Will MLS rules hinder future growth?
Some day, when Major League Soccer's history is no longer counted in years but in decades, maybe we'll look back on the current transfer window as the dawning of an era -- a time when the league truly came of age.
That things might have turned a corner for the league forever grappling for commercial traction was evident when the Chicago Fire hosted the New York Red Bulls on Aug. 8. With five well-known designated players (four of them recent signings) on the field, it was undeniable that MLS's on-field product, a focus of the league since its inception, had leaped forward.
But if there was indeed a watershed moment, it was an unlikely one. The Designated Player program was instituted in 2007 to facilitate the signing of David Beckham by the Los Angeles Galaxy and to allow other teams the marketing cachet of fielding one big-name player without restrictions on what they could pay him, while getting to count only part of his salary toward the salary cap. But before this season, the initiative looked to be dying a slow death.
In its inaugural year, four designated players were signed in a league of 13 teams. In 2008, that number went up to seven among 14 teams. In 2009, as the league expanded to 15 teams, the number of DPs grew to eight. But before this season's July transfer window, the league was down to five DPs with few teams showing much enthusiasm for the program after several high-profile imports had fizzled quickly.
Only after an April rule change allowing for a second DP slot (without having to trade for one) and even a third -- which can be bought from the league for a $250,000 fee (which is redistributed among teams) -- did the program get a jolt and result in a flurry of signings. In just two months, six DPs were signed while Blaise Nkufo, who had been signed to a DP contract in March and the Galaxy's Landon Donovan, no longer grandfathered into the program, helped bump the number of DPs to 12. (While Houston DP Luis Angel Landin has been released in the meantime, two additional signings have brought the number to 14.)
The new rules made it considerably easier to sign designated players by reducing the part of their salary (which has to be over the $335,000 a year maximum in place for regular players) that counts against the team's cap. Instead of $415,000 (2009's value), a DP will now only cost a team $335,000 against its $2.55 million salary cap. "I think that's important because you want to have the right pieces around your designated player," said DC United general manager Dave Kasper.
That said, it also means that more of the overrun on the DP's salary will be left for the team's owners to pony up. The payroll that is within the salary cap is financed by the league, which draws its income from a revenue sharing system. "You have to understand that it's a burden on the team owners as well," said Houston Dynamo coach Dominic Kinnear. "It's not just salary cap money but it's money above and beyond that.
"I think it's a little bit easier to sign a DP now but I also think with expansion and the thinning of squads it makes it a little bit more of a priority," said Kinnear. "At first it was a novelty to sign a DP and now it's becoming almost commonplace."
What has been fostered is an environment in which teams get to choose for themselves how they fill out the roster, rather than be subjected to a top-down approach orchestrated by the league. "We wanted the teams who wanted to build their roster on star power to have the possibility to do that. But teams that want to focus on a different thing, such as youth development, are put in a place where they have the same competitive ability to win the MLS Cup," said MLS executive vice president Todd Durbin. "All of it was designed to be competitively neutral."
Even within the decision to bring in one or several DPs, a number of approaches are emerging. Some teams, according to Kasper, opt to bring in big names, like recent Red Bulls signings Thierry Henry and Rafael Marquez. "They drive you commercially but they also do the business on the field," said Kasper. "Those are harder to find. It's hard to identify a player who is in the right period of his career and has a lot of playing time left who can drive you commercially." Other teams, like United, are opting for what Kasper calls "lower-end DPs," like recent United signing Branko Boskovic and Seattle Sounders recruit Nkufo, who are serviceable and more affordable players but whose promotional value is much more limited.
"The measure of the rule is that teams can be competitive irrespective of the approach they want to take," said Durbin. But many see that luxury of getting to choose which approach to use to build a roster as an obstacle. Some clubs would like to surround their DPs with the best players possible, but the tight salary cap makes that difficult.
"I respect and I understand the development of the league and I think the salary cap you have in this country is sensible, a lot of European countries should have the same," said Red Bulls general manager Erik Soler. "But for me the size of the cap at the moment is a very large barrier for what kind of players you can bring in."
New York isn't alone in its frustration with the still stringent budget and roster limitations, implemented to avoid the financial recklessness that sank MLS' predecessor, the North American Soccer League. Several other rich clubs find it cumbersome. "We have [salary] cap issues; we have roster space issues," said Sounders general manager Adrian Hanauer. "From a financial standpoint, our club would certainly consider three designated players if we could make the rest of the math work. (Seattle now has two.) We're playing in three competitions right now so we need quality and depth. We were able to at midseason get a designated player who hit our salary cap at $167.5k. (For DPs signed in the middle of a season, only half their salary counts toward the cap.) But next year they will hit at $335k each and we'll have some very difficult decisions to make."
