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CBA Talks Between MLS and MLSPA: How The Agreement Could Be Improved

MIAMI, Fla. (January 31, 2020) —

With the end of the current Collective Bargaining Agreement (“CBA”) between Major League Soccer and its Players Association due to expire at midnight on Friday, the two sides agreed yesterday to extend the contract until February 7, 2020.

Major League Soccer and the Major League Players Association released the following joint statement:

“Major League Soccer (MLS) and the Major League Soccer Players Association (MLSPA) today announced that they have agreed to extend the current collective bargaining agreement (CBA) through February 7, 2020.  The two groups have engaged in productive discussions and will continue to negotiate a new CBA.”

The two sides are reported to be having extensive talks this weeks, as today’s announcement would support. Little word has emerged on the parties’ progress, though both sides have indicated that talks are progressing.


This is a continuing look at the CBA talks, and the third part of my three part dive into the issues surrounding the negotiations.

To recap, in Part One, I looked at the issues that are on the table during negotiations between MLS and its players union, along with the backdrop that these negotiations are set against. With the issues defined and the clock counting down towards a deadline, both sides are saying they are committed to reaching a new agreement in time to prevent a possible players strike.

In Part II, I looked at comparisons that have been done to get a sense of where player salaries are in Major League Soccer, both in comparison to competing major sports leagues in North America, and in relation to the top football leagues in the world, through studies that compare the percentage of league revenue that is spent on players’ salaries.

What might a new collective bargaining agreement (“CBA”) look like? How does each side craft an agreement that can be considered a ‘win’ for each of them?

In this Part III, I examine what a new CBA might contain, and offer an opinion on how the agreement could be improved for the long term best interests of MLS as it aims to be one of the top professional soccer leagues in the world.

The 2020 CBA comes at a critical juncture in the history of the league, which this year will celebrate its twenty-fifth anniversary season. I believe that the fallout from whatever the new CBA looks like will have lasting implications for the league. It will have implications on a continental level, for example, in how competitive MLS teams will be in the Concacaf Champions League. It will also have implications in terms of the ability of MLS to compete in the global marketplace for the best players.

From the standpoint of the league — which operates as a single entity — apart from negotiating to avoid a player strike, MLS’ owners/operators want to continue to maintain a measure of certainty over costs such as player salaries and expenses. Due to its legal structure, players sign contracts with the league, not their respective teams. Having centralised control over contracts is sure useful in carrying out this objective. The rules surrounding retention of players rights (discussed in more detail below) even after that player has been transferred or his contract has expired also aids the effort to control costs.


November 10, 2019: Seattle Sounders midfielder Victor Rodriguez (8) scores a goal against Toronto FC defender Chris Mavinga (23) in the second half during the MLS Cup at CenturyLink Field. Photo: Troy Wayrynen-USA TODAY Sports

How Could The Next CBA Be Improved?

“Improved” is a word that is open to interpretation depending on the person whose opinion is being asked. At some point, whether one is an owner/investor or a player, there should be a convergence of what is best for the players and management. I will concede that lots of the changes to the rules discussed herein stand to benefit the players.

If there was one statement that sums up what the MLSPA thinks of the current CBA, it would be the following statement by Bob Foose, the union’s executive director:

“We have a very negative view of the restrictions in place. MLS turned what should have been a win into a real loss,” said Foose. “We should stop being a league where you design a competitive football league in a boardroom. It should be done by the people who know the game.”

A good representation of how the players feel about the CBA negotiations, and what they are looking for was provided by Dax McCarty, who in addition to being a 16-year veteran of MLS is a representative in the MLS Player’s Association. He spoke to Sports Illustrated’s Grant Wahl at MLS Media Day a couple of weeks ago in Los Angeles. “I think the most important thing, to be quite honest, is just more money in the player pool available for every player,” McCarty said.

The union wants the age and time of service requirements for eligibility for free agency to be lowered and wants the cap on salary increases removed or at least raised considerably.

Anyone who has studied the salary budget rules would likely agree that they are complex; one practically needs a law degree to decipher it. To put it succinctly, the MLSPA aims to have MLS’ salary budget rules simplified.

MLS, in addition to having a degree of control over player costs, also will want to continue to maintain control over where that money goes. After the last CBA was signed, the league introduced the concept of targeted allocation money (“TAM”). TAM allows the league spend more on players within a specific salary range. The league considers this program a success and as such has an interest in retaining that kind of discretion as to where investments are made.

