MLS Adds Second Designated Player Slot Per Club

MLS News Release

NEW YORK (April 1, 2010) – The opportunities have doubled for Major League Soccer’s clubs to pay select star players above their club salary budgets. All 16 MLS clubs now have the opportunity to sign at least two Designated Players.

The Designated Player Rule is a mechanism that in 2007 began allowing an individual club to pay one player any amount above a fixed salary budget charge. The club salary budgets are an expense shared by all MLS owners.

Under its new parameters, the Designated Player Rule also gives clubs the option of “purchasing” a third Designated Player slot for $250,000 that will be dispersed in the form of allocation money to all clubs that do not have three Designated Players.

Designated Player slots may be used to sign and retain existing MLS players, but they are no longer tradeable.

“Expanding the Designated Player Rule is another example of MLS’s commitment to providing top-level soccer for our fans,” MLS EVP of Player Relations and Competition Todd Durbin said.

“After three seasons, we have seen that the Designated Player Rule improves the quality of play, creates intrigue and discussion, and enhances our clubs’ distinct on-field identities. We will continue to see varied approaches from our clubs in assembling their rosters, and these changes will give them increased flexibility.”

A club’s salary budget will be charged $335,000 for its first Designated Player under contract, $335,000 for its second Designated Player under contract, and $335,000 if it signs a third Designated Player. If a Designated Player joins a club’s roster in the middle of the season, that club’s salary budget for the year will be charged $167,500.

The previous budget charge for a club’s first Designated Player, $415,000, accounted for approximately 18 percent of that club’s salary budget. The current rules reduce that budget charge to approximately 13 percent of a team’s salary budget.

Additionally, clubs have the option of “buying down” the budget charge of a designated player with allocation money. The reduced charge may not be less than $150,000.

Allocation money are funds, separate from the club salary budgets, provided by the League based upon their finish in the previous season, fees collected for the transfer of a player abroad, expansion, or exceptional circumstances.

Allocation money may be used to reduce the portion of a player’s compensation that counts against a club’s salary budget in connection with signing players new to MLS, or re-signing existing MLS players at the end of their contracts.

In the event that an MLS club transfers a Designated Player under contract to a club in another country, that MLS club will recoup the amount it has spent on that Designated Player before any additional transfer revenue is shared with the League.

These changes to the Designated Player rule are effective immediately. The Primary Registration Window—in which MLS clubs can conduct transfers to acquire players under contract in leagues of other countries—concludes April 15. The Secondary Registration Window opens July 15 and closes August 14, 2010.

Registration windows always apply to the country of destination in a transfer. Players out of contract may be signed at any time.