Hard and soft cap/budget + salary tax

Was just pondering this now.

I don't know if it is feasible or not. I don't even know if I would suggest this. But it is something to think about.

Keep all the current budget rules. And then add the ability for teams to buy allocation money.

Teams would pay a tax on any allocation money they buy.

The "tax" gets put into the allocation pool for all teams. This could be spread out over three years to help with budget planning for the league and teams. Or not.

There would be a cap on how much allocation money teams can purchase. That could be 500k, 1 million or 10 million(very unlikely).

The tax could increase as you spend, or stay the same.

It would allow teams who have some more money to spend to do so. It should help improve teams across the board rather than just help bring in high priced DPs. Although it could help bring in more low priced DPs who teams are then able to remove the DP tag from with allocation money.

anything that gives an owner money for doing absolutely nothing is dumb.

You aren't giving the owners money. You are giving them allocation money that can only be used on getting players. And it isn't that much money compared to the gain the others teams would get.

I think there can be some creative ways to allow teams to spend more besides DPs.

The league seems content only to increase the salary cap the minimum required. I don't think anyone knows how much allocation they are deciding to give out each season.

From a selfish point of view, I would love it if the Sounders could spend more money, and not on DPs, but on getting quality all over the field and increasing the quality of the depth players as well.

But the league is only increasing the cap at the minimum % required each year. So you have to build some incentives into the system in order to get others on board.

Lets say its only 500k with a 2:1 ratio. Where for every 2 dollars you spend you have to give another 1 to the league for the pool.

So a team would spend 750k for their 500k of allocation money. Then 250k gets split amongst 19 teams. It really isn't that much getting spread around to each team. only $13, 157.90 for each team. Or if you go 1:1 its $26,315.79. Granted, it adds up when multiple teams are taking advantage. If 10 teams are taking full advantage at 2:1 its an extra $131,578.95 for each team. And for those teams who spent the 500k they are actually getting $631,578.95.

Eventually, if all teams took advantage of it, they would all be getting 750k.

I don't think that is enough money for other owners to really get a whole lot out of it. Unless they choose to participate as well.

And gives motivation for all owners to kick in some extra money to help improve their team. Otherwise they will be operating with 500k less than everyone else.

What ratio would you suggest?

1 : 1.5 ratio. Using Toronto as an example, the team wants $500,000 allocation money. It will need to spend $1,250,000.

$500,000 as allocation
$750,000 for league pool (share by all 19 teams or ~$39,473 as allocation money)

Toronto would get $500,000 + $39,473 in allocation money.
The other 18 teams would get $39,473 in allocation money from Toronto.

This will be voted down. Nothing it in for the majority of the owners - why would they let the rich get richer? And it would diminish parity.

At some point you need to let some teams spend a little money imo.

With something like this, you can let the owners loose a little while still keeping some parity.

We already have teams spending a ton of money on DPs. I think the 500k allocation buy in could be a tool used by most teams. Some teams who can't afford a DP might choose this route instead of getting DPs.

It also lets us know which owners/teams can afford a higher cap. If enough teams are taking part they might as well raise the cap a little imo.

The numbers likely need adjusting from what I have suggested, but I think the concept could work.

.... so uh, yeah. You're giving them money in exchange for doing absolutely nothing. "But it's only allocation money that has to be put directly to acquiring/paying players !" So what ? That doesn't change the fact that it's a luxury tax/salary tax/whatever else you want to call it. It gives owners money to spend that they do jack shit for.

You do realize there are plenty of ways for them to abuse the crap out of it yeah ? Sure, they only get allocation money but in turn you've given them a tool to continue not to spend. Trades, swaps, buy downs of current players, etc etc etc .... and that's of course assuming that they'll actually use it (which not everyone does even now).

The league is content to spend within its means and continue the steady sustainable growth it has since its inception. The league is smart. The DP is incentive enough right now. Hell, not everyone even uses that. They've even changed the DP rules to garner more "depth" and to obtain different types of players.

Stay tuned in 2014.

How is imposing a tax on money you are willing to spend in order to better your team (and thus the league) that is paid directly to those unwilling to do so ... an incentive ?

If I were the head of your HOA and said that you could go over the bounds of the HOA in order to improve your property BUT BUT BUT you have to pay the HOA 1 dollar for every 2 you spend in order to do so .... oh, and we're going to pay out that money to everyone else in the HOA that doesn't go over the bounds but they can only use that money to improve their property ... you really think you're going to do that ?

If so, you need to move to my neighborhood. I'd love to build my dream back patio for free.

How again is that motivating ?

Seriously ?

Why?

I mean, in order for your idea to make sense, it first must be agreed that it is "Good" to let owners spend more money. But that can't be taken as granted. I, at least, disagree. So please, tell us, why is it your opinion that Teams should spend more money?

Potential loop holes aside, I'm a big fan of letting teams spend a set percentage of what they earn (rather like the new FFP coming into play in Europe). Salary caps are absolutely necessary while the league is still in its infancy, but as it matures I'd like to see something resembling FFP.

