What type of salary cap is best for MLS?

does that not incentivise middle of the road teams to go spend at the floor rather than at 120% ? I think the floor ceiling idea would work better if there was a basement, first floor at 120% and then a luxury tax to a ceiling of 135-140%

How exactly is the NHL cap "soft," Also, "cap floor" doesn't make any sense, I think you meant salary floor.

Doesn't the NBA also have a hard cap as well? I think it is designed to allow teams to be able to pay more money in order to keep talent they have had for at least 3 years, but then also keeping a hard number cap so that it doesn't get out of control. And the fact that a players bird rights are traded with the player seems strange, but I guess you would be screwing over what a player could make by trading him, and I don't think many NBA players have no trade clauses.

 

Also, there is an idea floating around FIFA or UEFA about limiting teams wage spending to a certian % of revenue. I think it was 50% but I am not sure. The rule protects teams against hot shot owners buying cheaper, underperforming clubs with big potential (Man City) and then throwing a ton of money at the team to turn it into an overnight contender. I am not really sure how much of an issue that is to MLS, or how crazy any owners would go if the reigns were let loose, but just throwing it out there as another posibility. It also prevents clubs from going into massive debt in trying to earn promotion, avoid relegation, or earn a bid into an international competition, and I think it is currently being used in Denmark.

 

What are the advantages and disadvantages of each salary cap system?

 

I like the current system. IMO it keeps all the teams pretty even, although the cap needs to be raised to double or tripple what it is now which is 2 or 2.5 mil. I know the DP only counts $400K of salary so leave that to 2 maybe 3 spots. At $6mil.

 

I don't like any of the those options. Instead, the two-tier cap system, as proposed by Snowden.

http://soccer365.com/us_news/story_81208190400.php

 

that system is pretty close to the NHL system


Also, we all know that 8 $1M players will help a team more than 1 $8M in terms of results. However, in terms of league wide revenue increase, the 1 $8M dollar player is going to help a lot more. If I am a small market owner, I would much rather the money I cannot spend, that other teams can spend, go towards one player that will increase the attendance at my stadium when that player comes to town while keeping my team reasonably competitive.

 

It's a good point.

If we look at Beckham as being the one $7M player, then it's likely that he would increase attendance at my "small market" stadium over say several $1M Freddie Ljunbergs (for example). However, the Beckham deal was a gimmick, and the deal actually made a bad team even worse. I don't think the Galaxy with Beckham would have brought in any long-term fans. LAG was a hapless team.

A team that significantly raised their quality of play otoh, would raise the quality of play around the league. And that would have a longer lasting effect for drawing in real fans.

 

First off, the league can't allow one or two teams to go all willy nilly on their roster spending, because the simple fact is that the league has not established deep enough roots in any market to be able to offset the depreciation in fan support when only two or three teams have any hope of winning MLS Cup at the beginning of the year. This isn't Europe where teams have been around for 100 years and have generation after generation of fan support regardless of the fact that the "Big 4" are the only teams with any hope.

So I absolutely don't support a Soft Cap / Hard Cap system with such a discrepancy as Snowden suggested and BSGuy quoted.

I do support a soft cap / hard cap system so long as the gulf between the two numbers is reasonable.

Currently the cap is around $2.3 million per season. If you make that the soft cap and then set the cieling at $3.5 million I think that could work. Keep the DP rule as is. Have some sort of luxury tax on every dollar spent above the soft cap number that is redistributed to the clubs that stay at or below the soft cap number.

An extra $1.2 million is an extra 50% to work with. That is a significant percentage, yet it isn't so outragous that it completely destroys the competitive balance that exists in MLS. It still keeps spending controlled, yet offers a cap number that might be within reach for more owners.

Not many owners are going to spend 7 million about the cap. Probably just two (LA and NY). But an extra million could entice DC, Chicago, Seattle, Vancouver (when they join) to spend above the soft cap, because the risk is far smaller. Hell, I can even see clubs like Houston, RSL, Chivas USA and KC spending above the soft cap number.

The more teams that are willing to spend abovve the cap the better the on field product becomes league wide...at least that would be the theory. Of course there would be some teams that don't spend wisely, but with more teams at least spending, you'd have more margin for error.

