When it comes to player salaries in MLS, left each team is afforded $3.485
million dollars to spend. For comparison,
this is over 30 times less than the NBA
salary cap and over 50 times less than
the NFL's. The original cap was far more
restrictive than it is today. It was $1.2
million dollars and prohibited any
player from earning over $192,500.
This was drastically revamped in 2007
with the arrival of designated players.
Commonly referred to as the "Beckham Rule" it
allowed MLS teams to sign star players
at a cost far exceeding the total cap.
For example when David Beckham joined
the LA Galaxy in 2007, he collected a $6.5
million dollar a year contract, more than
three times that of the cap. With the new
ruling Beckham's salary on paper cost LA
Galaxy and MLS just $400,000
a season and the team's owners,
AEG, paid the remaining balance of $6.1
million. Each team was afforded 1 DP spot
and should they wish to trade it they
could to another team with no team
allowed more than two DP spots.
This changed the way teams spent money and
Beckham was soon joined in the US by the
likes of Freddie Ljungberg, Juan Pablo Angel
Cuauhtémoc Blanco.
However the system was not perfect. The
financial disparity between teammates
often caused dressing room issues with
Beckham earning more in a month than
some colleagues did in a year.
In 2010 further amendments were made
with the DP's cost for teams lowered to
$335,000.
Futhurmore, spots could no longer be
traded but teams could pay a luxury tax
of $250,000 to unlock a third DP spot.
As the league continued to grow so did the
salary cap. The 2010 rates sat at
$2.55 million dollars and grew
five percent year-on-year until 2014 as
part of the collective bargaining
agreement between MLS and the players
union. In the intervening years only
minor additions were made. In a bid to
encourage buying young talent, MLS charged
teams just $200,000
against their salary budget for DP's
between the age of 21 and 23 and a
$150,000 for
players under 24. For those over 23 the cost
against the salary cap has slowly risen.
Not only did this rise impact the
percentage DP's took up on the salary cap
it also influenced how much allocation
money was needed to buy down their
contracts. In MLS allocation money
represents money that teams can use to
sign players and or allocate to existing
players salaries to lower their costs
against salary budget. For example if
player A earns above the threshold for
designated player, team X may use their
allocation money to buy that figure down
and remove his designated player status.
This allows them to now sign a more
expensive DP. The cap is seen by advocates
as a vital way to give the league
financial security as it prevents
overspending. The North American Coccer
league, which operates without a cap, has been
subject to financial instability in the
past. However critics of the salary cap
believe it to be restricted and is
part of the reason that MLS clubs have
yet to win the modern CONCAF Champions
League, with their restriction free
Mexican rivals often victorious.
However growth remains steady and it
seems unlikely that commissioner Don
Garber will have abandon this model. Rather
he will seek to slowly expand it, even
if it is unlikely to reach the dizzying
hights of the NFL the NBA anytime
soon.
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