Not so long ago, David Beckham’s move to LA Galaxy would not even have been possible. It was facilitated by a change in Major League Soccer’s rules. Tim Leiweke, the alpha male of the Galaxy, worked hard to lobby the league’s owners to join his crusade and the Designated Player Rule was born in time for Beckham’s arrival in 2007.
The reason Leiweke and the Galaxy needed to induce constitutional change to make way for the signing of Beckham is that MLS works to a salary budget, promoting financial sustainability and league parity. Each of the league’s fifteen clubs must build its squad within that budget, currently a meagre $2.3m. Clearly a league in which players of the quality of Houston Dynamo defender Geoff Cameron earn just $34,000 – and others as little as $20,000 – will struggle to attract any kind of marquee names from abroad.
Here’s how it works: each club has been allocated a designated player slot which allows it to add a player to its roster who would, in other circumstances, smash the salary cap. MLS holds contracts centrally and pays the designated player $415,000 which in turn counts against the club’s salary budget. The player is paid more than this, of course. The remainder is made up locally by the club. For example, David Beckham may be on $5.5m salary (that’s without all the endorsements and sponsorship deals), but MLS pays him $415,000. AEG and the Galaxy make up the difference.
Designated players in 2009
In 2009, just six MLS clubs have a designated player on their books. David Beckham, of course, is the best known. Minus the $415,000 paid by Major League Soccer, LA Galaxy pays the former England captain a base salary of $5.5m. Seattle Sounders’ Freddie Ljungberg earns $1.3m, Cuauhtemoc Blanco of Chicago Fire almost $2.8m and DC United striker Luciano Emilio $720,000. Guillermo Barros Schelotto of Columbus Crew banks $650,000 and Juan Pablo Angel, New York Red Bulls’ designated player, takes home a base salary of $1.5m.
It seems there are two approaches to taking advantage of the Beckham Rule (though there are many other complications like guarantees to be considered here). Galaxy, Sounders, RBNY and the Fire have used the rule to pick up players ordinarily out of Major League Soccer’s budget, while DCU and Crew have taken the chance to reduce the salary hit from Emilio and Schelotto to $415,000 and make up the shortfall in-house. This frees up some space under the salary cap to stop the roster being too top-heavy.
New York Red Bulls, incidentally, could in theory take on a second DP. The Beckham Rule states that each team may have up to two designated players, a situation which can be brought about through the trading of one club’s DP slot to another. Accordingly, RBNY traded Amado Guevara to Chivas USA in 2007 in return for a second designated player slot, currently unused. DC United also had a second slot, but traded it back to Colorado Rapids – its original home – in the deal which took Christian Gomez back to RFK.
Why do so few teams take advantage of a rule which could help them attract some star power? Financially, it may not be viable for every club. But it’s also a question of balance, and when one is working to a cap of $2.3m the ’spending’ of $415,000 is not to be taken lightly. Not having a DP could make all the difference when it comes to preventing a top-heavy squad. From Wahl’s book, it’s clear that LA Galaxy suffered from this in 2007. Ordinarily, Landon Donovan – now on $900,000 – would have become the Galaxy’s designated player. As it was, he and Beckham accounted for a huge proportion of 2007’s $2.1m salary cap, leaving precious little room for Frank Yallop to build the rest of the squad.
Time for reform?
The Beckham Rule is, in theory, a finite one in its current form. It’s up for review at the end of this season and apparently formed the centrepiece as MLS owners talked shop in Utah during All-Star week. It seems certain that the Designated Player rule won’t be disappearing anytime soon. Beckham, for all the friction, has been a marketing success for Major League Soccer and LA Galaxy. But with reform – or at least evolution – on the cards, should MLS be extending, changing or scrapping the rule after 2009?
The two strongest arguments in favour of the DP rule are the benefits to marketing and on-field quality. Major League Soccer is walking a tightrope with its marketing, and necessarily so. There is a difficult balance to be struck between targeting fans of European football, floating customers, free-spending single men and soccer moms. Some of those markets are impressed by marquee names, others less so. By attempting to attract the big names while some players earn peanuts, MLS is in danger of alienating supporters who value the league’s semi-organic development. Many MLS bloggers are outspoken in their opposition to the Beckham Rule.