“There are a variety of different areas that will be the subject of discussion as to where we should be making investments, whether it’s the senior team, whether it’s player development, whether it’s on other benefits,” Mark Abbott, MLS President and Deputy Commissioner told ESPN. “And in the CBA what we’re seeking to do is within the limits of what we’re able to spend that we ensure that we’re allocating those expenditures in the areas that are most likely to have the most impact.”

The issues of salary cap and allocation money are closely related, but this article will break them out for purposes of a coherent discussion. With that in mind, here are some ways to create a CBA that is simpler and which could reasonable be expected to allow MLS to continue to evolve in the direction that it says it wants to head, namely: to be a league of choice and among the world’s elite soccer leagues.

1. Remove TAM and GAM

In the new CBA, the players association is pushing for an overall simplification of the MLS roster rules. The MLSPA seeks to allow the individual teams to have full control over spending.

As a starting point to creating a new CBA, I would consider eliminating allocation money, both TAM and general allocation money (“GAM”). Removing TAM and GAM would be done in conjunction with setting a higher salary cap, and shifting from a soft cap, as is the present case, to a hard cap.

A note about salary caps: A hard salary cap is simple. It states a given amount of money to be spent on players’ salaries per team, and a team is not allowed to spend over that amount. The NFL is a prime example of a professional sports league that uses a hard cap. A soft salary cap is more complicated because there are exceptions that allow teams to exceed the salary cap to sign players. The MLS uses a soft salary cap with some of the exceptions including the use of TAM to buy down salaries to get under the salary cap and designated players (DPs) that do not count against the team’s salary cap at all.

Radical? Impossible, you say? Or is it merely an evolution that sends a message that MLS wants to be a major player for talent on a world stage.

As it relates to the present negotiations, MLS players want the salary cap to increase significantly from its current $4.24 million. In having the cap raised, the union’s goal is for the increase to benefit players across the board, not only the relatively few that are already making significantly above the league average, either via TAM or as a designated player.

Under the ‘soft’ salary cap. currently in place, in 2019, up to 20 players, occupying roster slots 1-20, count against a club’s 2019 Salary Budget of $4,240,000. The salaries of players on the Supplemental Roster (slots 21-24) and Reserve Roster (slots 25-30) do not count toward a club’s Salary Budget. The Maximum Salary Budget Charge for a single player is $530,000. [Read more on the rules concerning allocation money]

Through the use of TAM, certain players earn much higher wages. But, due to the fact that TAM’s restrictions make it applicable to only a small portion of a team’s roster, it seems that it might be better for TAM to simply get folded into a higher salary cap.

This would certainly make it easier to track what clubs are actually spending on salaries. Case in point: despite the 2019 season salary cap, the lowest spending team in the league this past year, the Vancouver Whitecaps, spent $8,152,130.00 on salaries. This underscores the fact that despite a salary cap, there are vastly different amounts being spent by clubs on salaries.

TAM is typically used to “buy down” the salary of a player who might otherwise be a designated player. For a club to use TAM to complete the “buy down,” the player’s salary must be over the maximum salary budget charge of $530,000 (in 2019). Some critics argue that TAM can result in a situation where a team overpays to acquire a player because of this rule. TAM is also typically used to acquire a player from abroad, which some say comes at the expense of domestic talent and existing MLS players (though clubs can re-sign existing players using TAM).

In order to actually eliminate TAM, it would likely need to be phased out over a period of time, because of trades and current transactions that have occurred. Teams have both TAM and GAM stockpiled, meaning that it cannot simply disappear. At best, I think they could be phased out over the time of this next CBA. In the meantime, if the parties agree to eliminate TAM and/or GAM, it wil need to be converted into some other form while it gets phased out.

Others who follow MLS very closely and are knowledgeable about the league agree with this approach.

GAM may need to stay, at least for the duration of the next CBA. It is tradeable cap space without any of the restrictions of TAM, meaning that it can act as a kind of currency that clubs can use to acquire players. It also comes into play with expansion continuing, since a club receives GAM if they lose a player during an expansion draft. GAM is also used to give those new teams a pool of money to begin building their rosters.

