On Tuesday, Major League Soccer announced that they will be making a change in the Designated Player Rules for the 2012 season. The rules will be augmented to allow overseas players under the age of 23 to sign as Designated Players with a reduced cap hit to the team. For those who are under 20, the cap figure will be only $150,000, while those from 21-23 years of age will count at $200,000 against the team’s cap number.
So, why was this necessary? The easy answer would be that the league sees this as one way to improve the product. It’s difficult to sign quality foreign-based youngsters because MLS has to compete with deep-pocketed European leagues. It’s not particularly wise to eat up a significant part of the salary cap with a player that may never come good on their promise. For top collegiate and Under-20 domestic (US & Canada) products, the Generation Adidas program helps MLS teams to cope with this reality, with those players not counting against the Senior Roster salary cap. That program does not allow for international youth signings, though.
Let’s dig a little deeper, and apply some recent news. Robbie Keane recently signed with Los Angeles as an expensive older DP. The league just spent a $3 million transfer fee on a guy who struggled to find playing time when he was loaned to the worst team in the Premier League, West Ham United. Keane did play well for Ireland over the summer, so there’s little reason to think he won’t work out for the Galaxy. But what if he doesn’t work out? That’s a large sum for the league to spend, and at what real return? Compare that to David Beckham, signed on a free but who garners a $6+million salary. In Beckham’s case, he has a buzz-worthy name in the sports world. In theory he draws fans to the stadium and to the television. Does Robbie Keane fall in that same category?
OK, let’s go deeper still. Jozy Altidore earned approximately $10 million for the New York Red Bulls and Major League Soccer when he signed with Villarreal of La Liga. Young players have a much better chance of returning the investment of both the team and MLS. So instead of spending a load of cash for an aging player whose fee is unlikely to be recouped, perhaps a team could spend $100,000 of transfer funds to get a very good young prospect. If the player does pan out, a big transfer market payday may be in the cards for MLS.
A final thought: image. There are many smaller-budget teams who have yet to sign a designated player. To me, there seems to be a stigma surrounding the “haves” and “have-nots.” The title “Designated Player” is as much a marketing tool as a salary designation at this point. This gives teams the ability to sign Under-23 players as Designated Players at a lower salary than a standard DP. More teams should then gain a chance to break into the realm of the DP without breaking their modest budget.
MLS is obviously keen on this plan, because they’ve added another catch: if you sign a youngster as your 3rd DP, you will not be charged the $250,000 luxury tax.
What will the overall impact be to the league? As seems to be the tradition in the league, I believe most teams will approach this timidly. As with the general DP rule, big-money teams will benefit the most, because they have the funds to absorb the extra charge. Primarily, I see this measure giving teams an incentive to invest in players who will create future excitement, and revenue, for the league. The timing of this announcement with the Keane transfer is interesting, but I’m sure this took a lot of thought and financial modeling to decide that this would be likely to succeed. All in all, I hope that we look back in a few years, and see this as a significant step in the development of the MLS labor model, and that it provides the league with more talent, and ultimately more fans.