MLS 101 – Single Entity Salary Cap and Designated Players

Major League Soccer rules regarding player contracts are the most confusing and complicated of any professional sport. Even avid fans can have a hard time understanding how his or her club has acquired a player. This is the first of a series of articles that will help try to explain the wild world of MLS rules. Honestly, I still don’t understand quite a lot. The first thing to understand is MLS is single entity. What that means is the all contracts are owned by the league, not its individual clubs. So in a dream world lets just say Nashville SC wants to sign Messi and offers him a hundred million (Ingram could afford it right!). Even if both sides agree the league still has to approve the contract because the contract is technically with MLS, not Nashville SC. The league likely would refuse the deal as its financially irresponsible and would create imbalance in the league.

A recent real life example would be the 2014 case of Jermaine Jones. Arguably the USMNT best player at the World Cup in Brazil, the Chicago Fire negotiated terms that Jones agreed to. However, when the contract went to MLS, the New England Revolution also expressed an interest in the midfielder. Jones wanted to goto Chicago, but MLS wouldn’t guarantee what team he would end up with if he signed the contract. Jones later agreed he would goto the Revolution, but only for more money which MLS got owner Robert Kraft to agree to. So now there were two teams wanting to sign the same player. The league claimed there was a blind draw (essentially a coin flip) that New England won and thus Jones ended up going to New England and making slightly more money. Nevermind that Chicago did all the legwork to sign Jones. There were no rules addressing this situation so MLS just made them up and there was nothing Chicago could do about it.

Salary Cap: The total amount each team has to spend on players. A club roster consist of 30 players that are eligible for selection to each 18-player game-day squad during the regular season and playoffs. In 2017, each team had a salary budget of $3.845 million. I know that doesn’t seem like a lot, but the salary budget is just a fraction of what most teams spend as you can see in the team salary chart. Last season Toronto spent the most at over $20,000,000. While many clubs spent about a quarter of that amount. Seeing Toronto won MLS Cup I guess sometimes you do get what you pay for. While the budget is increasing many have called for it to be eliminated as the bigger clubs are willing to spend more. The minimum salary for a player in MLS is $53,004. Peanuts for a full time professional athlete. You’ll quickly notice that all MLS teams spend well over the salary cap due mostly to designated players.

Designated Player: Rule that allows a MLS club to sign a player outside the team’s salary cap (including higher wages and transfer fees). This is known as the Beckham rule. Back in 2007, the LA Galaxy wanted to sign David Beckham, but there was no way they could under the salary budget. The league rightly realized that bringing in such a high profile player would benefit not just the Galaxy but the entire league. Thus, they created a rule saying each team could sign one player outside of the cap. The Galaxy had highest road attendance that year as other market fans jumped at the chance to see Beckham the one time he played in their city. The league also benefited from the worldwide attention the signing earned. I couldn’t find the numbers, but I’m sure Beckham jerseys were by far the number one seller that year. Since 2007 the league added and second and third DP slot. This rule is responsible for bringing in the best and highest profile players into the league. Giovinco, Villa and Kaka to name just a few.

While this rule has been great for the growth of MLS, it has also lead to two major debates in recent years. Following the lead of Beckham, most clubs have used their DP signings on famous European players well past their prime. The standard joke is MLS is a retirement league as many players like Lampard, Gerrard, Pirlo and others have spent their last year or two playing in MLS after hugely successful careers in top European leagues. MLS overpaid most of these players to entice them not to retire. The thinking being big names raise the profile of the league. More recently clubs like Atlanta United have used their DP slots for younger players. We believe this is the way to go as these players can later be sold. The second debate regards the ridiculously low minimum salary. Several DP’s make more than the entire 30 player payroll of other clubs. Must be awkward in the locker room at times.

These are the biggest and simplest MLS concepts to understand. Our next lesson will tackle general allocation money (GAM) and targeted allocation money (TAM) before we get into even more confusing topics like allocation order, homegrown players, Generation Adidas, international roster spots and more.

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