It’s potentially a short-term gain, but MLS needs to cash in on its momentum and that means long-term sustainability as well as short-term success.
It’s easy to assume that paying to bring in a few top-class players will bring up the quality of play but it’s not necessarily that simple. Jason Davis at Match Fit USA is a vocal opponent of the DP rule and argues that designated players are “shiny toys” but actually hold the league back in terms of its quality, and represents Major League Soccer’s misplaced priorities:
“MLS is facing a dilemma (although I’m not sure they realize it): sell out and throw money at past-their-prime names who will no doubt bring momentary spikes in attention and revenue (tickets sales, shits, etc.), or buy in and invest in the future of the league, allowing teams to spread more money around, increasing the level of play and hopefully attracting all of those anti-MLS American soccer fans that we know exist.”
It’s a question of cap balance. Even when topped up by the club, $415,000 is a significant salary hit. Some clubs, notably Columbus, can make this work. When your DP is truly the big dog, it’s worth paying that kind of money. But at the Galaxy Beckham’s salary contribution from MLS sits alongside the salary of Landon Donovan, combining to make the roster very top-heavy. If two players take home a large proportion of the salary budget, there’s less to go around the rest. Along with the Beckham circus, a bizarre road schedule and the appointment of Ruud Gullit, this is what made life difficult for the Galaxy in 2007 and 2008.
So how does MLS go forwards? It still needs to attract marketable names but must do so within a sustainable framework. Maybe, despite all the complexities of the situation, the league simply needs to increase the salary cap.
One thing is certain: having a designated player in the squad does not guarantee success. Last season, Columbus Crew won MLS Cup without one; Schelotto, their current DP, was rewarded with the improved status last December.
Chris Nee writes at twofootedtackle and co-hosts The twofootedtackle Football Podcast.
This is a very well written article. Most articles on MLS contain factual flaws or inaccuracies that make it difficult to take anything the author says seriously. It bugs me when I see articles that forget that Luciano Emilio or Schelotto are DPs.
This article is balanced by pointing out the advantages and flaws of the DP system. I agree with the author. The best fix is for MLS to increase the salary cap signifcantly, let’s say by 50% from $2.3M $3.4M. When clubs are paying $35 million to join MLS there is enough money to cover an extra $1.1M per club. Leave the DP “hit” at $415,000 so that the remaining funds can be used to enhance the quality of the squad. That will decrease the impact of the DP from 18% of the cap to about 12%, a more reasonable number.
I think the best thing for the league would be to increase the salary cap, but I’m no sure how economically viable that is for all teams. I don’t think the DP rule has been all that helpful to the league, and I think Beckham has brought a lot of shiny without much substance.
The best thing for the league would be incremental, methodical increases to the salary cap as team economics would allow. This would provide for improved talent across the board while not overextending clubs.
Imagine how successful Basketball, Baseball and American Football would be if they had to work within a salary cap of $2.3m and you will begin to see the main reason why the so-called Beckham Experiment is being said to be failing. A world-class talent like Beckham needs world-class teammates, which is why he was so successful at Manchester United, Real Madrid and, last year, at AC MIlan (where he kept Ronaldhino on the bench). The best Galaxy could offer him, under the rules designed to keep soccer a very poor cousin to the main USA sports (all three of them are very minor sports in global terms, certainly in comparison to Soccer) is Donovan, a trumped-up third-rater who couldn’t even make the bench at Bayern Munich and who flunks 4 out of every 5 goals Beckham sets up for him.
They are re-negotiating the CBA as we speak, and it’s likely that a salary cap increase will come into affect. This will increase the quality of play, and allow teams more leeway if they choose to get a DP. Right now, having a DP restricts your other roster moves because it eats up a lot of cap. The higher the cap, the more DPs will be used.
The tweak I think they should make to the DP rule is to not have the $415k for a DP count against their cap. This will incentives more teams to use it. Basically, the team (instead of the league) will fully pay for one guy, not matter what they decide to pay him.
