Major League Soccer players are heading to the negotiating table with owners to hash out a new collective bargaining agreement, and the outcome could reshape the league’s future. Rules governing Targeted Allocation Money, charter flights and the structure of the salary cap are expected to be major sticking points.
Players are hoping to make the league’s owners more competitive with one another by lifting travel and roster restrictions. It’s not as clear yet what owners are seeking in the new CBA, but MLS responded to a request for comment on this story with a statement.
“The upcoming CBA negotiations will provide the League and players the ability to discuss and address a wide variety of issues. We view these discussions not merely as transactional, but also as an opportunity to spend time with players to talk about ways we can together make our league stronger,” according to an MLS spokesperson.
While that sounds lovely, it seems likely that the players and owners have very dramatically different ideas about the best way to grow the league going forward.
Don’t expect revenue and wages to be formally tied together
Unlike the other major American men’s sports leagues, the MLS CBA does not tie player wages to a percentage of soccer-related revenue. While the players are open to the change, it’s not a priority.
“Over time, I think the formality of that link has become less important,” Ty Harden, MLSPA’s director of player relations, tells SB Nation. “I would argue at the end of the day that distinction hasn’t made a huge difference in terms of what players are getting.”
He continues, “we keep a very close eye on how much players are earning as a percentage of revenue. It hasn’t hurt us that we don’t have a formal mechanism that ties compensation to revenue because we’ve been at the table with transparency on finances, so we’re doing the same thing, it’s just not automatic in the CBA.”
Basically: The owners are doing right by the players in this regard at the moment, so players don’t want to use up political capital on the issue. They have bigger fish to fry.
The players don’t dig TAM
Is there a young international newcomer you’ve enjoyed in MLS recently? Chances are Targeted Allocation Money, or TAM, was involved in their acquisition.
TAM was introduced in 2015, and the league has steadily increased the amount that each team can get per season from $1.2 million to $4 million over the last four years. The money can be used to buy down the salary cap charge of a player whose total compensation and acquisition cost is above the Designated Player threshold – currently $530,000 – so that they do not count as one of the team’s three allowed DPs. (You can check out the league’s rulebook for more specifics on TAM and Designated Players.)
Importantly, $1.2 million of the TAM that teams get is non-discretionary, which effectively means that teams can roll it over to the next season if they don’t use it, as well as trade it for players, draft picks, international slots or restrictionless General Allocation Money. The other $2.8 million is discretionary, meaning teams can choose to buy into it or not, and the league tells them what they are and aren’t allowed to do with it. That money can’t be traded and doesn’t roll over, thus incentivizing teams to buy new players with it and inject fresh talent into the league.
The MLSPA doesn’t like TAM because it’s a pot of money that current union members largely don’t have access to. They’re not thrilled that the league has set aside $4 million per team that can’t be used to give raises to existing players even if owners want to. TAM’s very existence suggests that the league sees the acquisition of new players as a bigger value-add to the league than raises that keep solid mid-level players from moving abroad.
“What is most frustrating to us is the notion that players who are all doing the same job, putting in just as much time as each other, are competing for different pots of money,” Harden says. “Players certainly understand competition as well as anyone, so they understand that they might not succeed in accessing that money, but to be told that you’re not even able to compete for it is incredibly frustrating.”
Atlanta United’s Jeff Larentowicz, a player representative and 15-year MLS veteran, sees the current TAM rules as anti-competitive. “It’s restricting because when a GM is trying to build their roster, they’ve been hemmed in by how they can sign players, who they can sign, and with what money,” he tells SB Nation.
We can only guess at the league’s feelings about TAM, as it declined to comment on specifics for this story. How much the league is willing to budge on this issue is likely tied to the way it sees other competitive and salary cap rules.
Some TAM players are busts, and some are sensational signings that can be flipped to European clubs for big transfer fees. Most of them are very good, but not quite superstar players who coaches want to keep around. If a club makes enough TAM signings on that level, it won’t have room to continue adding players under the current rules.
With the salary cap at $4.24 million and teams allowed eight international slots, TAM gives owners a diminishing return. If a team has filled all of its international slots with players it likes and wants to keep, TAM is useless to it.
If owners want to significantly increase international slots to keep adding high-level talent to the league, they would also likely fight to keep TAM; they will need additional slots to use the money effectively without having to make difficult cuts. But if owners are OK with the current eight international slots, they may give players what they want and agree to get rid of TAM, especially if it helps them keep overall spending low. While TAM has improved the quality of MLS since its introduction, it may have run its course, and owners have other battles to fight.
Charter flights should be a sticking point
MLS players still fly commercial in 2019, with league rules only allowing for teams to charter four flights per season. The rule exists to level the playing field between the league’s richest and poorest teams, and some teams — like the Philadelphia Union — don’t even use all four of their allotted flights.
Players have been complaining about this for several years now, but Wayne Rooney and D.C. United brought a bit more awareness to the issue in August, and it’s now expected to end up near the forefront of CBA negotiations.