"The other challenge is that the designated players hit the cap at $335k," added Hanauer. "If you have three of them, that's a little more than $1 million on a not enormous salary cap, so you're really having to balance. You can either have three highly compensated players and really boot-strap the rest of your roster, or you can try to balance your roster without highly compensated players. In doing the simple math, if you have a roster of 20 senior players and three of them are taking a million of the cap, then 17 of them are taking up $1.5 million -- which is about $88k per player, and that's a challenge." There aren't too many established quality players who will work for $88k, after all.
Kinnear said that Houston can't sign a DP until it manages to free up cap space.
Hanauer's other issue with the DP program is that it needlessly labels certain members of the locker room, creating a 23+1 or 22+2 situation. "I hate the designated player moniker and what it represents -- singling out one or two players as designated. We call people designated players, I think it's kind of stupid," he said. "You have players all over the world and some are paid a lot of money and some are paid not a lot of money and sometimes they sit in locker rooms together. There are no designations for players elsewhere around the world."
Also unpopular with the more spendthrift is a clause docking a club's salary budget for any transfer fees it pays. MLS clubs haven't been known to pay transfer fees. This was long assumed to just be a business policy for clubs but could have more to do with league rules. Seattle recently paid Uruguayan club Nacional an undisclosed transfer fee for 24-year-old midfielder Alvaro Fernandez, according to Hanauer, believed to be one of the first such transactions in league history.
Seattle paid a steep price, not just in the fee for the rights to the player, but also the repercussions thereof. "Between the transfer fee and the salary, he's a DP, and without the transfer fee he would have not been a designated player," said Hanauer. Fernandez's transfer fee was divided by the number of years he signed for, and that amount counted against Seattle's salary cap in addition to the player's salary, taking him over the $335,000 limit and pushing him into DP territory. That means he not only takes up a DP slot but also counts more heavily against the team's already snug cap space.
The situation could eventually stunt the growth of the league, some GMs argue. "I think we're missing an opportunity," said Hanauer. "I'd like us to look at transfer fees a little differently, because I think it's in the league's best interest to be going out and buying young players. For players who are 23 or 24 years old and could be in our league for 10 years and could be massive stars, we should be encouraging teams to sign them and not create salary caps and player rules that inhibit that in any way."
Not being able to afford transfer fees puts MLS clubs at a decided disadvantage in the market, according to Soler. "It's hard to sign young kids because you are at the back of the line in terms of the quality you can go after," said Soler. "If we could transfer young players and develop them it could be a huge asset for this league."
The league contends that the rules are what they are to avoid teams over-exerting themselves financially, NASL-style. "The rule is designed taking that into account," said Durbin. "It is measured. You can't sign eight DPs or seven DPs or six DPs. We have a very disciplined ownership group with a very long-term approach. They want to win today but they want the league to be viable."
That doesn't take away that the richer teams, like Red Bulls, could probably easily afford more DPs without risking their financial solvency. "I would definitely sign more DPs if I could," said Soler. "Maybe not 10 or 11 but four or five, I would do that. I think that would bring this league even more forward."
Said Hanauer: "I'm extremely cognizant of the fact that we have to do this thing in a very intelligent way and make sure that we don't blow our brains out from a business standpoint. We do need to continue to figure out ways to improve the quality, and some of that is going to include spending money. Hopefully over time we begin to find a balance where if you have highly compensated players on your roster it doesn't compromise your ability to have the rest of the depth in your roster that continues to provide the quality we're all looking for as a league."
In spite of the willingness of a few teams to ratchet their up payroll further, the league isn't yet considering adding a fourth and fifth DP. "Right now, we're very happy with where the rule is," said Durbin. "If we get to a point where we think it's not delivering what we want it to deliver, where it's not providing teams the possibility to build their team around star players, we would consider changing the rule."
Yet the net result of signing more DPs has had a snowball effect. "With the influx of more guys and the big names that are coming in, obviously our league is one that is becoming more sought after by guys all over the world -- and more at a prime age and not just coming here for retirement," said Kansas City Wizards coach Peter Vermes, whose club just announced the DP signing of 30-year old Mexican star striker Omar Bravo, who will join the club in 2011.
"Guys like David Beckham have really opened up the eyes of a lot of players about coming here," said Kasper.
If only the purse strings were opened a little further, allowing for a few more big names to flow in, the league could grow faster still, argue some. "I think it's a better league than a lot of people think," said Soler. "This is a decent league and we're not that far away. We just need to take the last steps here and we'll surprise everybody and get the TV ratings that are crucial to us. I think if everybody had a little bit more to work with it would bring the league forward very quickly."
For that to happen though, the league will have to alter its philosophy entirely. And that is something one had best not bet on.
Leander Schaerlaeckens is a soccer writer for ESPN.com. He can be reached at firstname.lastname@example.org.
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