At U.S Soccer Scholarships we are often asked similar questions in regards to Major League Soccer (MLS), i.e. how do you get drafted, when can you get drafted and is there a cap on the number foreign players within teams. However, recently we have heard a lot of people talking about the so called ‘salary cap’ that exists in MLS. Contrary to popular belief MLS does not have a salary cap. A salary cap is a mechanism, agreed to within a Collective Bargaining Agreement (CBA), imposed upon independent employers within a federation of employers to control wage costs. A single entity model is conceptually incompatible with a salary cap – if there is only one employer, a “cap” would simply cap all employee salaries at a single level. Beyond a salary cap being conceptually incompatible with the single entity model, numerous published accounts confirm this. MLS has a salary budget, which was set by the management committee of MLS, and is now set within the CBA. The league’s true allocation of salary budget among the various teams is nebulous best, with unequal allocations perfectly allowable through various manoeuvring and league approved mechanisms.
Only certain roster spots count against salary budget. The league can choose to pay transfer fees for foreign players coming into the league, which in Europe would be charged on a per contract year basis against that team’s budget. For example, David Beckham, Frank Lampard and David Villa, all of their respective clubs would have contributed to the transfer of each player. Allocation money is given to each team on a Byzantine basis, which can be used to “buy down” salary budget charges. Generation Adidas players carry different salary budget rules. Designated Player (DP) total salary counts against budget up to a certain amount and is less if the DP joins a team half-way through the season and even less if the DP is under a certain age and finally if the DP is an international Designated Player their salary budget rules will again be different. Base salary, guaranteed salary, signing bonuses being allocated across the life of contracts versus year paid… Players like Beckham can be given an option to become an owner/operator at $20 million by the league, which option is now worth $100 million, and that $80 million windfall somehow doesn’t count as league salary. (Or, presumably, U.S. income tax or capital gains tax.)
I recently found a quote stating that the MLS has always been a league where all animals are equal, but some animals are more equal than others. MLS can pick and choose destination teams for marquee players and decide how much of the non-salary expense the league is willing to pay. The distribution of league revenues is unequal and tied to how financially successful an owner/operator’s team is. Some investor/operators are allowed to play in non-soccer stadiums, or in the outfield of baseball parks, or on artificial turf, others must build soccer stadiums to get into the club.
In short, the Major League Soccer pay structure is somewhat of an enigma and you would need a Ouija board to try and begin to unravel the mysteries. Mind you, it isn’t anything compared to the English Premier League where the so-called ‘lowest’ paid players are earning millions a year! MLS has started to adopt a lot of traits used in European soccer, not just buying ageing premier league stars. It may not be long before you see MLS players on $300,000 a week especially with the way soccer’s popularity is growing.
U.S Soccer Scholarships