When the number of teams spending to the hard cap exceeds the number of teams spending to the soft cap, you can raise the soft cap number and keep the 50% disparity. It's still slow and steady growth, but as you grow, the reward for being willing to spend becomes greater.

I think under this system, it allows for the more daring teams to spend money to put a more attractive product on the field. The hope of course is that would increase revenues. The luxury taxes would bring the smaller budget teams closer to profitability as well. In essence, it allows for the bigger spending clubs to carry the rest of the leauge forward with them rather than leave the rest of the league in the dust.

edit... I also think that luxury tax payments should replace allocation money. And that a minimum % of those payments must go into player development. You can't force a team to use the money on players, because that could push certain teams over the soft cap number and eliminate them from collecting on luxury tax the next year. You can however force them to reinvest in their youth academies. Over time, that investment could lead to some solid homegrown talent to ad to the roster that would be far cheaper and much more loyal than going out and buying mercinaries.

 

Interesting thread.... i am a super rookie at how caps work, alot of the stuff thats in the main post is foreign to me lol.

But i think the MLS should have something like you describe what the MLB has...... in 20 years! Right now we though waht the league needs is a 'hard cap' like you say, until we all have our own stadiums. Then we could start playing with money, so we can be competitive internationally.

 

I don't think your idea is that different from Snowden's proposal. It comes down to what ratio you belive would throw off competitive balance.

You propose a ratio of 1.5:1 of hard to soft.

Snowden's is 3.33:1.

However, Snowden eliminates the DP rule, so he's really not that far off from you. Depending on who the DP is, under your proposal you could theoretically reach a payroll differential of 4:1 (or higher). Whereas under Snowden's system, the payroll differential could never be above 3.33:1 (as no DP is allowed).

 

Snowden's is 4:1. At least, the last time I checked, $10 million is four times more than $2.5 million. By eliminating the DP rule, he all but assures that the ratio will be higher rather than lower. Under my system, yes there is a chance that one player would skew the ratio, but as has been pointed out in this thread, 1 player isn't enough to change the fortunes of an entire team or skew the competitive balance. By maintaining controlled spending, you would still need a vehicle with which to attract players like Beckham, Blanco, ect who raise the overall profile of the league.


Under Snowden's system, it all but guarantees a two team league with everyone else just trying to grab a last two CCL spots as a consolation prize.

 

I think he wanted a soft cap of $3M. And hard cap of $10M. So, 3.33:1.

By eliminating the DP, he assures that the payroll differential never goes above 3.33:1. Cause you can't spend above $10M no matter what. It's a true hard cap, no DPs.

That vehicle still remains. After all, owners have $7M of their own money to spend as they see fit. We just simply stop calling them "designated players". That's the only difference.

 

One of the few things I like about the NBA is the fact that their cap system promotes keeping players that are on your team, on you team. I would like to see a rule built into the cap that allows for teams to pay out far over their cap to retain you talent.

IMO the MLS needs to be a league that develops young stars (see Clint Dempsey) and is not thought of as a retriement home for aged Euros. So if we can set up a system where Dallas can pay more and keep Cooper around a few more years and Seattle can make a run at keeping Montero then this will have stong positive influence on attendance and quality of play.

 

Disagree completely. As Snowden put it:

 

I would advocate for all shared money from luxury taxes to be shared equally amongst all teams and not only the teams that are under the soft cap. For teams that are on the border of to go over or not, it certainly makes a lot more sense to stay on the south side of the soft cap because its the difference between collecting tax dollars and paying them. If you are going to be collecting them no matter what, then its all about what the team can reasonably afford to spend to make it as good as possible.

 

It's still way too large of a disparity, and you'll only see a small handfull of teams spend 10 million. LA, NY, and possibly Seattle. You are essentially creating a big three in MLS and pricing out every other market in the league.

You're right that the main difference between my proposal and Snowden's is the ratio. But under my proposal, the teams willing to spend money actually bring the league along with them. Under Snowden's, the teams willing to spend money kill the other franchises.

