Note: The following column contains the opinions of the author, and does not necessarily represent the opinions of FifthOfficial.com as a whole.

Dempsey: shortchanged? WireImage

Last week, the Washington Post published (for the second year running) the salaries of every MLS player, exposing the finances of a league that likes to keep most of its internal workings secret. The revelations did answer some burning questions -- like how much Claudio Suarez is making and how much Clint Dempsey isn’t. Once people start to analyze the numbers, however, they raise a whole bunch more questions -- like “how are Chivas USA under the salary cap?” and “is there a salary cap at all?”

The answer to the last question is yes, and no. That’s because while MLS does limit how much teams can spend, it is not the “hard cap” many think it is. MLS does not use the term “cap” in its rulebooks, and the term “salary budget” would be much more accurate. The value of this “budget” is reported to be $1.91 million for 2006, which is the amount each team is expected to spend paying its players. The rules governing how they go about meeting this budget are, of course, complex -- but so are the financial arrangements of most sports leagues.

The Developmental Roster

First, developmental players don’t count at all against a team’s budget. Each MLS team has ten spots for DEV players, who are players under 24 years old that sign non-guaranteed contracts for very little money (either $11,500 or $16,500 in 2006) as they try to make it as professional athletes. It must be tough for these young men, but worth it for the few that make it -- those who don’t want to stick it out can often find more lucrative employment in lower division soccer, or by using their college degree to find another job. As shameful as these salary numbers are, the developmental roster is an important part of MLS’s commitment to developing young American players, and it might not exist if not for its low cost.

Marvell Wynne: G. adidas. WireImage

There is another class of player that counts on the developmental roster: members of Generation Adidas (formerly Nike’s P40). These young players, who have chosen soccer over college (for now), are given guaranteed contracts that often pay as well as many senior roster players, and the deal includes money for college when they do go. This program has brought some great young talent into the league and while it lasts the teams basically get some great young players for free.

The Senior Roster

All this then leaves the eighteen players on the Senior Roster, and theoretically by adding up the salaries of these eighteen players you should come out with a number that is below the $1.91M “salary cap.” Of course, those that have calculators or spreadsheets will quickly discover that this is not the case for the majority of the teams, so there must either be other loopholes. These include the ability to “buy down” a players budget number by using allocations (i.e. part of a team’s transfer money), agreements between teams for the sharing of a traded player’s salary, and, most notably, the fact that only a portion of the salary for the highest paid players counts against the budget.

Donovan: rollin' in the money. WireImage

Let’s start with that, then. Many players in this league make well above the league maximum (which is, I think, $300,000), especially when you include bonuses and sponsorships. The simple fact is that MLS couldn’t have players like Landon Donovan, Eddie Johnson, Paco Palencia or even Freddy Adu unless they could break their own rules to pay them a wage competitive with other leagues. If, however, these players’ entire salaries counted on their teams’ budgets, they couldn’t afford to pay the seventeen other players much more than the league minimum. So MLS has decided to make exceptions for exceptional players -- and each one must be approved by the league. There is then a sliding scale that governs how much each player counts on the cap, up to a maximum of $350,000 (again, I think). I’m not sure even the GM’s are sure how this scale works, but basically anybody over $300,000 counts at between that and $350,000, and there are only eleven players in the league to whom this applies. (You decide whether Clint Mathis is really worth it!)

Once this is done, there are still other ways of “hiding” parts of a players salary so that we still don’t know the true budget numbers despite the Washington Post’s revelations. Often, when a team is desperate to unload a higher-salary player they offer to retain some of their salary on their budget to make the deal more appetising. The Clint Mathis and Tony Sanneh trades would never have happened if RSL and the Crew did not agree to retain part of their bloated salaries against their budget -- unfortunately, no-one but the GM’s really knows how much money is being shared around this way, though it does often get reported.

Hidden Expenses

Ruiz gets many "bonuses". WireImage

Just as there are hidden moves that clear some wages from the budget, there are hidden expenses that add to a player’s budget impact. Most players have bonuses of various types tied into their contracts -- signing, scoring, appearances, playoffs, all-star games, etc. -- and these numbers probably don’t appear in the Washington Post’s figures for players’ “guaranteed salary”, since there is no guarantee they will earn them again. Of course, bonuses obviously have to count against the budget, or else even the less savvy GM’s would figure out how to give their players large bonuses and small salaries. In MLS, the amount a player earns in bonuses counts against their budget number the year after they first achieve them, if the league deems them likely to achieve them again. A clever agent might even tie raises to bonuses, so that a bonus one year may make a double impact the next time around. Thus the budget cost for successful players can rapidly inflate -- which is only fair considering they are probably earning those bonuses by scoring goals or helping the team to the playoffs. There are ways to avoid the impact of bonuses, such as using part of the allocation used on a players transfer on the signing bonus, but in the end the only way to stay on budget is to get rid of players, which is why you see all those veteran-for-draft-pick trades that leave you feeling a bit cheated.

And on top of that the league “taxes” each player’s salary to account for the benefits plan he will get when he retires, which adds yet more money to their budget number!

So, that is the game as I understand it, and while I think I’ve cleared up some issues, you can see that there are too many variables out there to get an accurate picture of a team’s salary cap situation from the Washington Post report. Suffice it to say that most MLS teams do in fact operate within their budget when you take into account the rules we know about -- even Chivas. At the end of the day, the budget is more about fiscal responsibility than competitive parity, and that is why the owners have a vested interest in seeing it adhered to. Perhaps if MLS took some time to explain their rules there wouldn’t be so much confusion and concern among the fans -- but then again, after seeing the state of the rulebook, perhaps not!

- Jamie Sundquist