It is also a backdoor way of raising the cap, without actually raising the cap.
@Tom – Not a bad idea.
Great article Chris.
The salary cap is the main reason that MLS will never be able to compete with European leagues. Unless the 6+5 rule goes through perhaps…
The MLS is in such a tough situation. I think the best option is to try to keep all the best American talent in the MLS, but on the other hand a lot of these players want a higher level of play in Europe, and in general it improves them a lot for our national team (Dempsey is the prime example).
They should cut the all star game to East vs West rather then facing some European team, it just glorifies them and if the MLS loses it makes the league seem absolutely pitiful (even if it is, you want to keep the mirage it’s not!).
Another thing is trying to improve the level of play while increasing the amount of teams is going to be tough, but they have to expand, because if you don’t have a local team in places like Philly why shouldn’t soccer fans watch a higher level of play in Europe (which is exactly my situation, except i’m in the Southeast where we will not likely get an MLS team).
I also think the champions league is important for the MLS, to emphasize the global scale of soccer. There is no other sport that does that in the USA. To see two teams from different entirely leagues, different countries and cultures.. it’s a great thing, but I doubt the MLS would be on board because they are consistently owned out of the CL.
Well Ruud they tried no salary cap before it was called the NASL. They went out of business due to the uncontrolled spending of the “big clubs”
Im not sure that the DP rule is particularly bad for the MLS.
I think theres merit in making direct comparison with the premier league in its formative years. Consider that there were, I think, under 20 non-british players in the premier league when it first kicked off in 1992. For the first two or three years, the increased TV income didnt make a bit of difference to the dominant italian and spanish leagues.
The first few high-profile players who were enticed from those leagues were players at the tail end of their careers, happy for one last big pay cheque in a decent league. It was exciting that English football could get such players (Klinsmann, Gullit, Vialli) but there was an over-riding feelign that, despite this, they were here for the money.
Yet, it was their success that paved the way for the next round, who were closer to their peak and a bit more desirable (Bergkamp, Cantona) and the sea change began.
I appreciate that the presence of a salary cap might slow that rate of progress somewhat, particularly in the markets that might not feel they can support it, but even now its quite evident that there is a world of difference between attracting a Danielle Dichio and a player of Freddie Ljungbergs stature. Going back two years, it would seem implausible that a player like Ljungberg, by no means finished at the top level, would look to the MLS, but I have no doubt hes there because of the Beckham factor- having been convinced of the marketability of such a move, the rewards are evident.
So, in the short term, whilst Beckham is still there, the MLS is in a strong position to pick up other star attractions nearing the end of their career without feeling embarrassed about what the rest of the world thinks. The fact that the rest of the world is even looking, means that its working and more players will follow. To me, Ljungberg is the real attention grabber here, because hes clearly following a path- the fact a path has even been laid down is the key factor.
If the DP slots start being filled, then the pressure will begin to bear on the salary cap, to allow others in below it. There are hundreds of players being released in the UK right now who could do a good job, but would be frightened off by the wage structure. Use the DP rule to continue to draw the big names in, then the rest will follow.
It worked in England.
Having read Grant Wahl’s book, it seems to me that the DP slot indeed isn’t the real issue, it’s making sure it’s being used properly. I agree with the author, Galaxy’s signing of Beckham to accompany Donovan on high salaries left the squad far too top heavy, especially for the 2008 season when they were forced to trade or waive experienced players who earned far too much to keep them under budget.
It wasn’t Beckham’s fault, not necessarily at least, but this in turn (of course) led to a Galaxy squad that was poor even by MLS standards, Donovan, Chris Klein and Peter Vagenas not withstanding. In a team full of rookies, Beckham spent the second half of the 2008 season trying to do everything himself, and when things went wrong his explanation was that the overall quality of the team was just poor.
Tweaking the salary cap seems the only viable option to prevent squads from becoming top heavy like that, although in fairness clubs like Columbus who won the MLS Cup last year didn’t have that problem. Is it a problem faced solely by the Galaxy due to their own incompetence? If so then maybe things should be left as they are.