What is wrong with US soccer?

What is going on with US soccer? The national team’s first friendly versus the Czech Republic, a team that will not be in the 2010 World Cup, was a demonstration of how not to play soccer. The US lost 4-2.

The defense looked like a bunch of amateurs: the proverbial men versus boys. The US (needless to say, but I will say it anyway) were the boys.

In its second exhibition, the US’s performance was, once again, the lowest level of amateur. This time they battled against Turkey. The Turks are no push over; they were semi-finalist in the 2006 World Cup. They failed to qualify this time around.

In yesterday’s friendly, the US started off being dominated by the Turks, with the US dropping the first goal. What was most upsetting is how the US lacked the basics skills of futbol – trapping, turning and shielding were non-existent. How could a country with 300 million people where soccer is the number one participation sport produce so few good soccer players? It simply does not make sense.

The performance was so poor that it begged the question: Is the US soccer program wrought with corruption?

There is no way that after a 30-year rise in participation with so many kids playing from grammar school programs through high school through clubs through college to professional that we can be that bad.

Well, if not corruption, something else must be going on. Conventional wisdom might be the problem: the belief that shipping as many players as possible over to Europe to play will benefit the national team. But this piece of wisdom does not seem to be working.

In game after game, US broadcasters pontificate about the merits of playing abroad. Joze Altidore and Clint Dempsey play in the EPL, and the list goes on and on, league after league.

But what is not said is the level of teams they play for and how well they do. Altidore, a real gem of a young talent, after being shipped to Spain and now England, has stopped developing as a player. Dempsey, who has had good success in Fulham, has had an impact but no where near that of fellow US player Brian McBride. The development of Dempsey’s skill level has to be questioned. Eddie Johnson, a former young gem, has been shipped to so many different teams that nobody knows where he is anymore.

In reality, many US players spend a lot of time on the bench or play for second-rate leagues. The combination of little playing time, playing out of position or getting injuries, begs the question are US player better off staying at home and playing in the MSL?

In the second half of yesterday’s game, the tide changed. The US dominated the Turks and scored two goals to win the game. It was by far the best half of futbol for the team. What led to the change? Taking out many of the players who play abroad and inserting MSL players. Maybe this is a lesson for those who make the decisions in the US: those who play in the US are better off than those who sit on the bench in Europe.

Stock Repurchases: Outlaw Them Now

In Lexington, Kentucky there sits a printer manufacturer called Lexmark, spun off from IBM a number of years ago, that has done a quality job competing against industry powerhouse HP.

However, the company, like so many others, has spent a fortune buying back its shares over the last bunch of years. Lexmark has ponied up over $3.0 billion on share purchases as its stock collapsed to USD $32 in recent trading after peaking at $92 in 2004. This means it lost and wasted a lot of money.

No matter how you slice it, even with the most optimistic bend, the repurchase was a disaster. With over 13,000 employees, if the money was divvied evenly, employees could have walked away with over $230,000 a piece.

That’s not chump change! How many employees do you think would have preferred the cash versus stock options? I think a lot.

Let’s put that into some perspective. Tuition at the University of Kentucky, its home state, is about $17,000, per year. A family with three kids, assuming no tuition increases (very unlikely), would cost $204,000 for four-year degrees. That cash could have been used to finance their kids’ educations.

Instead, where did that family of three find the money? Where else! The equity in their home.

This is a massive swing in a family’s household net worth. Rather than having cash-in-hand to pay for their children’s education, they were forced to borrow. There is likely no data that follows this trend: how consumers would have been better off if corporations spent that money paying their employees instead of buying back shares.

Most major consumer purchases in the early and middle part of this decade were financed with borrowings, rather than higher incomes. Now demand is dead and consumers are stuck with too much debt and public corporations wonder why revenue is stagnant.

Want to see the US economy take off? Have Congress pass a law outlawing share repurchases. This would give labor more power to demand higher wages, versus the false hope that stock options would some day make up for lower wages today - higher wages; more demand.

By the way, Lexmark is one example of hundreds. Returning capital to shareholders via share buybacks has created no return for shareholders. It is time to listen to the market which is telling us that this strategy does not work.