There’s never a good time to talk about the complex set of rules, bylaws, and accounting functions that comprise the MLS Roster Rules. But I think about it a lot and write about it occasionally. And since it’s the offseason (effectively), and we’re starting to hear some rumblings about player signings, player departures, quasi-player signings, and shady instagram sleuthings of empty lockers, I thought I might write a series of posts laying out what I have determined to be the “optimal strategies” for building an MLS team within this byzantine roster rules system. After all you’ve got Joe over here scouting South America on Football Manager, Rob identifying trade targets within MLS, and Parker trying to sign players from God knows where. Josh is trying to figure out where Almiron could go, and Haris won’t even let me finish before he’s changing the MLS roster rules on me. I’ve decided this needs to happen now. If you’d like, think of it like a Summer Semester course that you didn’t have time for during the school year. And disregard that it’s winter. This class will likely consist of nerds, bookish types, gamers, indoor kids, and LAFC. Orlando City has enrolled, but they’ve flunked this class three times already, so its unclear how often they’ll show. Nashville SC is apparently going to audit the class, wait-listed for the real thing. It’s MLS Winter Offseason School: Advanced Roster Construction.
Here’s a rough look at the Syllabus, but as you know, these things change. Sometimes class is cancelled because it’s too nice out. Email me at TiotalFootball@Gmail.com if you’d like a different topic covered, and I’ll try to work it in. Here we go:
- Introduction & Framework
- Allocation Money as Increased Budget
- Designated Players and Young DP Savings
- The Option Value of Loans and Subsidized Wages
- Monetizing Allocation Order Ranking
- Differences between GAM and TAM
- International Slots & Investing in Scouting/Analytics
- Limited value of SuperDraft picks
- The real benefit of Homegrown Player Contracts
Purpose: At the end of this class, you’ll be able to articulate optimal strategies for building a successful MLS club by mastering how each significant rule functions and applying a general framework. You’ll be able to make fun of other teams’ bad trades on twitter and feel 50% confident in what you’re saying.
When it makes sense, I will touch on examples of transactions Atlanta United made during the inaugural 2017 season and evaluate them using the framework laid out in these posts.
First Lesson: Overall Framework
Major League Soccer is a league of relative parity compared to other leagues around the world. This is by design as it is a single entity and the parity enforced via a complex set of roster construction rules orbiting mostly around a "salary cap" or "salary budget" depending on how technical you want to be. The broad strokes are first that 20 senior players per team carry with them a "charge" that for most of them equals the wages they are paid by the league as a whole (single entity), second that no single player can have a charge higher than $480K (players who earn more than $480K are only allowed on a roster through the use of various other mechanisms like "Designated Players" and "Allocation money"), and third, that the total "budget charges" on a team cannot exceed $3.8M (2017 amounts). An important fact to note is that Major League Soccer (“the League”), not the individual teams, pays the “salary budget” of every team (the $3.8M plus allocation moneys used). The clubs are only on the hook for the wages paid to designated players in excess of their salary budget charges. This is important because we can think of all non-DP wages as not having an incremental cost to the team for decision making purposes (it’s coming out of the overall MLS operating budget). And this matters because the point of these posts will be to identify (mostly costless) ways to increase an MLS team’s strength relative to the other MLS teams.
As a general rule, I'm going to roll with the idea that wages (not transfer fees) are the better measure of a player's competitive value on the field (a separate question from what is his asset/trade value in a capped or non-capped league). I first read about this concept of looking at wages instead of transfer fees as a predictor of success in Soccernomics, but it’s a basically intuitive concept that on the whole, better players demand better wages in a somewhat efficient market, and so a team with higher wages generally has better players. This of course fails on an individual level all the time, but on the whole it’s a helpful framework. I don't want to get hung up on this point - we're just going to need to accept it for the purposes of this exercise - even though as I Google it, it appears some do take exception to the idea. And of course, teams make mistakes in signings. Regardless, it's helpful to understand how to fit more team wages into the constraints of the MLS Salary Budget given that again, most wages are funded centrally by the league and so with the exception of designated players, maximizing league-funded wages relative to other clubs does not come at an incremental cost to the individual club. Also, salary information is publicly available for MLS players so we have data to play with.
Total Wages & League Parity
So I started by saying that there's relative parity in MLS, and that all the teams have this "salary cap" thing of $3.8M, right? Yea, sort of. Here are the actual player wages paid by each MLS team in 2017 courtesy of Steve Fenn's excellent Tableau Viz:
These are the total team wages (players 1 - 29), not just the Senior players (1-20) whose charges must sum to the $3.8M budget cap. But the point should be clear, that while there is a salary budget/cap in place, teams pay vastly different total wage bills. Most of this variance is tied up in the optional signing of designated players whose wages can be as high as the individual owners are willing to fund them with the team taking only the league-funded $480K charge per DP against the $3.8M budget. You might notice that Giovinco, Altidore, and Bradley make more combined than every MLS team. This is important and we’ll get to it in a later lesson, but it’s distracting for our purposes today. What happens if we exclude DPs? While I'm working with a slightly different data source, here is a graph I put together of just the non-DP wages by team in 2017 (the league-funded wages):
What you can see is that on a total dollar measure, the disparity between the teams is greatly reduced once you take away the excess wages supplied by individual owners directly for the designated players. On a low to high basis, we go from a range of $5M-$23M including DPs to $4M-$7M when only including their budget charges ($480K each, or $200K for a young DP). But an important reality is that once you take away all excess owner funding for designated players (a max of 3) and you're just staring at the allocation of central league-funded wages (the salary budget), there’s general parity but there's still a not insignificant amount of room to maneuver if your goal is to maximize your team's league funded wages relative to the rest of the league (as a proxy for maximizing your team's talent relative to the rest of the league).
This is the framework we’ll use, and throughout the rest of the course, we’ll talk through the various ways to maximize a team’s wages relative to the rest of the league. One very important way to maximize your team’s wages relative to other teams is to efficiently uses Targeted Allocation Money (TAM). This is the topic we’re going to discuss next week. It is one of the most critical pieces to the puzzle, and it gets more and more important every year as the league approves new rounds of TAM.
If you want to read ahead of the rest of the class, I’ve written the basic text over at ATLUTDinsight.wordpress.com, but it may be more fun to take our time with it and go week by week through the various topics. Each week, email me or tweet at me @TiotalFootball with any questions and I’ll see if I can cover them the following week before diving into the next post. And call me out if you disagree or think I’m misinterpreting something. Thanks for reading.