There’s concern that changes could lead to a less egalitarian MLS system, where teams become “haves’’ and “have-nots’’ in spending and performance much like Major League Baseball in prior decades.
Inside Sports Business
There hasn’t been much Sounders talk locally this preseason, but that’s about to change in a big year for them on and off the pitch.
The lack of local buzz is primarily due to the team’s entire training camp being conducted in warmer climates as they ready for CONCACAF Champions League play next week in El Salvador. Training finally resumes in Tukwila this week for a squad that’s won all but one preseason match ahead of Thursday’s exhibition finale in Sacramento.
But off the field, the impactful games began a while ago as Major League Soccer enters a new financial realm, throwing around money previously unseen beyond two or three elite players every team carries. There’s concern the changes could lead to a less egalitarian MLS system, where teams become “haves’’ and “have-nots’’ in spending and performance much like Major League Baseball in prior decades.
While recent MLB rule changes have lessened the impact of spending to a degree and made it easier for smaller market clubs to contend for the playoffs, MLS appears headed in a different direction as its quest for growth continues.
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Sure, playoff upsets in one-off games and short series will remain. But we might soon see the same big-spending teams topping the regular-season standings year after year and earning the status of perennial playoff favorites.
That’s already happened with defending MLS champion Toronto FC, which outspent the Sounders by a 2-to-1 margin in 2016 and 2017 and earned homefield MLS Cup advantage over them both times.
Of greater concern is the number of additional MLS teams poised to follow suit and widen the payroll gap thanks to new Targeted Allocation Money (TAM) spending rules. Right before the Sounders lost the MLS Cup final in December, league commissioner Don Garber announced TAM changes that could see up to $2.8 million more spent by clubs on midrange players each of the next two seasons.
“The Designated Player rule was to increase the top half of the roster,’’ Garber told those of us attending his annual state-of-the-league address. He added, “today I think it’s really about continued recognition that the next stage in our evolution is we need to drive value and quality in the middle of the roster and specifically at a certain level of compensation.”
The official MLS “maximum’’ salary for any one player is $504,375. But there are exceptions, like the aforementioned Designated Player (DP) money allowing unlimited funds for up to three players on each team.
The Sounders pay DP money to Clint Dempsey, Nicolas Lodeiro and Osvaldo Alonso.
Then, right in the roster “middle’’ that Garber describes is another exception and possibly the biggest key to future MLS success — TAM funding. A major criticism of the defunct North American Soccer League was teams overspending on a few name players while rounding out the roster with subpar talent.
In contrast, MLS has increasingly upped its TAM spending to encourage talented midroster signings.
Last year, teams were each allocated $1.2 million by the league to spend on TAM players with salaries falling between the regular maximum and going as high as $1 million.
This season, the maximum any TAM player can earn has increased to $1.5 million. And teams will have the additional $2.8 million to spend — as long as it comes out of their own pocket — in both 2018 and 2019 alongside the $1.2 million the league provides.
Big-money teams are just itching to spend more and buy additional on-field success. The question is whether teams outside major markets will also choose to maximize their increased spending limits.
Toronto FC last season spent more on DPs Sebastián Giovinco, Michael Bradley and Jozy Altidore than every other team did on its entire roster. Giovinco alone earned more than the payrolls of half the league’s teams, while Toronto TAM player Victor Vazquez made more than the DPs on several squads.
The Sounders have added three TAM players since last July — signing Dutch right back Kelvin Leerdam and Spanish midfielder Victor Rodriguez for the 2017 stretch run. Last month, they inked Norwegian midfielder Magnus Wolff Eikrem, who’s already stood out in preseason play.
We’ll eventually know whether that’s enough.
The Sounders entered 2017 with a $10.4 million payroll nearly identical to the prior year, yet fell from No. 5 to No. 7 in league spending. Top tier teams are all spending more as TAM limits keep increasing and eventually, you’d expect the talent disparity to become more pronounced — as it already is between Toronto and most of the league.
A team to watch will be Atlanta United FC, the Arthur Blank-owned expansion franchise that made the playoffs last year after spending nearly as much as the Sounders. Now entering its second year, Atlanta has been among the biggest offseason spenders with designs on challenging Toronto FC for Eastern Conference and MLS supremacy.
For years, the Sounders parlayed huge CenturyLink Field crowds into larger revenues than most teams. But Atlanta drew record crowds of its own last year, while Toronto also significantly boosted revenue. Toronto, New York City FC and Chicago have also shown a willingness to spend a higher percentage of revenue on player payroll than the Sounders have.
All except Atlanta beat the Sounders head-to-head last season — the Atlanta game was a tie — and all finished with better records.
So, if you’re the Sounders, you’ll have to hope your large crowds keep showing up and likely be prepared to spend a bigger chunk of that revenue down the road. At this rate, it’s going to cost increasingly more to keep up talent-wise with elite franchises threatening to permanently separate from the pack.