2. Set A Real Salary Cap

If TAM is eliminated, the logical follow up step would be to raise the salary cap, and in the process, converting it to a hard cap. This gives teams the freedom to spend as they see fit. The amount the salary cap should be raised to would likely be another lengthy discussion, but with a 30 player roster, just for illustration, a cap of $15 million per club seems reasonable. At that roster size, each player on the team could make in theory $500,000, enough to build an extremely strong team. Of course, younger players would earn much less, which would free up money to pay the best players on a squad more. Whatever the salary cap is, whether $15 million or something less, MLS as a league benefits, since the talent level presumably would rise proportionally with those higher wages.

The call to increase spending on players has actually already been expressed by head coaches. After Sporting Kansas City were thoroughly wiped out by CF Monterrey in this year’s Concacaf Champions League, Peter Vermes spoke out:

3. Add A Fourth Designated Player

According to several high-level league and club sources, in the current negotiations, MLS is entertaining proposals to change its designated player (“DP”) system. [It is worth noting though that per the expiring CBA, the league can amend the DP rules outside of the collective bargaining agreement.]

The current rules about designated players is as follows:

Teams are allowed to sign a maximum of three DPs. Regardless of how much teams spend on acquisition costs and salaries for those players, DPs hit the salary budget at a set figure that varies depending on the player’s age. In 2019, DPs age 20 or under hit the budget at $150,000, those between 21-23 years of age hit at $200,000, and those 23 years old and above carry a $530,000 hit. In addition, teams that have three DPs over age 23 have to pay the league $150,000.

No matter how much a team pays a DP, his budget charge will be determined according to the above. Note that the current rules do not restrict what ages a team’s DPs can be, only that if all three are over 23 years of age, that team has to pay for the “luxury” of having three players who are presumably better than the rest of the roster. The word is that the league and its influential product strategy committee are considering a new set of DP rules. The Athletic reports that that the league and its influential product strategy committee are considering a new set of DP rules designed to more strongly encourage the signing of younger players.

Under the new proposal, if none of a team’s three DPs are under 23 years old, the annual spend for one of those players would be capped at a sum of $1 million plus that season’s maximum budget charge. In 2019, that total would have been $1.53 million, or the upper limit for a player who could be bought down using targeted allocation money. If teams have at least one under-23 DP, they would be able to spend any amount on all three of their DPs. 

Instead of putting more centralised planning in the form of restrictions from headquarters on designated players, a better approach might be to first consider whether such new rules are really needed. Why should teams have their autonomy taken from them? Sporting directors and general managers are well-paid executives who want to be able to run their clubs as they see fit. If they want to sign three expensive 30-year-old DPs, they feel they should have the choice to do so. 

The example of Toronto’s 2017 team which featured three DPs all in their prime (Sebastian Giovinco, Jozy Altidore and Michael Bradley) is becoming rare. The trend in MLS is towards younger DPs, anyway. Take Los Angeles Football Club as an example. Last season, LAFC set the all-time regular-season points record with a DP trio of Carlos Vela, Diego Rossi and Brian Rodriguez. Rossi and Rodriguez are 21 and 19, respectively. 

The trend towards signing younger DPs makes sense economically. Those players are the ones with the larger sell-on potential. Transferring these younger DPs while they are in their prime to European clubs is the model set by Atlanta United with Miguel Almirón’s MLS record-smashing transfer to Newcastle United for $27 million, which broke the previous MLS transfer record of $22 million paid by Bayern Munich for 17-year-old Alphonso Davies from the Vancouver Whitecaps.

But why not take the DP rule one step further: allow teams to sign up to four DP’s. With this, there could be a rule that the fourth DP must be under 23. Along with this, using a hypothetical $15 million salary cap, DPs 1 to 3 would have a salary budget charge of $1.5 million, while the 4th DP would come in at a salary budget charge of $500,000. A team that doesn’t have at least one under-23 DP would pay the league $250,000. Thus, with the four DPs, a team would use up $5 million of its $15 million salary cap. That leaves a team $10 million to spend across 26 other players. That is $384,615 per player, which would result in a stronger team.

4. Increase Roster Size

Currently MLS teams can sign up to 30 players. Two of those players (occupying roster slots 29 and 30) have to be Homegrown Players. I would propose keeping that requirement, but increase the roster size. This would help over the course of a season if a team incurs an unusually high number of injuries.

