Thursday, April 8, 2010

MLS Roster Changes and Transfer Fees

MLS issued a press release today announcing changes to the roster, specifically designed to encourage the signing of younger, homegrown prospects, like Red Bulls recent signing Juan Agudelo (pictured above). The changes have to do with how, and how many, players from a team's developmental academy can be signed. Here is a comparison of the roster regulations before and after today's announcement.

Prior to today's announcement, rosters were:
18-20 Senior players, who count against the salary cap. Of these, 2 players can be Designated Players.

Up to 4 "developmental, but we don't use the term 'developmental' any more" players, who do not count against the cap. They could be either Generation Adidas players, or players who signed for the league minimum.

Up to 2 "homegrown" players. The old homegrown player rule read as the following bunch of gibberish: "Eligible players must have resided with their parents in a team's "Home Territory" for at least one year prior to placement on a team's Home Grown Player list, subject to the Non-Home Territory exception. Pursuant to all rules regarding qualification as a Home Grown Player, these players may be added to a team's roster Senior or Developmental roster. At this time teams may add up to two players per year from their Home Grown Player list subject to MLS Competition Committee rules." Whatever that meant.
After today's announcement, rosters are:
18-20 Senior players, who count against the salary cap. Of these, 2 players can be Designated Players. The right to have a third DP can be purchased from the League.

Up to 6 "protected" players. These protected players consist of:
  • Players signed to Generation Adidas contracts
  • Players signed to a minimum Senior contract, $40,000
  • 2 of the 6 slots are reserved exclusively for Homegrown players. A Homegrown player now is quite simply a player who spent at least one year at the signing team's academy, and who is 24 years old or younger. A team can assign a maximum of 4 Homegrown players to the Protected roster. Homegrown players can be signed to an Apprentice salary of $31,250. Up to two Homegrown players can be signed to GA contracts.
Does that all make sense?

So, how does this affect the Red Bulls today? Well, it has no immediate consequences. The roster complied to the old rules, and it complies to the new ones. But there was plenty more news to digest. Keep reading...

Also interesting in today's news was information regarding how transfer fees are split between the clubs and the league.
Home Grown Player:
  • Club receives 3/4 of transfer fee revenue and the League receives 1/4
Generation adidas players & non home grown players acquired in the SuperDraft:
  • 1 Year of service: 1/3 to Club and 2/3 to League
  • 2 Years: 1/2 to Club and 1/2 to League
  • 3+ Years: 2/3 to Club and 1/3 to League
All other players:
  • Club receives 2/3 of the transfer fee revenue and the League receives 1/3
This provides additional enticement for clubs to sign promising homegrown players, as they will be rewarded with a larger percentage of transfer fees should they move on to foreign shores. MLS also announced that the maximum amount of a transfer fee that can be used as allocation money has been increased from $500,000 to $625,000. Combined with the recent news that allocation money may now be used to pay down the salary cap hit of DP's, this is big news indeed. A $1,000,000 transfer of a regular player (not that this is common in MLS, but it's certainly not unheard of--there's been at least a dozen) would net a team the maximum $625,000 in allocation funds, more than enough to pay three DP's down to the $150,000 minimum.

Finally, the League said it recognized that it must provide a means of giving younger players an opportunity to play competitive matches if they are to realize their potentials. They are looking towards a means of providing that, either by re-establishing a Reserve League, or by some sort of creative agreement with the U.S. Second Division teams, with loans and two-way contracts between clubs that would allow the player to move back and forth between the clubs--the MLS club could "call up" a player when needed, then send him back down. They are targeting next season to implement whatever solution is chosen. This is great news. While it's been good to see New York taking the, er... bull by the horns by scheduling their own "Reserve" games against local college squads, a real solution need to be implemented at the League level.

With regards to all this new roster and transfer information, it should affect the Red Bulls quite favorably. New York has one of the best developmental academies in MLS, and they will finally be able to bring more of these players to the senior club. Teams that have not put as much money and resources into their academies will have to step up or lose out on an opportunity of which organizations like Red Bull can take advantage. New York is already in a great position to benefit from these changes.

Today announcement contained a lot of figures. The biggest news that I take away from this is the increase in transparency the league has made in sharing these details with the public. MLS has been very secretive in the past about the subjects of allocation money and transfer fees. If the league starts making public the amount of allocation money each team has, and includes allocation figures when trades are announced, it would allow fans to speculate on their team's options and plans. Part of being a fan is speculating on deals, and evaluating who got the best of a trade. It has been impossible to do that in the past. Let's hope today's announcement is the beginning of a continued lifting of the veil.
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