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Inter Miami Hoy

Inter Miami slapped with sanctions by MLS

MLS punishment includes heavy fines that will impact the team’s next two seasons

FORT LAUDERDALE, Fla. (13-July-2021)

Just how bad was Inter Miami’s inaugural season in 2020? Well, they couldn’t even win after cheating. In the biggest rules infraction to be made public involving Major League Soccer, Inter Miami and its managing owner Jorge Mas, were slapped with more than $2 million USD in fines for roster violations.

“We need to abide by the rules, period, end of story. That’s etched in stone. I will always push the envelope, but within the envelope.

Jorge Mas

In June, weeks after the fines were announced, Mas spoke with the Miami Herald about the incident. (original story link below) According to him, the investigation began when the team, during its offseason front-office house-cleaning, self-reported a compliance issue to MLS headquarters concerning midfielder Blaise Matuidi’s contract.

As to how the rules violation occurred, Mas attempted to play off the problem as being one where the ownership group, including himself, were “not experts” with regard to the intricacies of the league’s very complex salary structure. Mas further elaborated that he places the blame squarely on McDonough, who was Inter Miami’s first hire based on his successful roles in the building of expansion teams in Orlando and Atlanta. (McDonough was first hired to be Inter Miami’s sporting director but later assumed the role of chief operating officer after Jurgen Mainka’s departure.) McDonough was terminated by Inter Miami on December 9, 2020.

Mas said he had entrusted all player negotiations to McDonough. (McDonough subsequently rejoined Atlanta United but has since been suspended from all MLS activities through the 2022 season for his part in the Inter Miami’s blatant disregard of MLS roster rules.) Inter Miami replaced him with Chris Henderson from the Seattle Sounders during the offseason. Mas said the team has put undisclosed legal and financial officers in place to ensure roster compliance going forward.

“I would never condone violation of any rules, whether I agree with some rules or not or how I think the league should evolve.”

Jorge Mas

“We need to abide by the rules, period, end of story. That’s etched in stone. I will always push the envelope, but within the envelope.

The Inter Miami managing owner did his best to paint a forward-looking picture. “We were new owners of an expansion team during COVID. Paul had extreme authority, maybe more than any sporting director in the league. Should there have been more checks and balances? Yes. Now, we have finance and compliance and legal people involved in all signings. That’s the past. It’s been addressed. We’re moving forward. We’re going to continue being extremely ambitious in what we do. This will not deviate us from the path to what we want to accomplish.”

After its own internal investigation, MLS imposed heavy fines on Inter Miami. The team was fined a league-record $2 million and Mas, as managing owner, was personally held accountable and fined an additional $250,000.

MLS announces Inter Miami sanctions for a slew of rule violations:
■ Club fined $2 million
■ Jorge Mas fined $250k ■ Loss of $2,271,250 in allocation money for ’22 & ’23 seasons
■ Paul McDonough suspended thru 2022 season
■ Matuidi and Reyes should’ve been DPs
■ Budget hits underreported for Figal, LGP, Carranza

Originally tweeted by Paul Tenorio (@PaulTenorio) on 28/05/2021.

While Mas cooperated with MLS officials, he was fined nonetheless because the league said he failed to disclose his knowledge of the violation pertaining to midfielder Blaise Matuidi’s contract at the appropriate time, as required under league rules.

The more stringent part of the MLS fine is a reduction in allocation funds. Internacional will have a reduction of $2,271,250 in allocation money (funds handed out by MLS to its teams to assist them in strengthening rosters) for the 2022 and 2023 seasons.

Breaking Down The Cheating In More Detail

As noted above, MLS suspended Paul McDonough from all MLS-related activities through the end of the 2022 season.

He was found to have played a role in Inter Miami’s violation of MLS roster rules, for not ensuring roster compliance with the signing of five players, including former French World Cup winner Blaise Matuidi whom Inter Miami acquired on a free transfer from Juventus, and young Colombian defender Andres Reyes from Atlético Nacional. Both players should have been classified as “Designated Players” within the league’s complex salary structure. By underreporting their compensation packages, they were able to not be counted as DPs preserving the Fort Lauderdale team’s three DP slots, the first of which was Matías Pellegrini. The team later added Rodolfo Pizarro and Gonzalo Higuaín as DPs.

Effectively, had the salary details been fully-disclosed, it would have meant that Inter Miami had five Designated Players during the 2020 season, two above the league limit.

Mas said the plan all along was for Matías Pellegrini to be classified as a “Young DP” but his contract was “too expensive” for that designation. Pellegrini was signed on July 26, 2019 from Estudiantes de La Plata (ARG) for a transfer fee of approximately $9.7 million (€8.18m); he was 19 at the time of the transfer. According to Mas, “We missed, Paul missed on that, so it put us in a major quandary,” According to MLS roster rules, a DP’s salary budget charge is basesd on the player’s age; thus Pellegrini, who turned 20 on March 11, 2020, would have carried a salary budget charge of $150,000.

