Fredy Montero is an example of a relatively new breed of Designated Players, ones who require transfer fees and are still near the beginning of their careers.
This weekend the international transfer window closed and promptly thereafter the league came out with new rules for younger designated players (DPs). The closing of the window means it's unlikely there will be any new DPs entering the league and we can take a look at how teams around the league are using their DP slots. The rule change gives a good springboard for analyzing future strategies for teams around the league.
The rule change incentivizes teams to use their DP slots on younger players currently playing abroad. Next year only $150,000 of the salary and transfer fees paid for players 20 years old or younger who come to the league will count toward the salary cap. The cap hit will only be $200,000 for players between the ages of 21-23 while older DPs will continue to have $335,000 of their salary and transfer fees count toward the salary cap. Currently, the salary cap is $2,675,000. You can read more about the DP rule and current DPs here and here.
Prior to the Sounders joining the league there were very few teams willing to pay significant transfer fees for younger players. The Sounders were one of the leaders in paying significant transfer fees for promising young players like Fredy Montero and Alvaro Fernandez. Other teams are following the trend with signings of young, pre-peak DP players like Fabian Castillo, Diego Chara and Mustapha Jarju.
The rule change will be a significant benefit for the Sounders and other teams that favor younger, less well-known soccer players for their designated player spots. Other teams that look ready to take advantage of the rule change include FC Dallas, the Portland Timbers and the Vancouver Whitecaps. Other teams, mostly the elite of MLS 1.0, have relied on aging super-stars and inexpensive veterans for their DPs and will need to change their strategies to take advantage of the new rules for DPs. Teams that fall into this category include the Los Angeles Galaxy, the New York Red Bulls, Toronto FC, DC United and the Chicago Fire.
However, the biggest impact might well be on the smaller market teams that have until recently used their DP spots sparingly. These teams have focused on building balanced rosters and have only recently started to use the DP slot to hold onto important talent. The new rule allows them to keep more of their balanced rosters by reducing the cap hit of the transfer fee. Second, if the player is successful, they can sell him on to Europe and receive a hefty transfer fee. As an added bonus, the team keeps two-thirds of the transfer fee and up to $650,000 of that transfer fee is available as allocation dollars to help them build future rosters.
After the jump I break down DPs into a few different categories with some examples. I’ll follow-up in the next few days with a post that analyzes ten of the most interesting teams in the league and their DP strategies.
The Rising Star (Europe Here I Come)
Previous DPs: Luis Angel Landin
Current DPs: Milton Caraglio, Fabian Castillo, Diego Chara, Alvaro Fernandez and Mustafa Jarju
This is the new and growing category of DPs and one that is likely to see even more growth with the latest changes in the DP rules. These are pre-peak players coming into the league to learn, grow and eventually move onto more competitive leagues in Europe. The younger the player, the less likely they are to come into the league and make an immediate impact. The real goal is for the player to show continual growth and have a high impact by the second or third year of the contract. If all goes well, the player will move on to a better league and the team will recoup their investment through a hefty transfer fee. Sometimes, as in the case of Luis Angel Landin and the Houston Dynamo, the whole thing falls apart and the entire investment is lost.
The changes in the roster rules have made it much easier to bring in young talent. Teams are more willing to gamble on younger talent now that they have three DP slots and expanded rosters for younger players. With the new rules, teams can get the most cap space over a three year contract by signing players 20 years of age or younger. This probably means more project-type players like Fabian Castillo and fewer DPs in the 24-25 age range like Alvaro Fernandez.
The Superstar (The Standard by Which Others Are Judged and Found Wanting)
Previous DPs: Nery Castillo
Current DPs: Landon Donovan and Julian de Guzman
This is a category created for one man and no, that man is not David Beckham. The sole successful member of this club is Landon Donovan. This category, in short, is what every fan wants and only one team has been able to get. Other teams have tried, and failed, most noticeably with the signings of Julian de Guzman and Nery Castillo. The Sounders can add their name to the roster with the apparent attempt to sign Prince Tagoe.
The Superstar is a player in their peak, making a high impact on the field and earning more $1 million annually. Donovan has recorded either 10 goals or 10 assists every year he’s been a DP. He’s been the face of MLS and a branding icon for the LA Galaxy. Donovan’s successful loan at Everton last year could have translated into a considerable transfer fee in the off-season if the Galaxy and MLS had been willing to part with their star.
There are two other DPs who were brought to MLS in their peak years on similarly high salaries and expectations. Julian de Guzman is a good player, he was never suited to be the superstar on a team, and is widely considered a DP failure in Toronto. The Chicago Fire tried something similar with striker Nery Castillo and that ill-fated signings is widely considered one of the worst in the history of MLS.
The Aging Superstar (Look to the Stores, not to the Field to Judge These Icons)
Previous DPs: Cuauhtemoc Blanco, Marcelo Daniel Gallardo, Fredrick Lungberg, Miguel 'Mista' Martinez, and Claudio Reyna
Current DPs: Juan Pablo Angel, David Beckham, Thierry Henry, Robbie Keane and Rafael Márquez
The Aging Superstar category is for players with an established record of playing high-level soccer in some of the best leagues in Europe or South America. They’re big names earning big paychecks (generally $1 million or more per year) and generally expected to contribute as much or more off the field as they do on the field.
The Aging Superstar has proven themselves in some of the best leagues in the world and can usually contribute at a high level. However, their contributions on the field are rarely worth the cap-room and hefty price-tag. The real advantage of the Aging Superstar is driving people to games and to stores to support the team. A good chunk of these players were brought in by teams interested in courting a specific demographic such as Mexican-Americans or fans of the English Premier League.
Of course, that’s assuming they are on the field. The Aging Superstar is often MIA due to persistent injuries, loan demands, international call-ups, royal weddings and other assorted distractions. Claudio Reyna is a good example of the problems of brining in an injury prone super-star. During the two years he played as a DP for the New York Red Bulls he only played 27 games. DC United and Toronto also saw limited return from their investment in Marcelo Gallardo and Mista due to injuries. Lastly, teams can’t expect much in the way of allocation return from these players.
The Budget DP (A Tale of Mixed Expectations)
Previous DPs: Denilson, Luciano Emilio, Geovanni, Claudio Lopez, Blaise Nkufo and Guillermo Barros Schelotto
Current DPs: Branko Boskovic, Omar Bravo, David Ferreria, Torsten Frings, Erik Hassli, Jeferson, Danny Koevermans, Andres Mendoza, Frank Rost and Alvaro Saborio
This last category is the largest category of DPs that have come into the league. The Budget DP is a veteran or journeyman with extensive soccer experience, but not the star power of the aging superstar. These tend to be low-risk signings, but there are some notable busts in the budget DP category.
The Budget DP has a contract that is very reasonable by international soccer standards (under $1 million) and usually come to the team as free transfers. The goal is to get a solid contributor from day one to fill a big hole in a team’s roster. Blaise Nkufo is a prime example of the budget DP. He came to the Sounders at the tail-end of a very successful career in Europe on a very reasonable salary to fill the team’s continuing problems at the target forward spot.
The Budget DP may have also been with the team a long-time and their ascension to DP status is a reward for contributions on the field for the club. This is a smart, low-risk way to utilize DP spots and keep a core group of players together. Some examples include Alvaro Saborio, Guillermo Barros Schelotto, Luciano Emilio, David Ferreira and Andres Mendoza.