No, We Can’t Buy Down Jesús Medina

And other absurd rules that impacted NYCFC’s offseason.

The French writer Albert Camus, famously a fan of soccer, once said, “The absurd is the essential concept and the first truth.” He would have loved MLS. Our league has some of the most complicated roster rules in sports. They’re bewildering, incomprehensible nightmares that only a lawyer or D&D dungeon master could love—and that’s just the rules that are made public. The real headbanger is that MLS reserves the right to modify, create exceptions, or rescind these rules at any time.

But to understand some of the moves NYCFC has made this offseason, you have to hold your nose and dive in.

Can the club buy down Jesús Medina’s Designated Player status?

The short answer is no, we won’t be getting any more mega-signings this season.

The basics of the 2018 Designated Player rule.

Most fans know that each team, unless they’re the LA Galaxy, is allowed three Designated Players. What makes DPs special is that teams can spend an unlimited amount of money on their salary and transfer fees without getting charged more than 12.5% of the “salary budget”—MLS language for the salary cap, which is set by the CBA at $4.24 million this season. A DP who costs $700,000 and one who costs $7 million will both count at most $530,000 against the cap.

It’s important to note here that a player’s “budget charge”—the number that determines his DP status—is calculated by “averaging all amounts payable over the guaranteed contract term.” In other words, if the total salary, bonuses, and transfer fee averaged over the length of his contract top $530k, he’s a DP by default.

Jesús Medina’s four-year contract, signed in 2018, came with a $4 million transfer fee, according to an executive from his former club. We know from the MLS Players Association that Medina earned $770,833 last season. If his contract comes with yearly pay increases, that will increase his budget charge, as would any option years that don’t count toward the average. But assuming the transfer fee claim was accurate, Medina’s budget charge in 2019 is at least $1.7 million, making him a DP unless NYCFC can buy down his budget charge using allocation money.

At its essence, allocation is league-given Monopoly money that can be used for a multitude of roster purposes, including the ability to bring a player under the maximum budget charge and free up his DP slot to add another star. There are two types of allocation, General Allocation Money (GAM) and Targeted Allocation Money (TAM). It’s not practical to buy expensive DPs down with GAM, because teams are only issued a base allotment of $200,000 each season and it has a lot of other uses. NYCFC did spend GAM to buy down Mix Diskerud, and that turned out to be a mistake that hamstrung roster moves for years.

TAM was created to allow teams to sign players whose cap hit is more than the maximum budget charge of $530k but not more than $1.53 million. Since Medina’s budget charge is at least $1.7 million, higher than the TAM limit, NYCFC can’t buy down his DP status in 2019. If his contract includes an option year in 2020 or 2021, he would be TAM eligible then, since the transfer fee would no longer count toward his budget charge.

But there would still be other costs to consider. Medina counts as a special kind of DP: a Young DP. Instead of the max budget charge, DPs between 21 and 23 years old only count $200,000 toward the salary cap. If NYCFC decides to buy down Medina in 2020 or 2021, they would also be giving up at least $330,000 a year in cap space.

This could all change next season depending on the outcome of the new CBA negotiations. The moral of this story, though, is that Medina will be a Designated Player in 2019, and there is no chance that he can be bought down—unless, of course, MLS announces some type of rule change. Which they would never do … right?

Why all the young Americans?

One of the big trends of this offseason for NYCFC, especially at the bottom of the roster, has been a shift towards young American players. Gone are the international players David Villa, Eloi Amagat, Yangel Herrera, Jo Inge Berget, and Cedric Hountondji. Domestic veterans who were not really cracking the starting lineup, like Tommy McNamara, Rodney Wallace, Andre Rawls, and Saad Abdul-Salaam, were jettisoned as well.

They were replaced almost entirely by younger domestic players: Tony Rocha, Keaton Parks, Justin Haak, Juan Pablo Torres, and Luis Barraza. In a break with NYCFC’s usual practice, Alexandru Mitriţă, the new Romanian DP, is the only new international signed so far this offseason.