What the MLS Roster Rules Say:

Classifying a player as a “Young Designated Player” doesn’t mean a team gets to have more than three DPs. A Young DP simply means that the player’s salary budget charge is lower than what it would be for a regular DP:

Young Designated Player

A Designated Player who is 23 years old (or younger than the age of 23) during the League Year (the age of the player is determined by year – not date – of birth) will carry the following Young Designated Player Salary Budget Charge:

  • Ages 20 and younger: $150,000
  • Ages 21-23: $200,000

If such a Designated Player joins the club after the opening of the Secondary Transfer Window, he will carry the Mid-Season Young Designated Player Salary Budget Charge of $150,000 if he is a Young Designated Player and $306,250 if he is not a Young Designated Player.

Clubs may “buy down” the Salary Budget Charge of a Designated Player with General Allocation Money. The reduced budget charge may not be less than $150,000.

Each club will be allotted two Designated Player roster slots. Clubs with two Designated Players may add a third Designated Player by paying $150,000 to the League, which shall be split among clubs with two or fewer occupied Designated Player slots for use as General Allocation Money in the following MLS Season. Clubs must pay the $150,000 fee every year in which a third Designated Player slot is occupied on the club’s roster.

If a club uses the third Designated Player slot to sign a Young Designated Player, then the club will not be obligated to pay the $150,000 charge.

Designated Player slots are not tradable.

Further, the team was penalized for having undisclosed compensation agreements paid to agents involved in the signings of Argentine players Leandro Gonzalez Pirez, Nico Figal and Julián Carranza. The league said none of the players were aware that rules were being violated or that their salaries were underreported.

The explanations offered to the press underscores the importance of having a lawyer versed in the MLS roster rules as part of the team working on player contracts.

“We as an ownership group were told we could bring Matuidi in as a TAM [Targeted Allocation Money] player for 2020 and then we would deal with his designation in 2021-22 as a DP moving forward, and we said, ‘OK, perfect, we approved the spend on his package, that was that,” Mas said. “None of the owners are experts on MLS rules, so that’s why we brought Paul on board to guide us through this.”

For Matiudi to have been brought in as a TAM player, his salary would have needed to be not greater than one million above the maxium salary budget charge given to a player. In 2020 that figure was $612,500, meaning that Matiudi’s salary could not exceed $1,612,500 if the team wanted to use TAM to buy down his salary. Otherwise, he would need to be classisifed as a DP.

Relevant MLS roster rules:

Buy-Down

Allocation Money can be used to “buy-down” a player’s Salary Budget Charge as part of managing a club’s roster, including buying down a Salary Budget Charge below the League maximum of $612,500. For example, a club may buy down a player earning $700,000 to a Salary Budget Charge of $500,000 by using $200,000 of General Allocation Money.

General Allocation Money can also be applied in the following circumstances:

  • To sign players new to MLS (that is, a player who did not play in MLS during the previous season).
  • To re-sign an existing MLS player.
  • To off-set acquisition costs (loan and transfer fees).
  • In connection with the extension of a player’s contract for the second year provided the player was new to MLS in the immediately prior year.
  • To reduce the Salary Budget Charge of a Designated Player to a limit of $150,000.
  • To reduce the Salary Budget Charge of a Player whose Salary Budget Charge exceeds the Maximum Salary Budget Charge to a limit of $150,000.
Salary Parameters

A player must earn more than 2020 Maximum Salary Budget Charge ($612,500) to qualify for Targeted Allocation Money. The compensation ceiling for such eligible players is set at $1,612,500 in 2020.

McDonough had a reputation for building expansion teams and being a guru in the MLS salary structure. MLS, as a single-entity limited liability company league, has complicated salary rules to ensure no owner can load the roster with expensive megastars. In 2020, the year of the violations, each MLS team had a salary budget (cap) of $4,900,000 million; the maximum salary was $612,500 with three exceptions for “Designated Players” whose compensation can exceed that amount. There were also slots for “Young DPs” and “Homegrown Players,” whose salaries count less toward the team salary cap. The league also offered each team up to $1.9 million in General Allocation Money (GAM) and up to $2.8 million in Targeted Allocation Money (TAM) — two mechanisms teams use to buy down salary budget charges and bring in expensive players without taking DP spots.

Inter Miami owner Jorge Mas opens up on MLS sanctions, Messi rumors, Miami Freedom Park, Michelle Kaufman, Miami Herald, June 9, 2021 01:26 PM

By Ken Russo

While my background is in the legal industry, the skills acquired and fine-tuned in law practice are now applied to focus on the sport of football. Russo Soccer aims to inform, educate and engage on news and relevant issues in the 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.