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MLS ’13 – The Designated Player Rule: How Is It Working?

Finances are always a hot button in any sport, and American soccer is no different. With a sometimes controversial system that is quite unique in an international world of football, Major League Soccer continues to do business with a salary cap that helps to keep teams from getting caught in a spiral of overspending.

Previous attempts at soccer leagues in America ran into financial pitfalls, and so the league built itself upon a certain amount of austerity. Even with the guarded spending MLS had its own share of dire financial straits a few years into its existence, forcing the league to pull back two Floridian franchises and restructure some ownership situations to bear the brunt of the shortages.

In 2007, after things started looking better for the league, MLS pushed through a needed bit of legislation. A rigid cap kept teams from breaking the bank, but Don Garber and the league saw an opportunity to increase the domestic and international profile. It would involve doing something the North American Soccer League of the 70′s and 80′s did – bring in aging, big-name international stars.

mlsseasprev2013take3 150x133 MLS 13   The Designated Player Rule: How Is It Working?The problem: the cap. You couldn’t bring in big names without blowing that out of the water. What came about in 2007 was something that amounted to a waiver, a way for teams with significant financial backing to escape the confines of the salary cap and bring in a marquee name to help sell tickets. The rule defined a new term, Designated Player, and at this point, I think most of us would agree the change has worked.

Of course the genesis of the Designated Player Rule was primarily to allow AEG and MLS to lure David Beckham to the North American continent. Before 2007, the salary cap was a composite cap on the total salary of the team. There were no restrictions on one player’s salary, aside from obviously needing to field an entire squad within an approximate $2M budget. The Designated Player Rule gave each team the chance to sign a player to any agreed-upon amount, with that player only counting $400K against the salary cap. Of course, with any rule there are exceptions, and in the case of the Los Angeles Galaxy, Landon Donovan was already making well over $400K per season. MLS grandfathered Donovan’s salary such that the Galaxy did not have to go to any great lengths to accommodate Donovan and Beckham (two other players, Dallas’ Carlos Ruiz and KC’s Eddie Johnson, also fell into this exemption, but only Dallas used this exemption to their benefit, signing Denilson to a DP salary).

At first, teams could trade their DP designation to another team, allowing a team a maximum of two. That was relaxed to two DP spots in 2010, with a $250K “tax” to add a third. More recently, a young DP (under 23) was introduced, theoretically to allow teams to bring in young international players who can develop into stars for MLS.

It’s not easy to know much about the salary status of players within MLS at this time of year. Around May, the MLS Players Union will release their salary list, which gives a glimpse into the salary situations within MLS. But MLS does have a page which lists Designated Players, and it appears to have been updated recently. Here is a list of all DP’s in the league currently (YDP = Young Designated Player):

CHI: Sherjill MacDonald; CHV: Osvaldo Minda; CMB: Federico Higuain; DCU: Rafael (YDP); FCD: David Ferrreira, Fabian Castillo (YDP); HOU: Oscar Boniek Garcia; LAG: Robbie Keane, Landon Donovan; MON: Marco Di Vaio; NER: Jerry Bengston; NY: Tim Cahill, Thierry Henry; PHI: Freddy Adu; POR: Diego Valeri, Diego Chara; RSL: Javier Morales, Alvaro Saborio; SEA: Christian Tiffert, Mauro Rosales, Shalrie Joseph; SJE: Chris Wondolowski; SKC: Claudio Bieber; TFC: Danny Koevermans; VAN: Kenny Miller.

A few things to consider:

- As of now, there is only one team in MLS that is on the books for three DPs, and that is Seattle Sounders. They took on Shalrie Joseph’s contract from Chivas USA, eating up their final spot. Teams like Toronto, DC United, New York, and Los Angeles who went all in on 2 or 3 DPs have decided to take a “wait and see” approach, to find the right fit.

- There are currently only two Young DP’s, DC’s Rafael and Dallas’ Fabian Castillo. Suffice it to say that clubs in MLS are likely still trying to decide the best tactic for using this exemption to

bring in younger talent.

- The only team without a Designated Player at the moment is Colorado.

So what to make of this trend of fewer DP’s in general? There have been a lot of DPs that have worked out poorly. If you are going to tie up $350,000 of salary cap in each DP, you’d better get something special.

Many teams have had to make tough decisions about the cap. I have a feeling this may be a clear sign that teams are feeling a pinch within the auspices of the current cap. Salaries continue to rise for the average player, and without an adjustment of the cap you may see continued shuffling of talent.

Does the cap need to be raised? Does a whole new way of capping the league’s salary structure need to be investigated? When we hear about a growing league, one would think that teams would be more willing to add Designated Players. That’s not happening, at least within 5 days of the beginning of the 2013 season.

