Avoiding the Drop

While much has been made about David Beckham’s salary lately, very little explanation has been given as to how exactly Beckham is allowed to make $6.5 million a season in a league with a $2.3 million salary cap. Major League Soccer – like the NFL, NBA, MLB, and NHL – has very specific rules and regulations in place regarding their salary cap, but no league has a “designated player” rule quite like this. Dubbed the “Beckham Rule”, it’s an interesting little quirk of the MLS that’s rarely been explained in plain English. With that in mind, let’s look at the rule and what it can mean for clubs who want to sign big money players.

Let’s start with the text of the rule (Section II, Article B):

The Designated Player Rule allows the League to sign players (under the League’s single entity system) whose salary will fall outside of the team salary budget and whose cost above the salary budget charge will be the financial responsibility of the club for which they play. A Designated Player’s salary budget charge will be capped at $415,000 per annum in 2009, but his actual compensation is higher. Each team initially received one Designated Player slot, and clubs are allowed to trade Designated Player slots. However, no team can have more than two Designated Players. The Designated Player Rule is a three-year initiative that will conclude after the 2009 MLS season when its future will be reviewed.

Did you get all that? Let’s break it down a little further.

The MLS is a “single entity” system. This means that MLS is responsible for every player’s paycheck, not the individual teams that they actually play for. This is a significant departure from other American sports; Lebron James is paid by the Cavaliers, not by the NBA.

So rather than have a salary “cap”, each team is allocated a salary “budget”. It’s a small but important difference; in both the NBA and NFL, teams play tons of number games that allow their actual salary figure to be higher than their “cap number”. Here, you’re allocated a set amount of money that MLS will provide for your players; there’s a lot less wiggle room to play with.

Enterprising owners with a little bit of cash to splash on their roster are thus given the “Designated Player Rule”. Under the rule, a player named as a club’s designated player can sign on for a contract of any size; MLS pays for $415,000 of that contract, while the club picks up the rest of the tab. So David Beckham’s cap number for the Galaxy is $415,000, regardless of whether he makes $6.5 million or $65 million a season, as long as the Galaxy makes up the difference.

If you were paying attention last night, you heard Christopher Sullivan and Max Bretos engage in a conversation about how New York was looking to use their designated player slot on a defensive player; this was followed by a remark from the other commentator that New York was already using their designated player slot on Juan Pablo Ángel. The second commentator’s right; Ángel is currently New York’s designated player. The first commentator is also correct, though: New York still has an open designated player slot.

How’d that happen? Back in 2007, New York traded midfielder Amado Guevara to Chivas USA; in return, they received the Chivas designated player slot. A team can actually own up to two designated player slots at one time; New York’s second slot still has yet to be filled. Should it be filled, MLS would pay for $335,000 of said player’s new salary; the rest, again, would be at the owner’s expense. And don’t think about trying to make a SuperClub (thanks, Alexi!) by trading for everyone’s slot; two’s the absolute limit.

The current designated players (and their salaries) are as follows:

• David Beckham (LA Galaxy) – $6.5 million
• Cuauhtémoc Blanco (Chicago Fire) – $2.95 million
• Juan Pablo Ángel (New York Red Bulls) – $1.8 million
• Freddie Ljungberg (Seattle Sounders) – $1.3 million
• Guillermo Barros Schelotto (Columbus Crew) – $775,000
• Luciano Emilio (D.C. United) – $758,857 (this is possibly the only salary number I’ve ever seen that’s also a palindrome)

That’s right: only six teams have used the rule, and three of those players (Ljungberg, Schelotto, and Emilio) are in the first year of their designated player deal.

Sigi Schmid, who won MLS Cup with the Crew in spite of not using a designated player slot last season, said the issue was one of accuracy: “In M.L.S., if you bring in five new players, four have to succeed for the team to be successful. You got to hit with a high percentage. Whereas in Europe, with teams with big budgets, all you need to do is bat .500, maybe less, and you’ll be O.K.”

Simply put, if you swing and miss on your designated player, you’re seriously screwed.

Another fun little wrinkle: the rule is up for review at the end of this season. I’d imagine that it’ll probably be extended (the ramifications of not extending it seem too frustrating to deal with), but the fact that so few teams are using it is noteworthy.

2009 MLS PLAYER RULES AND REGULATIONS SUMMARY [MLS.net]
In M.L.S., Designated Players Do Not Guarantee Great Expectations [The New York Times]
Designated Player Rule [Wikipedia]