If rosters were increased to a maximum of 32 players, and a team does not need this many, they could be loaned to a USL Championship or USL League One team, or to a club’s affiliates in those leagues. Those who aren’t playing for the first team can simply be loaned down. Also, there would probably need to be a minimum roster size that teams had to comply with. Let’s say minimum roster size is 28 players.

Again, using the hypothetical $15 million salary cap for illustraton, if a team has four DPs, the remaining $10 million would be an average salary of $312,500 per player. Again, there would be variations in income depending on where a player is on the roster.

5. Remove Club Rights into Perpetuity

Right now, MLS clubs somehow continue to own the rights of players that they have declined options on, not signed after they drafted them or who have left the team to go overseas.

I would propose ending this practice. At the bare minimum, if you have declined an option or drafted and not signed a player, it’s logical that player should be free to sign with anyone. When player leaves to play outside of the country, I’m open to clubs keeping their rights, but for a limited time period, not forever.

This offseason’s trade of Julian Gressel from Atlanta United to DC United is a good example that illustrates the issue and why it is a topic in current negotiations between the league and the MLSPA.

It happens to players in MLS each season:

If a player is out-of-contract, a team can make a “bona fide offer” to the player, even one that is less than market value, and maintain that player’s rights in MLS. In other words, under MLS’s rules as currently structured, a player in the league can play out his contract and be a free agent everywhere else in the world — except in the MLS — where he currently plays. Examples include the Chicago Fire still owning Matt Polster’s rights within MLS, or why goalkeeper Tyler Miller could be traded by LAFC to Minnesota United despite him being out-of-contract with LAFC. (Miller signed a new deal with Minnesota.)

Atlanta United general manager Carlos Bocanegra, on a conference call with reporters after the trade was announced, spoke about Gressel’s situation:

“In the end we’re getting a million dollars in allocation for a player that, if we really wanted to, we could have him play on $130,000 this year, extend him a bona fide offer at the end of the year and he can go nowhere else in the league.”

Bocanegra was stating a fact: Atlanta would have been within its legal rights to resort to that course of action.

The intent of the rule

As someone who has experience in the legal profession, when I see a rule that on its surface might not seem to make sense, I often look for the intent of the rule. What were the drafters of such a rule thinking? Here, the fact that a team can continue to own the rights of a player whose contract has expired or whose option was not exercised, can only be to carry out two objectives: (1) To essentially eliminate any leverage the player has in contract negotiations, and (2) to limit competition between teams in a single-entity league, which would of course drive up the price on the player even though the same company, MLS, technically employs the player and is cutting the paycheck.

Relationship to Other Rules

This type of restriction on a player ties directly into another issue at stake: An increase in ‘player movement.’ This is a major point of emphasis for the union in this round of negotiations. In fact, it is an extension of the last round of CBA negotiations, in which the players bargained for the introduction of a highly-restricted form of free agency. [see below] Back in 2015, getting the league to allow any form of free agency was seen as a major win by union leaders; now the goal now will be to expand on those rights.

6. Open Up Free Agency

“Everyone should be able to choose where they want to work, especially once they have a certain level of experience.”

Harry Shipp

Again going back to a central theme of this round of negotiations, and it’s fair to say one of the two biggest issues for the players association, is a loosening of the restricted free agency rules now in effect. Currently, to be a free agent, am out-of-contract player has to be at least 28-years-old and have eight years of MLS experience.

The problem with that should be fairly clear: Nearly everyone who has met that threshold so far is beyond his prime and is likely to be only a role player at best. In fact, under the current rules, only 12 % of the player pool would have been eligible in 2019.

Compared to the leagues with arguably the most successful free agent setups, like the NFL and the NBA, players become free agents somewhere between three and five years into the league.

I propose a compromise where the number of years of MLS experience comes down to four or five years for players out-of-contract or for players who have had their options declined. I’d also do away with the age requirement altogether. I’m confident players would view five years of MLS service as a victory. It would certainly allow players who are still in their prime to benefit from free agency if their clubs cannot reach a new agreement with them.

7. Raise the Minimum Salary

Although listed as one of the ways the new CBA could be improved, the fact is that the minimum salary has been rising, and will surely continue to. Currently, depending on what portion of the roster a player is on, the minimum salary varies. It was $70,250 in 2019 for players occupying roster slots 1-24 and $56,250 for the final six roster slots.