But this isn’t a crisis or anything. I think it’s actually a sign that teams are learning the joys and pitfalls of having players that break out of the set salary structure. Teams like Los Angeles, Real Salt Lake, and Seattle have gotten the most out of these special players, while there are teams like Kansas City, San Jose, Colorado, and Houston that have found success with hardly a DP to their credit.

So the DP rule is certainly a continued help in getting top players, but teams must be careful not to eat up their budgets with unworthy players. The lack of step change in terms of the cap makes the quality of the DP signings for each team that much more crucial; that teams look for a player that seem to improve the players around him, or provides enough skill to vastly outperform a player they can get for fewer bucks. The DP questions that I see going into the 2013 season:

1) Will LA and NY fill that 3rd DP slot? Since they have tended to set the standard for making the biggest splashes in the transfer market, seeing them add another big name each could vastly swing the balance of power in each conference.

2) Will questionable DP salaries like Freddy Adu, Shalrie Joseph, and Kenny Miller be rectified one way or the other – either by better play, or by sale?

3) Can teams exploit the Young DP salary more effectively, to bring in dynamic, marketable young players that afford them more flexibility under the cap?

What do you think? Has MLS done well with the Designated Player Rule? Should they revisit the way top players enter the league? Is the Salary Cap appropriate at the moment? Join the conversation and comment below.

17 Responses to MLS ’13 – The Designated Player Rule: How Is It Working?

  1. Charles says:

    The problem with the DPs is three fold:

    One, the lack of parity that results from it. No one can do what Seattle is doing right now. Signing for $4 million and playing $2.5 million for a guy that isn’t name selling shirts.

    Two, the money made from DPs like Beckham and others is kept by the teams owners. Shirt sales, advertising, etc.

    Sure TV money is probably better, but on the whole this makes parity problems worse as the money isn’t shared.

    Three, it means less money for the lesser players. No doubt about it. Seattle and maybe a few other haves no, but for the rest of the league it dampers salaries. Not good.

    What is the solution ? There isn’t one. Parity is a must. But money is a must too. Everyone likes having DPs to watch. Henry, of course. Keeping Wondo…yes. Find the best balance on the evil and go with it.

  2. K says:

    parity is a must! all teams must suck equally!

  3. K says:

    there are around 70 soccer leagues on the globe. Two of them have salary caps (MLS and A-league). The leagues that are equivalent in talent to MLS don’t have salary caps. Neither do the leagues that are below and above MLS. None of these leagues has ever folded.

    The old NASL folded not because the Cosmos spent so much more than everyone else. The old NASL folded because 1) it was a franchise league with every team’s financial survival tied together. When the weaker teams went bankrupt they were an albatross that pulled the whole league down and 2) they didn’t have an American player base to choose from. Teams were only required to have two Americans per team. The reason for this is that there weren’t enough quality American players.

    So here we are in 2013 with another soccer franchise league. Because MLS is a franchise league some financial constraints will have to be in place to prevent the old NASL implosion. But is a salary cap necessary? No. Salary caps are bad for sports leagues and they are especially bad for sports leagues that have to compete with other leagues for players. Soccer is a global game. The NFL is not. The salary cap in MLS makes sure that we have a really poor quality league. If that’s there intention then they’ve succeeded. What it needs to be replaced with is something similar to financial fair play.

    A financial fair play system will allow clubs more autonomy in how they allocate their resources to fill a roster. Right now MLS allows LA and NY to spend $15 million a year yet they have to spend it on 3 players with the rest of the club being paid peanuts. Then, we are surprised when LA or NY get pushed around in the CCL and we are surprised how bad NY is.

    FFP would let clubs mandate that clubs cannot spend more than their revenues. Since outspending revenues is what puts clubs in dire financial shape this would prevent that from happening. And it would remove the worst aspects of salary caps, which is parity that is designed to get every team sucking equally.

    The type of players available to MLS will not cause the league to turn into a league where 3 teams have a chance to win the championship. There will always be good parity in the MLS because the players in MLS will always be around the same level. The best American players will always want to go to Europe.

    If someone wants to make an argument for the salary cap lets hear it. I’ve never heard a good one.

    • Charles says:

      Arguement for the salary cap ?

      You are way off. I get the feeling you didn’t even watch NASL at all…..NASL folded because it was boring to watch. The Cosmos won it every year. There was no salary cap, it was a joke. It is not some weird freak thing that NY does draw well all of the sudden, they were fair weather casual fans that went by the wayside when it was a real competition.

      Because of all that MLS should do and does run a parity league. FFP is just to assure the top teams stay the top teams. No one in racist Europe wants Arabs coming in and buying championships. Running an elitist league where they call the elite Sir, as in Sir Alex, just doesn’t fly in this country. This is a country where guys in Omaha become the richest on Earth and Columbus wins MLS. Way better run league.

      Lastly EPL and LaLiga pretty exciting this year, huh ? Over at mid-season….

