other American owners of British Premier League teams, Short's only financial sporting interest is Sunderland.

Who owns the rest?

Blackburn: Venky's (India)

Bolton: Eddie Davies (UK)

Chelsea: Roman Abramovich (Russia)

Everton: Bill Kenwright (UK)

Fulham: Mohamed Al-Fayed (Egypt)

Man City: Sheikh Mansour (UAE)

Newcastle: Mike Ashley (UK)

Norwich: Delia Smith and husband Michael Wynn-Jones (UK)

QPR: Tony Fernandes (Malaysia)

Stoke: Peter Coates (UK)

Swansea: Mel Nurse (UK)

Tottenham: Joe Lewis (UK)

WBA: Jeremy Peace (UK)

Wigan: Dave Whelan (UK)

Wolves: Steve Morgan (UK).