Outlier Impact on MLS Salary Data

The latest installment of Business of Soccer’s analysis of Major League Soccer’s (MLS) Player Union salary data examines the effect of outliers on the collective salary information.  By removing the effect of a minority of player salaries well above the average, we’ll obtain a better understanding of earnings in Major League Soccer.

In statistics, an outlier is an observation point that is distant from other observations.  For the simple purposes of the analysis, the 12 players that make up the Millionaire List will be considered outliers, and therefore removed from the evaluation.  The comparative statistics, both with and without the effect of outliers, is detailed below:

BoS_Salary Data 4-10-14

After removing the millionaires, the most notable of the fluctuations is the decrease in average league salary.  The “new” average salary of $130K is a decrease of approximately $80K, or 37%.  By eliminating outliers, the average becomes a much more telling measure.  As only 12 players out of approximately 550 were removed from the original analysis, the median remains roughly $90K.   A consideration of both the median and this new average yields a better understanding of what the common MLS player stands to earn on an annual basis.

Also noteworthy is the portion of total MLS payroll dollars attributable to players on the Millionaire List; roughly $45M, or 39% of total MLS payroll dollars are allocated to 12 players.  The remaining 61% of payroll is distributed to about 540 players (more than 95% of the player population).

BoS_Salary Data Pie Chart

 

As MLS continues to grow in aspects such as attendance and overall quality, a prominent earnings gap continues to prevail in comparison to other major sports leagues in the United States, demonstrated below:

BoS_Salary Data 4-10-14 3

 

The data above is well-known to those familiar with MLS, but nevertheless illustrative of baseline compensation differences among professional athletes in the United States.

It’s important to note that MLS is only in its 19th season, while the other major leagues have built off of a significantly longer history.  Additionally given the global landscape of soccer, MLS faces competition to the extent other major leagues in the United States cannot relate, whether it be time-zone or quality related.  The former condition means the best games in the world begin at 7:45 AM in New York and can be watched from the comfort of one’s couch at minimal cost, every weekend;  the latter reflects America’s recent entry into the soccer world, where the best players are concentrated in territories that have played and adopted the game for over a century.  It’s in these locations where compensation for professional soccer players is at its highest.  By the time the first MLS match kicks-off on a Saturday, one could have already watched two or three matches in England, Spain, Italy, Germany, or France.  This is and will continue to be a significant challenge for MLS, especially when trying to attract an audience in tune with the global game.

MLS continues to trail other professional sports leagues in compensation both domestically and abroad.  However, considering the youth of the organization, as well as competition from abroad, the League has made considerable overall progress in nineteen years.  Going forward, as MLS expands, continues to grow its base, and increases quality of play, more clubs will generate a profit, and compensation should continue to trend upward.

What do you think about the outlier impact on MLS Salaries? Let us know in the comments section below or via Facebook or Twitter.

Reporting on the business side of the world's game.