      • Charles says:

        Should be NY does NOT draw well now, obviously.

      • The original Tom says:

        EPL not exciting? Tottenham-Arsenal will be great this weekend- the race for the Champions league spots is really compelling.

      • K says:

        Charles,

        you are wrong about everything.

        The Cosmos did not win the title every year. There were 17 seasons in NASL and the Cosmos won the title 5 times. During those 17 years you had 12 different teams that won the championship. So what the hell are you talking about?

        • Charles says:

          Like I said before, you obviously did NOT watch NASL. Nice that they have Wikipedia for you, where you can cherry pick stats from.

          The Cosmos dominated NASL until it folded..that is a fact and there is zero disputing this fact.

          You mention other teams winning…correct, while the league expanded to 24 or so teams everyone won.

          When the Cosmos finished with the most points for 6 years in a row and made the Soccer Bowl almost every one of those years,the league folded.

          • K says:

            NASL 17 seasons, 12 different champions.

            Of those 17 seasons the Cosmos lead the league in points 7 times.

            The last season of NASL the Chicago Sting lead the league in points.

            Maybe you should take your nonsense to Bigsoccer with the handful of other MLS-bots that just repeat nonsense over and over again.

          • Charles says:

            You have no clue what you are talking about.

            Just admit you didn’t really have a clue about the league, the Cosmos domination, so you tried ( and still are trying ) to mislead people.

            Just give it a rest. You remind me of the guy who said Japan was great league with pro/rel.

            Unbelievable. Chicago won the league the last year….wow. Talk about trying to lie/mislead.

    • The original Tom says:

      Charles, I don’t think a country that has team names such as Redskins and Indians should call anyone racist. We don’t have a museum in Washington to the victims of Indian massacres. Plus, when a guy with an odd ethnic name runs for president, a good part of the country convinces themselves that he must not have been born here, despite the fact that his parents had a birth announcement in a domestic paper!

      Lets not throw stones.

      • Charles says:

        Good point, playoffs do make it more exciting, but no the EPL is not exciting.

        Good point regarding the Native Americans too, racism isn’t stomped out, but I can go to a game and be 100% certain that no one is going to start up racist comments or chants. As close to 100% as you can get.

  4. The original Tom says:

    I like the DP’s, they make it more interesting.

  5. Scott says:

    One major reason you’ve seen many clubs shy away from signing DP’s is the shift at the last CBA negotiation granting players more guaranteed contracts.

    With that change, teams can no longer release a majority of rostered players with merely a 2 week severance package, freeing up cap dollars to spend them all over again.

    As a result, clubs must keep more cash in reserve to have available for the summer window, so that when a change is needed, they can waive a player, possibly eat some salary in the process and sign a new one to replace that player.

    Clubs had a hard enough time under a salary cap to sign DP’s when the rule initially came into play. Now with the guaranteed contracts, it has become even more difficult. Clubs with ample cash to spend above and beyond the cap (LA, SEA, NY, etc) have strategized to incorporate DP salaries into their roster, while other clubs have shied away and have made fewer dips into the market.

    The new CBA’s goal should be to expand the salary cap by a dramatic amount (at least double) in order to provide clubs with more breathing room to operate with the confines of the system.

    • Charles says:

      Good post.

      I am for a wider salary cap and agree a smaller salary cap leads to salary gaps, but do you think there is room for all the teams to be able to afford double ?

      I care about parity, I don’t want to re-live the NASL days.

  6. K says:

    if you replaced the salary cap (which harms the quality on the field) with Financial Fair Play (which is designed to prevent bankruptcies) the LA Galaxy would have enough revenues to sign Kaka and Lampard.

    More people would watch the LA Galaxy which would lead to more revenues.

    This is how it works.

    Or you could have a salary cap which hurts the quality on the field just so there is equal parity throughout the league. And nobody will watch the games.

  7. footyfan says:

    The thing with the game now is you have more teams like LA and NY. Americans seem to forget about the teams in Canada and the companies that run them. Toronto (as crappy as they are)owned by MLSE have more than enough money to easily spend with the big dogs. Vancouver, well not as financially set, has the fan base to create the revenue to become a big time player. The same could be said for Montreal.

    Now the league isn’t good enough YET for no salary cap, but with the continued development of STRONG fan bases and organizations there is no reason that in 10 years time the cap could be eliminated.

    Also, The league shouldn’t expand anymore either, but look to move failing franchises, once fans get wind of their team possibly moving due to attendance or whatever reason they may try to make more games, if not then they aren’t true fans of “the game” and are probably only involved when a team is winning. EPL may be bought every year but each team has a massive fan base, that’s what truly matters. Trust me, I’m an Everton fan and we always seem to come close then the big clubs take our managers (Moyes) or players (Rooney) but no matter what I still love the team and organization. COYB

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