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Guaranteed Contracts are Death in a Salary Cap League

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With all the news about the CBA out there these days (ok, a few stories Romero, Denz) I thought that a key point would be the key areas where the Players and League disagree.  Some of these may have compromises, some will not. There will be points where one side or the other will get their way.

The main issues where the Players and League disagree are the following -

- Guaranteed Contracts
- Free Agency
- Club Autonomy
- Salary Floor
- Developmental Players

The secondary issues that are not necessarily CBA related (ht to denz again)

- Salary Cap
- Designated Player Slots
- Allocation

This isn't necessarily going to be another series of stories, but I think that the topics might build on each other. First though is something that soccer fans may have trouble accepting, but those that follow American sports will understand quite well - Guaranteed Contracts are Death in a Cap League.

I'm totally serious. This might be the one issue where I will never be on the players' side in the CBA debate.  For those that followed the Sonics I offer up two names - Jim McIlvaine and Vin Baker. In any discussion of the effects on salary caps that an awful guaranteed contract has on the ability of a club or franchise to make moves for their future these are two of the most common names, and in Seattle they should be particularly powerful.

While yes, McIlvaine's contract was also awful in that it pissed off Shawn Kemp, it also limited the ability of the club to sign future players because they had millions tied up in awful - awfully large, and awfully bad.  For years that contract influenced the decisions that management could make on future players.

Just when they could have gotten out from under tall, slow and part-timer they decided instead to spend even more money on a player who went from good, to mediocre. Vin Baker went from being a solid contributor to fat, slow and uncoachable.  The Sonics, without a creative trade, would have been forced to eat that salary every year.  Every single year over ten million dollars would be spent on a player that was completely useless.  At times that was over 15% of the salary cap that Sounders ownership and their GM were forced to factor in as a sunk cost.

Baseball, and international soccer don't have this issue, but MLS will.  It needs the cap so some level of parity exists, so that Seattle, Toronto, Los Angeles and Red Bull don't just own the league. Yes, it pains me as a Seattle fan to say that MLS needs a cap, but the fact is in these nations, at this time people in Salt Lake, in Houston, in Columbus, in DC have to think that they can win a Cup in any given year.  Right now that's true.  Without a cap, it won't be.

The NFL does not have guarantees, but even than clubs get hurt by bad decisions, and they should. To use a soccer metaphor (yeah, soccer metaphor on soccer site, odd huh?) think of Davino in Dallas.  That was a bad decision. The club should suffer a bit for the signing, but not for the full two years (they didn't as they waived the player), and the NFL only punishes a team a bit in the years following a cut, this is applied through a pro-rated signing bonus.

The league most like MLS, the NHL does things a bit differently, it is a cap league, with the cap figured as a percent of league revenue, the cap has a floor and ceiling as well. It does well in installing an exception for long term injuries, as MLS currently does, but most radically due to the nature of the League's massive overspend in its last year before the 2005 CBA started the league reduced all player salaries by 24% in remaining years and allowed teams to buyout long-term contracts rather than force clubs to sit with massively overpaid players on the squad.

In the NHL deal, and the NFL deal (two hard cap leagues) MLS should find its model.  The key is that players need a certain level of guarantee, but also clubs can't be hurt too much long term for the poor financial decision of a GM and/or Owner. It would also involve a certain level of compromise.

1 - While MLS contracts will not be guaranteed there will be a buyout value. This value would be a minimum amount (33%), or the percentage of a single year salary based on the match day of the season which ever is higher. That would be the contracts value v. the Salary Cap for the year. No further years or salaries would count towards future caps.

2 - A player released by a club, after being under contract would be a Free Agent. Free to sign with another club within MLS, other USSF or CSA sanctioned league, or any other FIFA sanctioned league in the world. A player not yet signed, but waived could still have their rights held for a maximum period to be negotiated by the Players and League.

3 - Allocation dollars will continue to not count towards the Salary Cap.

These two changes alone would grant the MLSPU a key element in their negotiations, while offering a limited compromise on the "guarantee" that enables clubs to take risks on players, but also to not be damaged in the long term for a poor contract. The Buy-Out Clause would mean that players that get cut still get some monies, and that they would be Free to sign with other teams, earning a new contract.

Is it perfect? No. But it is likely the best that the Players and League can get at this time, with the current financial environment in which the league operates (decent, but still in debts). Oh, and does the mention of Allocation seem out of place? It is, a bit, but again, note the NFL's concept of signing bonuses and that will give you a start as to how I envision the League working.

If you were a player would you accept this as a compromise? Any idea where I'm headed with the Allocation dollars?