 

I think leave the DP spots maybe add 1 to total 3
1. So $1.2 mil. in DP that goes against the cap.
2. I like the DP rule because it helps small markets compete with larger ones. I look at it as if let say Henry was being chased by the Wizards and the Red Bulls if only $400k counts against the cap then KC can go outside the cap limit (like it does now with the DP slots) and
Outbid NY. IMO big names usually go for big markets like NY and LA
But given the greed factor money can persuade a big name to go to smaller market.
3. I don’t think MLS falls in the category where only certain markets succeed because they have more money. Look at the MLS cup winners DC, LA, SJ, Hou.,Chi.,Col.,and KC
http://en.wikipedia.org/wiki/MLS_Cup . That’s 7 winners in a league that’s been around 14 years.

 

I hate to break the news to you, but it doesn't take 11 Thiery Henry's on one team to create a competitive imbalance. Chris Wondolowski is no Juan Pablo Angel. Josh Tudela is no Guillermo Barros Schelotto. You can't honestly think that a team stocked with developmental players and scrubs, with a handfull of quality players is going to be able to stack up to what ammounts to an MLS all star team.

A team that raids South America and gets a few Javier Morales' and Schelotto's to feed a few Freddy Monterros, with a solid keeper, and a backline of million dollar defenders each is going to be competitively superior to every other team in MLS.

Snowden's biggest flaw is that he assumes the teams will use the extra 7 million to buy one player. What happens when teams use that extra 7 million to poach the top talent from every other team in the league?

What happens when a team finds out that Salt Lake has been scouting this guy named Javi Morales and says, Hey we have an extra 7 million, whatever they are paying you, we'll add an extra $300k to your salary.

Teams will either be forced to match whatever offer an AEG or Red Bull make in order to retain or attract talent (which in several cases, the revenues wouldn't be able to support) or they'd have to watch a couple of teams get infinantly stronger while they stagnate. Not exactly a system that promotes growth.

 

The only reason this statistic is possible is because MLS has created a system where no single team can grossly outspend another team, with the exception of one player.

Under Snowden's system, a team can spend on average $416,000 per player. That essentially means that all 24 players on the team would qualify as DP's under the current rule. The markets that can only afford to spend at the cap and not above by contrast would be spending $125,000 per player on average.

Lets reward the LA Galaxy's and New York Red Bulls who are willing to spend some money to bring big name players to the league. But lets not hand them the inside track to win MLS Cup every single year.

 

Thats why we should keep the DP slots. When a player is going to cost more than the aloted money that goes towards the DP tag then that team can only have that number of DPs. In my formula you raise the cap from $2.?mil to $6mil. maybe the 400k that counts againts the cap goes up but it still forces those team to only have 2 or 3 players that can make that kind of money.

 

you are also assuming that no clubs will spend a little bit over the soft cap or a medium amount over the soft cap.

Then there is also the more indirect way of "bringing teams along with you" that could happen under that type of system. IF in fact two or three "superclubs" do emerge and they become very popular and win the CONCACAF Champions League and put up a good account for themselves at the club world cup, and generally have a very positive view from the rest of the football world, this is going to raise the view of the league. That is what is going to drive the tv numbers because most people will have one of the superclubs that they "hate the least" and one that they hate a lot and will want to root against them. A lot of these increased revenues for the whole league would be shared tv revenue, which would allow the smaller teams to then spend more money and catch up to the bigger clubs.

 

If the cap is raised then the criteria has to as well. I like the current system where a team can stay on par with the LAs and NYs but if the cap is going to be raised then do so but not at the expense of smaller markets.

 

Except that isn't how things work in the real world. How many people in the U.S. are huge Stoke City fans, or Wigan Fans? The theory has always been that a few big clubs that raise the profile of the entire league is always better. But the problem is, while those smaller clubs are indeed getting more money for playing in the same league as the big 4, the big 4 are getting even richer. The gap always widens, it never closes in the real world application. Do you think Kansas City is going to be able to do a preseason tour of New Zealand and Australia to rake in big money? NO. Do you Colorado jerseys are going to sell at the same rate as a New York Thiery Henry jersey will? NO.

In any system that allows for unrestricted spending, or even just far less thethered spending, the haves will always grow at a much faster rate than the have nots. Its inevitable.

 

I think we're on the same page, you're just open to a little more free wheel spending as the cap ceiling than I am.

I would never want to see the soft cap to hard cap ratio exceed 2:1. Even that number starts to look pretty high to me.