Article by Matt Lichtenstadter
With the addition of Targeted Allocation Money into the murky ooze of MLS’ salary cap waters, teams have been able to sign better players from abroad while also keeping their own at home under better contracts. This pool of “funny money” has been steadily increasing since its introduction with rumors that more is on its way. And with the addition of clubs such as the free spenders in Orlando, the Bronx, Atlanta and soon LA, many are wondering whether this league that has prided itself on parity and competitiveness is going to lose that in the future.
Paul Tenorio of FourFourTwo writes about how some league GM’s and coaches are worried about a growing gulf in spending power between some clubs in the league.
“We’re going into an era soon that if your ownership doesn’t spend, we are going to have a divide in the league,” someone told Tenorio. “And if you don’t spend and you don’t have an academy, you’re in big trouble.”
To be sure, MLS in any given season is a fairly level playing field because of factors that have been long hammered on in these column inches: travel, injuries, depth issues, etc. But in terms of sustained, year-over-year success? It isn’t that far of a leap to assume that clubs such as Seattle, TFC, NYCFC, Orlando, Portland, Atlanta, etc. would have advantages with free spending ownership that those in other locations may not. But naturally, MLS’ salary structure is still super bizarre and the “cap” isn’t really a cap at all, more like a budget, or encouragement to spend x amount of dollars. But even those numbers could easily be fudged further.
When you add up all of the complicated, arcane and maze-like measures of MLS’ salary structure, which goes beyond the $3.845 million “salary cap” and add in TAM, GAM, homegrown subsidies and parts of the MLS 30-man roster that don’t technically count against the cap (I know, it’s more complicated than it should be), the total MLS “salary budget” so to speak is a shade under $6 million per team. Most of the league spends on or around that level, a few slightly below and a few go well over it. Some clubs, such as the ones mentioned above, spend above and beyond those levels on DP’s just for a start, and all of them are pretty much contenders on a consistent basis, though some haven’t had life as easy as they’d like.
Some of these clubs can spend consistently because they have deep pockets. Other clubs base their financial strategy on buying low and selling high, i.e. investing heavily in their academy set-up or buying players with lower risk and then selling them onwards and upwards. FC Dallas and the New York Red Bulls for instance are major adherents to this strategy, and both have been consistent contenders for years. Atlanta United is even using this idea as they spent exorbitantly this summer on transfer fees, but mostly for young players with upside that they can re-sell at a higher value to recoup allocation money (their academy is pretty insane too).
While that is a strategy for success, as MLS continues to move the needle even further and further out when it comes to expansion fees, the new ownership groups that come into the league will have deeper and deeper pockets, potentially imbalancing the spending even more. And then there are the academies, and clubs can spend on those whatever they so wish to, with some clubs investing heavily in them and others not so much. That too creates an imbalance, though its one that can be overcome depending on the players developed.
MLS is fundamentally a weird league with its rules for player acquisition thanks to the salary cap, budget, TAM, GAM, HGP and the entire alphabet soup of rules and regulations that can be skirted around by shrewd front offices or blown away by clubs with spending power that dwarves their rivals. And with all of that, the league is essentially still a selling league as the clubs in Europe, even in lower leagues which still have bigger financial heft than most MLS clubs do. But is there a major financial imbalance really developing between the have’s and have-not’s in MLS as some fear?
Sort of. Not every club can spend the money TFC or NYCFC can throw around for example, but smaller and smarter clubs can still be league powerhouses with creative management and smart investments elsewhere. FC Dallas is a model in American soccer and they are one of the lowest spenders in the league.
At a point, spending will matter above all else and while some clubs have that heft, others don’t. But with MLS’ insistence on parity and centrality still there and ever-present, those imbalances will be kept in check as much as possible. How MLS evolves and changes as new clubs enter the fold with spending clout and grand designs remains to be seen, but for now, MLS is still a league where the little guy can easily beat up on its big brothers by being smarter and shrewder.
That won’t change, no matter how much Toronto FC can spend on its DP’s when Colorado can’t come anywhere close.