Instead of flying direct, #DCU ended up w/a connecting flight on both legs of the trip and a 12-hour travel day; $165,000 is on the low end for a charter, according to a source. West coast trips frequently start at $200k and go up from there, depending on fuel costs, etc.— Pablo Maurer (@MLSist) August 22, 2019
“Travel is for us very much a performance issue, not a perk issue at all,” Harden says. “I believe we have fewer training days than any league in the world and that’s in part due to how big the countries are. If you charter flights you instantly reclaim, my guess is 10 training days over the course of the year, which is significant.
Larentowicz adds, “You want to make the league better, you want players fresher for games, going into games feeling good and having better travel days, that’s making the league better.”
If a team chartered a flight to every single away game, its costs would climb well into the seven figures. Some teams could spend more on travel than they do on their best players. The likes of Atlanta United and Los Angeles FC would probably spare no expense to get a competitive advantage, but a handful of clubs wouldn’t charter any more flights than they do right now.
Players want clubs to spend more on travel in part so they can be more competitive, but the league’s less wealthy owners wouldn’t be thrilled with the competitive imbalance that would result from a rule change.
Ditching the weird roster rules
The MLSPA would like to do away with not just TAM, but the league’s roster rules that affect salary cap charges. The most notable one is the Designated Player rule, but Reserve, Senior Minimum Salary, and Homegrown contracts also affect a team’s roster makeup as well. There are 20 senior roster spots per MLS team and a salary cap of $4.24 million, but teams can have up to 30 players, and they currently spend anywhere between $7 million and $26 million, depending on how they use the league’s various roster and cap exceptions.
MLSPA’s position is that the cap should be as simple as possible — have a salary cap, and the only rule is teams can’t exceed the number. How teams spend their money would be up to them.
As MLS is currently constructed, with DPs and TAM, teams are incentivized to create top-heavy rosters primarily comprised of star players and low-paid players. With a few notable exceptions, players with mid-tier salaries are often poor value for the money in MLS’s existing structure.
“The way to solve that is to create one open salary cap that can go to anyone, so any player can sign for any amount of money,” Larentowicz says. “Having those restrictions eliminated is the end goal.”
Harden adds, “The league has mandated that everybody take the same path towards building a roster to our detriment. A numerical example of that is every team in the league is spending at least $7.5 million or close to that on players. Despite that, no one’s been allowed to construct a team that went from, say, $600,000 at the highest paid player to $400,000 for the 20th guy on the roster, which is what you see in most other places in the world. I think a team constructed like that would compete very effectively.”
This idea makes MLS’s marketing department shudder. Balanced rosters might lead to better overall quality of play, but it might also lead to fewer players like Zlatan Ibrahimovic and David Villa entering the league. The handful of owners who care more about winning than marketing won’t be repulsed, nor will the cheaper owners who could never hope to attract a megastar anyway. But the owners who sit in the middle of those two groups are likely to be opposed to this idea.
Eliminating roster rules and going to a simple salary cap sounds like the most extreme of the players’ proposals, but it’s actually the one that should encounter the least opposition if owners can overcome their initial shock. Changing the cap structure represents the most significant structural upheaval that the players are asking for, but it’s also unlikely to cost owners significantly more money or create a wider competitive imbalance.
A compromise of the players’ proposal, plus one Designated Player slot feels like a win for all parties. But we can only guess at how receptive the owners will be.
2020 should be different than 2015
The above issues will not be easy to iron out, but the players and owners are negotiating on much better terms than they were four years ago.
Last time MLS players and owners had to negotiate a CBA, they nearly entered a work stoppage. The two sides only came to an agreement after players authorized a strike, just a couple weeks before the season started.
The major sticking point in 2015 was free agency. Until then, MLS teams held their players’ rights in perpetuity as long as they weren’t renounced. The league maintained for years that this system was essential to the league’s survival.
In the middle of the 2015 negotiations, Real Salt Lake owner Dell Loy Hansen commented on a radio show that the players were wasting their time by seeking free agency.
“The perennial issue is that ‘we want free agency’ but that can’t exist where everyone is employed by the same employer. That’s not going to change. That’s a go-nowhere conversation. The (players) have tried it twice, and it’s been defeated by the courts. It’s just a foolish place to waste time. I think there’s some great agreement that everyone can reach, but every time I read that we’re going to work on free agency, that’s kind of one of those waste of time conversations.”
Hansen was fined $150,000 for those comments, and also turned out to be wrong. At the 11th hour, the players and owners agreed to a restricted form of free agency, with players gaining freedom of movement once they’ve reached 28 years old and completed eight years of MLS service.
MLSPA seems a bit more optimistic about negotiations this time around. “The real difference this cycle is in terms of how much and how frequently we’ve talked to the league about substantive issues,” MLSPA executive director Bob Foose tells SB Nation. “It doesn’t feel like there’s a beginning, middle and end, it’s more a continuation of conversations we’ve been having for the last couple of years.”
Foose adds, “What I think has changed a bit is our ability, the amount of time we’ve spent and how much work has been done to communicate effectively. We’ve collectively done a better job of where each other are coming from, which hopefully will help in the months to come.”
Labor negotiations can get contentious and change very quickly, but the MLSPA and league appear to be starting off on a good foot. It appears that we can expect good faith discussions and a smoother process this time around.