Part of this is the natural development of the academy, which helps the club take advantage of homegrown player rules. Starting with James Sands in 2017, and more recently Joe Scally and Justin Haak, our academy has finally begun to produce talent good enough to be signed to the first team as homegrowns. This matters because only the first 20 roster spots—the Senior Roster—count towards a team’s salary budget. Homegrown players earning less than around $200k can be signed to the Supplemental (21-24) and Reserve (25-30) rosters, creating a load of salary cap flexibility.

An estimate of NYCFC’s roster situation shows the value of homegrowns and other domestic players.

Although the other new Americans, Rocha, Parks, Torres, and Barraza, do not come with homegrown benefits, the MLS economy in the TAM era has increased the value of domestic players generally. By design, TAM is mostly used to sign quality international players that the American system is not quite producing on a big enough scale. In the last two years NYCFC, leveraging CFG’s scouting network, has used TAM to acquire or re-sign the squad’s core: Alexander Ring, Alexander Callens, Ronald Matarrita, Ebenezer Ofori, Anton Tinnerholm, and Ismael Tajouri-Shradi.

The consequence of the league-wide international signing frenzy is an increase in the value of international roster slots. Whereas in the past you could easily pick up an international slot for $50–75k in allocation money, this January we’ve seen some monster trades: Montreal picking up a slot from Columbus for $175k GAM; Chicago getting a slot from Minnesota for $125k GAM and $75k TAM. The TAM-induced demand for international players and the inflationary pressure of introducing $1.2 million in tradable assets into MLS’s restricted economy are driving up prices.

As a result, there’s a tremendous value in adding a player like Parks or Rocha to the roster, since a comparable international replacement could cost nearly $200k more if you also need to purchase a international roster spot.

Are there any other weird single entity things that could get NYCFC some GAM?

Why yes, yes there are.

MLS has a single-entity business structure. This means that instead of the traditional model with private ownership of individual teams, all teams are owned by the league, and each “owner” is an investor-operator that owns shares in the league and has an exclusive license to operate their franchise. As a consequence, all player contracts are actually owned by MLS instead of their teams.

In the 2010 case American Needle v. NFL, the Supreme Court firmly rejected the NFL’s argument that their organization was also a single entity. Justice John Paul Stevens wrote for the majority that the NFL could not be a single entity because the “teams compete with one another, not only on the playing field, but to attract fans, for gate receipts and for contracts with managerial and playing personnel.” To avoid a similar judgement, MLS uses perplexing rules to prevent the appearance that teams are competing for players.

One of these rules is Discovery Rights. Each team in MLS can submit to the league up to seven unsigned players on a “discovery list,” which grants them the first shot at signing those players. If an MLS club wants to sign a player on another team’s discovery list, they have to trade for the player’s rights.

Some 2018 rules regarding discovery lists.

So when NYCFC acquired $150k in GAM from Vancouver for the rights to first refusal for the Brazilian winger Lucas Venuto, it told us something interesting. To prevent teams from squatting on players’ rights, the league imposes a $50k allocation cap on discovery right trades unless the rights holder had made a legitimate attempt to sign the player. The fact that NYCFC was able to get more means that the club was interested enough in Venuto, Tajouri-Shradi’s former teammate at Austria Wien, to actually offer him a contract.

A similar rights-swapping situation can arise for out-of-contract players who do not qualify for free agency. To be eligible for free agency, a player must be at least 28 years old with eight years of MLS service, so Saad Abdul-Salaam, who is only 27 years old with four years of MLS service, did not qualify when his NYCFC contract ran out. Although Abdul-Salaam eventually left New York City, the club was able to retain his first refusal rights by offering him a bona fide contract. The upshot is that NYCFC could potentially be in for another GAM payday if Abdul-Salaam, who’s currently on trial with Seattle, is offered a contract by another MLS team.

Too bad that GAM still can’t buy down Medina. ❧

Image: Allan Grant, Destination Moon