I have never been a fan of "sharing trophies" mentality where losing teams are compensated ad nauseum until they get it right or held back because of stragglers. Successful teams shouldn't be punished, nor should they be allowed to spend their way to titles though. So the next best thing is the introduce a percentage cap on revenues, which dictates how much you can spend in the market of course (if that is what you choose to do with your extra revenue).

So, quick example:
Percentage cap: 60%
Team A generates $30m in revenues; Team B $15m in revenues.
Team A can spend $18m on players; Team B can spend $9 on players. That's a simplified version of things, but the 60% would be enforceable. No luxury tax for going over that. It would be a hard cap without smaller teams dragging down the cap for bigger teams. Lets face it, the wages differ from club to club anyway, and as has been established, LA certainly pay way more than the cap with DPs taken into account.

Some may look at this as totally unfair, and benefiting big market teams only. You'd be right of course, as it does favor teams who can generate more revenue, which tend to be in big markets. But we can't go on pretending that every team deserves to land a trophy in some cyclical fashion. I honestly believe we do more harm in the long run by not allowing bigger clubs to establish dynasties, legacies, rivalries, and storylines.

Teams who are hamstrung by lower revenues would be incentivized to find ways of increasing revenues, perhaps leading to improvement in club facilities and stadiums, a focus on youth development and so on.

Under these rules, we would have stronger teams in places where the game is booming. The Pacific Northwest could potentially be a hub for the game, not just in terms of support but in terms of on field product.

To reiterate, this obviously wouldn't be the way to go now. We're not at the stage where we can let some of the clubs hang around like a bad habit while the bigger teams win week in week out, but as the sport gets more popular, I think it might be something to revisit. And perhaps most important its not something that would scare off new and existing investors. Either way its a good solution I feel that allows successful teams to continue to do well while incentivizing smaller teams to improve revenue streams or find other ways of compensating like youth development.

This makes no sense considering the league we are dealing with.

Do you know where the money comes from to pay players? So MLS is already doing what you are complaining about. And you need to explain to me about this tool not to spend? It makes no sense the way the league is structured. The owners aren't spending anyways, besides capital calls and any money they spend on DPs.

Are there ways to abuse it? Sure. But keep in mind this idea literally popped into my head right before I typed up my first post Don't expect everything to be worked out and ready to submit at the next MLS BoG meeting.

There are potential fixes for some of the problems. For instance, If teams don't use the allocation money received from this it goes back into the pool that is split 19 ways. So it is a use it or lose it type approach.

And I am suggesting a way to allow teams who are able to, to spend a little more. I am not suggesting a huge change here. 500k seems reasonable to me. The DP rule has more of an impact on spending than this would.

Why doesn't every team use the DP rule? Many don't even use it as originally intended. Which was to bring in star players as more of a marketing tool.

It is quite possible this 500k of allocation money teams could buy would be more appealing to those teams who aren't taking advantage of the DP rule right now.

I am of the opinion that a star player or two, or possibly three aren't that great of an option compared to being able to improve at multiple positions. If LA could take all the money they spend on Beckham and Keane and turn around and use it on getting numerous players who command salaries around 500k. They would be a MUCH better team and the amount of money being spent wouldn't change.

Huh? You are looking at it wrong. The incentive is for the owners who aren't in favor of the idea to go along with it.

So your HOA collects money from all its members, then gives you all back money to pay all your bills? You are only given a certain amount of cash from your HOA to purchase fertilizer, tools, gas, paint, materials, etc for the upkeep of your yard? And you can't spend any more than what the HOA gives you? What if someone wants to pay for a yard service so they don't have to do all the work themselves on their yard? Is there a special rule for that? Ohh, is that the "DP" rule of your HOA?

lmfao...

Yes. If you have 14 out of 19 teams spending the 500k, maybe the league could up the capital call and increase the cap 6% or 7% one year instead of 5%. Clearly the teams can afford it...
If just 8 out of 19 are taking advantage, probably best to keep it at 5% for now.
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If teams have the means to responsibly spend more money, why stop them?

Well, we don't want 3-4 teams massively out spending everyone else and creating a situation where 3-4 teams are now all the sudden becoming super teams and dominating the US Soccer market and raking in most of the money which only allows them to keep their stranglehold on those top spots...

Yeah, I get that.
However, at the same time, you don't want to create a system that actually encourages teams to do the minimum required. We want teams to feel empowered. We should find a way to reward them for their hard work. One that DOESN'T create a huge advantage, but still lets them take advantage of their success.

DPs are nice. And they are adjusting the DP rules too. But its only for a max of three players. And guess how you get that 3rd DP spot?

And not every team may want to spend on a DP, or simply can't find one that is worth the cost, but doesn't cost too much...

This 500k they could buy may actually be something they are more interested in and more likely to use.

Good luck with 60%. It might work with 33%

$30 mil revenue: $9.9 mil salary budget
$15 ml revenue: $4.95 mil salary budget
$10 mil revenue: $3.3 mil salary budget

Correction:
It might work with 33% if 2/3 majority of MLS owners agree to it.

