MLS and the DLP rule
The Designated Player rule, which some may know as the Beckham rule, was something set in motion to fix the salary regulations in the MLS in 2007. This rule has benefited a lot of teams with little money to get players of high standard, examples? Clint Dempsey to Seattle Sounders Or Sebastian Giovinco to FC Toronto.
The rule allows teams to sign players outside of their salary cap, either by paying them the salary needed, or a part of the transfer fee. Teams can also use something called allocation money towards their salary, or use their Designated player slot, which frees them from a lot of work and money. Think of it like this. The League “owns” the player(since the team can’t afford his transfer fee, MLS can buy him) and the team can provide the salary or parts of it atleast.
Some of the things to remember/consider with MLS and salaries:
⦁ For each Designated Player, $400,000 of his salary is charged to the salary cap and paid by the league, with any remaining salary being paid by the team’s owner. This value was increased for the 2009 season to $415,000.
⦁ In 2010 this happened: For each Designated Player, $335,000 of his salary is charged to the salary cap and paid by the league ($167,500 for DP players joining during the MLS summer transfer window), with any remaining salary being paid by the team’s owner. This amount is halved for Designated Players signed in the middle of the season. The salary cap value of Designated Players can also be reduced using allocation money. Finally, teams whose Designated Players transfer abroad in the middle of a season can recoup part of the Designated Player’s’ salary cap value.
⦁ Teams can pay a $250,000 “luxury tax” for the right to sign a third Designated Player. This $250,000 would be distributed equally to all MLS teams that have not signed a third Designated Player in the form of allocation money.
Starting with the 2012 season, the rule was changed with respect to younger players. MLS announced the changes in August 2011 after clubs expressed concern about signing young international players with no guarantees that they would develop into stars. The DLP rule Also put in motion that any player under the age of 23 could only earn so and so much, because they did not want money to go to their head. Age of the player is determined by year not by date of birth, which it also used to.
he maximum budget charge for Designated Players over age 23 was increased to $368,750 for 2013, $387,500 in 2014, $436,250 in 2015, $457,500 in 2016, and $480,625 in 2017. The budget charge for those who join during the midseason transfer window has remained at one-half of the full-season cap charge since the inception of the rule. The budget charges for younger players have not changed since 2012.
The rule is informally named after football star David Beckham, in anticipation of MLS teams signing lucrative deals with internationally recognized players of Beckham’s caliber. As it turned out, Beckham was indeed the first player to be signed under this rule, signing a lucrative contract with the Los Angeles Galaxy worth up to $250 million over five years, with direct guaranteed compensation from MLS and Galaxy at $6.5 million a year. The rest of Beckham’s increased earnings would come from Beckham regaining the entirety of his image rights, of which Real Madrid had owned fifty percent, effectively doubling his existing endorsement income, as well as new endorsement deals, a share of jersey sales, bonuses, etc.