“To be a league of choice, we need to have players choosing to come here, and that means they need to be compensated at an appropriate and fair market value.”

Ethan Finlay

The median household income in the US in 2019 was $63,000. The career of a professional athlete is generally a few years. During those few years, players must devote a lot of time to maintain their skills and be fit. It makes sense to pay more higher than the median household income to encourage an athlete to choose a professional playing career over other types of work. Thus, I would raise the minimum salary to $75,000 and adjust it annually based on the cost of living index.

8. Eliminate Re-entry and Waiver Drafts:

If you’ve looked at the offseason calendar you’ll notice that MLS has stopped calling the offseason player mechanisms by the name of “draft.” They still, however, are in use. I would end the Waiver and Re-Entry Draft, Stage 1 and Stage 2.

For now, I’d maintain the SuperDraft, and revisit its usefulness for the next CBA negotiations. At the least, however, I’d rename it.

Dropping the Waiver and Re-Entry drafts ties into the discussion about teams owning a player’s rights into perpetuity, even on players they release or don’t pick up options on. It stand to reason that if a team does not want a player, he should be free to move to where he is wanted, instead of being selected by another team that he may have no interest in.

9. Increase International Roster Limit To Ten

With a roster of up to 32 players, it would be possible to add to the allowed number of international players. While there is logic to limiting the number of international players in a North American domestic league, there is also the need to be competitive with the top leagues for the best talent.

Currently teams can have eight internationals on their roster (not counting players who have been granted permanent resident alien status (a/k/a “green cards”) who count the same as a domestic player (defined as a citizen of the US or Canada).

I would propose raising that number to 10, while continuing to allow these spots to be considered assets that can be traded.

10. Remove Roster Designations

The current roster format features three roster designations: Senior Roster (spots 1-20), Supplemental Roster (21-24) and Reserve Roster (25-30). It seems the main reason for this is that only spots 1-20 (or as few as 1-18) count against the salary budget of $4,240,000. With the proposal above to raise the budget to $15,000,000 and convert it to a hard salary cap, there would no longer be a need for the roster slot designations. Instead, the issue becomes greatly simplified: a team can have up to 32 players on its roster, and there is a total salary cap of $15,000,000. Per my above recommendation, there would also be a minimum salary of $75,000. It would be up to the teams, not the league office, to decide what a player’s salary would be.

I would continue to not count Homegrown players against the salary cap, in order to encourage teams to sign their youth academy players.

11. Make More Charter Flights Available

In order for MLS to reach the level its owners and players want it to attain, the flight issue has to be resolved. In the ideal world, every flight in the league would be a charter. Not only would such a proposal be met with resistance from owners, there are some shorter distance trips where it’s reasonable for a team to save the cost of a charter flight. I’m thinking of the northeast corridor, Montréal to Toronto, the Cascadia teams, California teams, etc. However, the league spans an entire continent and to get to the next level as well in terms of quality of play, performance and recovery, there needs to be improvement in how the players travel, especially on those long cross-country trips.

“I think eventually every flight in this league should be a charter if you want to be an elite league,” Alejandro Bedoya said.

“We have a ways to go to reach an agreement.” union boss Bob Foose added.

Summary

The alterations mentioned above as noted at the outset, weigh in a little more on the labour side than the management side. That doesn’t mean the MLS owners/investors are wrong to want to maintain some limits on spending and roster rules. In fact, one of the initial reasons MLS was set up as a single entity was to control spending, and prevent the sort of irresponsible spending that doomed the original North American Soccer League in the early 1980s.

Like any negotiation, the current CBA talks require compromise. The ramifications of what is agreed to in this next rendition of the CBA will have a lasting impact on the development of MLS and whether it achieves its goal of being a “league of choice.” To be one of the best leagues in the world, to be a place where players choose to come play, MLS needs to look and feel a whole lot more like those leagues with which it wants to compete.

By Ken Russo

My work in the business of soccer applies skills acquired in law practice with the commercial, communications and team operations side of the sport. Russo Soccer aims to inform, educate and engage in dialogue on the business and sporting side of the world's game.

Um advogado por formação, concentro meu trabalho nos negócios, comunicações e operações de equipes no futebol mundial. | Abogado con fundación avanzada en comunicaciones, enfocado en los negocios del fútbol y las comunicaciones. | Je suis un avocat experimenté dans les affaires de football.

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