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Structure of João Paulo deal splits difference between current needs, future flexibility

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One-year loan means team is full-up on DPs this year, but will regain flexibility in 2021.

Any hopes of the Seattle Sounders signing a big-money Designated Player — someone who might set a franchise record transfer fee like many teams seem desperate to do this offseason — will have to be put on hold.

João Paulo, whose signing was announced on Friday, will occupy one of the Sounders’ three Designated Player spots this year. Unlike other recent “third” DPs like Xavier Arreaga, Victor Rodriguez and Osvaldo Alonso, João Paulo will not be eligible to bought down below that threshold using Targeted Allocation Money, at least under existing rules. Barring a dramatic reimagining of the way DPs hit the salary cap under the new CBA or some unforeseen change to the roster, that means the Sounders won’t have the flexibility to bring in a big-money player this summer.

“It’s a fair comment to say that’s overly cautious of me,” Sounders GM and President of Soccer Garth Lagerwey said on Saturday. “But what you can not do in a salary cap world is make mistakes and have dead money. The thing we’ve done really well is putting our money on the field and I just wasn’t willing to risk particularly a DP spot — we’ve really gotten those right.”

The silver lining — if you choose to look at it that way — is João Paulo’s signing is actually a one-year loan with a purchase option for 2021. Various reports in Brazil have suggested the Sounders paid a rather hefty $1.25 million loan fee. Even with a relatively modest salary, that would easily push João Paulo beyond the current TAM threshold of $1.53 million cap hit for 2020. At the end of the year, the Sounders will have the opportunity to complete the transfer, reportedly for an equivalent sum as the loan fee. Even if they exercise that option, it’s far more likely João Paulo would fall below the DP threshold as the Sounders would also likely sign the Brazilian to a multi-year extension that would spread out the cap hit.

Essentially what Lagerwey has tried to do with this signing is split the difference between giving Brian Schmetzer and his coaching staff the talent they need to make a run at Concacaf Champions League and avoiding a longterm commitment that would have come before knowing the still undecided rules of the next Collective Bargaining agreement.

“We really are motivated to go for it,” Lagerwey said about how CCL influenced his thinking on this signing. “To have three full DPs from the start is really a statement of intent. We mean what we say.

“We’ve had a tricky situation with the CBA. What we did was we were able to find a player who really wanted to come. Because of that we were able to find this loan structure whereby João honestly could have had a longer commitment somewhere else but chose the Sounders and chose the loan structure. It helped us out and kept our flexibility without knowing the CBA is going to be. It all came together and we found a way where it worked for everybody and we’re really excited to have him.”

Lagerwey strongly implicated that he has at least one more TAM-level signing planned for the offseason that he said could be announced as soon as this week. That is almost certainly Union de Santa Fe centerback Yeimar Gomez Andrade, who on paper appears to be a near-perfect pairing with Arreaga. Even after that signing, Lagerwey said the Sounders have one more international roster spot. While there isn’t the potential of another DP signing, it’s entirely possible that a new CBA will give the Sounders the flexibility they’d need in order add more high-priced talent.

Since taking over as the Sounders GM before the 2015 season, the Sounders have historically been very conservative with their winter signings. João Paulo is the first DP they’ve signed in the offseason and Yeimar would be just the third offseason TAM signing they’ve made.

“There’s a reason we’ve signed DPs in the summer before,” Lagerwey said. “If you sign three DPs from the get-go, your money is committed from the get-go. We’re committed for Champions League, we’re all-in for the season.”

Lagerwey seems to think João Paulo is the type of player who can push the Sounders over the top. Not only was the versatile midfielder lauded for being immensely talented, but he’s also got the kind of complementary personality that has proven so helpful during the Sounders’ championship runs.

“These are the defending champs out there,” Lagerwey said. “This is not a team that needs to get blown up and remade and needs a new alpha dog. What they need is a guy who’s going to play with [Nicolas] Lodeiro and [Raul] Ruidiaz and [Gustav] Svensson and [Cristian] Roldan and [Jordan] Morris and the rest of the gang. We believe he’s that player.”