Designated Player Strategies - A Look at DPs Around the League

On July 15th the summer transfer window for MLS officially opens. Like many of you I’ve been watching rumors of possible and not-so-possible designated players (DPs) like Djibril Cisse and Diego Forlán. It’s also made me think about DPs around the league and which strategies for using DPs have been successful (and which haven’t).

The first thing that comes to mind when talking about DPs is the big name, big budget stars like David Beckham, Landon Donovan, Thierry Henry and Rafa Marquez. However, these big names are quite misleading. The majority of DPs makes much more modest salaries (by international soccer standards) and didn’t come to MLS with big names. They have also been plenty of big busts.   

Every team wants their designated player to be the next Landon Donovan. The truth is that there is only one Landon Donovan and he plays for the LA Galaxy. After him there are a long line of successful, partially successful and flat-out bombs that have carried the burden of the ‘designated player’ label.

Despite the proliferation of designated players in the league there really hasn’t been much attempt to identify the strategies behind team’s use of designated players. So, I’ve decided to fill in the gap a bit with my own thoughts in a series of posts on the subject.  I’ll go over the origin of the designated player rule and how the current crop of designated players are performing against their salaries.

The Designated Player Rule

The designated player rule – often referred to as the Beckham rule – was created in 2006 with the express intent of allowing the LA Galaxy go outside the strict salary cap of the league to sign David Beckham. Under the rule, only $400,000 in annual salary was paid by the league and charged against the salary cap. The rest was covered by the LA Galaxy and their owners the Anschutz Entertainment Group (AEG).  

Prior to Beckham’s arrival there were already 3 players in the league officially making over $400,000. These three would be grandfathered in as DPs although only Landon Donovan would stay with the league as a DP. Donovan was grandfathered into the system which allowed the LA Galaxy to have two DPs on their roster often leading to charges of favoritism.

Eventually, the league would change the roster rules to allow teams to have multiple DPS. Currently, each team is allowed two Designated Player spots which they may not trade. Teams can pay a $250,000 "luxury tax" for the right to sign a third Designated Player. The MLS pays for the first $335,000 of a designated player’s salary which counts against the salary cap. The remaining salary is paid by the team. Transfer fees are also paid by the team and are spread over the life of the contract. The salary cap value of Designated Players can also be reduced using allocation money.

Also, teams can recoup some of their investment when players are sold to teams abroad. Teams receive 2/3rds of a transfer fee (up to $650,000 in allocation money, rest for other soccer needs) when a player is transferred abroad. Allocation money can be used to reduce the cap hit of a player allowing teams to spend beyond the salary cap. It is also valuable for trades inside the league.

Current Designated Players

Currently there are 16 designated players plying their trade in MLS. In the table below I’ve taken their production so far this season and plotted against salary data released by the MLS Players Union. All salary data is guaranteed compensation. The other data comes directly off the MLS website and is current as of the evening of June 15th. The four players in italics are known to have had large transfer fees that push them over the DP limit and will skew the salary/minutes calculations. Omar Bravo presents a bit of a quandary. He's been labeled a DP yet his salary is way below DP levels. There's been no news of a transfer fee for his services.

So, what to make of all this? The first thing that pops up when looking at the table is the wide variety of designated players. Only six players really fit the media mold of the highly paid DP. Those six make over $1 million and all are but one are in their 30s. As you can see from the table the cost per minute to have them on the field is extremely high so it hurts quite a bit when they miss time due to injuries, national team duties and royal weddings. Things that are more common for an aging superstar. Only Landon Donovan really has the potential to net a significant transfer fee should he move on from the LA Galaxy. The rest are sunk costs.

The other, larger group of players are 'budget conscious' DPs. These six are veterans with plenty of experience, but don't command the high wages of the premium star. Many of them are players that have had their salary raised to DP levels due to their performance on the field. The track record for these 'budget conscious' players is mixed with some providing a real boost on the field while others have been flops. In the next article in the series I'll look at previous DPs and show that these 'budget conscious' DPs have made up the majority of the DPs who have cycled through the league.

Lastly, we have a relatively new trend with younger DPs coming into the league. Seattle has really been a leader in this trend with the signing of Fredy Montero and Alvaro Fernandez. The rest of the league is following in Seattle's footsteps with the signing of young DPs like Fabian Castillo and Diego Chara. The hope is that the team can benefit from the services of these players on the field while still capturing back some of the transfer fee in allocation dollars later when the players move onto to richer leagues in Europe.