If there is nothing in it for the owners of Colorado, Dallas, Columbus, New England, San Jose, Chivas, DC, Chicago they won't vote for it. No owner is stupid enough to vote away their competitiveness for no compensation in return.

So what kind of compensation would you propose in order to get the owners of Colorado, Dallas, Columbus, New England, San Jose, Chivas, DC, Chicago to vote for a system that diminish their competitiveness on the field?

Do you know where the salary money comes from? There isn't some mythical entity called "MLS" that gives money to the owners

Because parity makes the League exciting. Every team can win every game...that's a hell of way to run a League

Excellent, you understand. But I sure hope you go on for another 5 paragraphs anyway.

The problem is that the single-entitity structure exists, as much, to ensure sustainability as it does to ensure parity. This system actively discourages sustainable growth, by asking owners to pay $X+1.5X for $X worth of players. It makes "competing" inherently more expensive. Because there is an un-natural carrying capacity (only some many more people can fit in the Home Depot Center), you're going to lose 3 fans from the now-shitty teams that can't afford to pay the tax for every fan you get to a Superteam game

3:1 luxury tax

Want to spend $1 mil more than the salary cap?
Pays $3 million in penalty. This will then be divided equally by ALL teams as allocation money.

New York would love to do this rather than pay $4 million for Marquez.

Well the Redbulls would have to pay about a 30 million penalty, 12 million for Marquez alone.

Luxury tax = stupid worthless sack of shit. Much like those that think it works/is a good idea.

If you could get past the desire for posting some snarky comments and talking down to me, you would realize I actually covered all your points in the post of mine which you were dissecting.

How would purchasing 500k of allocation equate to super teams that significantly disrupt the "parity" of the league?

The idea that teams should be able to buy themselves out of the salary cap disrupts parity. If LA, SEA, and NY (and no one else) can afford to 'buy away the cap', then you're going to lose the tight battles every game, the tight battles in the table...you'll lose what "parity" means.

I think you misunderstand parity.

FMF has no parity, yet low teams can beat higher teams. (also the J-league with no cap has a similar goal differential with MLS).

Parity as American sports does it does not mean a bunch of equal teams, it means that in the long run (over many seasons) lower teams will get better and top teams will get worst leveling off the disparity.

Year over year you will still have shitty teams and good teams, the difference is that the name of the teams will change unlike non-cap leagues where they are usually the same teams on top and a few going back and forth at the bottom.

Wiki doesn't agree: http://en.wikipedia.org/wiki/Parity_(sports)

You wikied my ass, I stand corrected, and you know this is right because the last edit was August 2011, so this is final. (Someone should remove the neutrality disputed tag from the top).

The article reads like something I would write (very shitty) at the end I have no clue what they are trying to say, they start with win every single Sunday to the Portuguese league having 3 winners in 77 years, so it kind of wants to have it both ways.

You didn't answer my question, but whatever.

I hate to break it to you, but there are already mechanisms within the current salary budget format that allow teams to outspend others.

The obvious is DPs.

Another is allocation money received from player transfers. And they are encouraging teams to sign younger DPs. Once teams start doing that and then selling them on, those teams will start earning more allocation money than other teams who aren't as successful with that tactic.

Another is allocation money received for playing in CCL. Or for sucking... TFC will be getting money for sucking and for CCL, lol.

They wouln't sign Marquez in the first place. They would put the $4 mil a year to much better use. 1 Player, even if he is exceptional talent, isn't worth an extra $1 mil salary cap room each year.

New York: $3.7 mil salary cap
MLS salary cap: $2.7 mil

is a much bigger advantage than 1 player.


I use 3:1 penalty for luxury tax because it has a better chance of getting 2/3 owners approval. Sure, 1:1 is more fair but it won't get enough owners on board.

No, it doesn't.

The luxury tax idea is stupid, and it doesn't actually work. All it does is give money to owners that don't do shit with their teams. How in the blue hell is a plan that calls for 3 times the expense more likely to get approval ? The clubs that actually do want to spend will laugh that shit right out of the board room.

You know, I don't like the idea of just giving money to owners who aren't doing shit with their teams either.

However, I think a form of a Salary Cap could work if you throw in some other stipulations on the tax part. And I already stated I don't want to let teams buy too much allocation money. I don't think 500k is all that much. And I actually think most teams would be interested in taking advantage of it.

You can make it so in order to take advantage of the tax, you have to spend all your other allocation money first. And any unused goes back into the next years pot for everybody.

That means the owners can only use it if they actually use what they have already. So its a use it or lose it scenario.

^ I like that, but doesn't change the fact that you're still taxing the teams willing to spend.

500K relatively IS a good portion of change. It's 18% of the current cap number.

Yes, but how much allocation money does the league give out to each team? That number we don't know and is also part of the Salary budget. The cap is so misleading because of the work-a-rounds already in the system.