Last week, FC Cincinnati announced that former USMNT defender Geoff Cameron had signed with the club.[1] With the changes in MLS’s Free Agency[2] eligibility rules, it’s possible Cincinnati availed itself of the signing mechanism to bring on Cameron, which creates a great opportunity for us to break down the new MLS Free Agency rules, and how they affect eligible players’ return to MLS.
The Old Eligibility Requirements
Per the 2015-2019 MLS CBA, to be eligible for Free Agency a player had to be 28 years old with 8 MLS service years.[3] Compensation under the previous regime was also essentially capped: players making above maximum salary budget charge (in 2021 that would be $612,500) were not eligible for MLS Free Agency unless they were willing to a) stay at their previous club, or b) accept a salary below the Maximum Salary Budget Charge, so long as their previous club did not offer them a contract.[4]
Eligibility Under the New Scheme
The 2020 (well, 2021 considering the Force Majeure renegotiation) CBA expands the eligibility to players who are at least 24 years old, and have at least 5 MLS service years.[5] Likewise, while salaries are still (to a certain extent) capped, it is open to players making above the MLS maximum budget charge.
As a result of the expanded field, MLS removed several players from their Allocation List.[6] This seemed a tacet admission by MLS that former MLS players not currently playing in MLS can be eligible for the free agency scheme, so long as they meet the minimum age and service year requirements. This makes sense, it would be difficult to say players not meeting the requirements could not avail themselves of the mechanism unless such a situation was explicitly carved out form the CBA.
However, expanding the eligibility, and having players outside of MLS be considered MLS free agency creates complications in how to calculate the capped wages from the structure.
Not-So-Free Agency
MLS Free Agency is one of the few mechanisms where MLS clubs may bid against each other for players. While this means players can finally leverage MLS clubs’ interest to improve their salary, wages (and, possibly Salary Budget charges) for Free Agents are capped.
This wage cap is a function of the a) the player’s previous wage, and b) MLS’s Maximum Salary Budget Charge in that season (in 2021, $612,500).
While these calculations are easy if the player’s previous contract was with MLS, complications arise when the player is outside of the league.
Maximum Free Agency Salary Calculation
The key question when calculating a player’s maximum Free Agency salary[7] is what was the player’s previous salary.
“For players making the maximum salary budget charge or less, a free agent can sign a contract with another club with an initial salary of the greater of $25,000 above the maximum salary budget charge, or 15% above the player’s prior salary.”[8]
Likewise, for a player earning between the maximum salary budget charge and the maximum TAM amount:
“the player could earn 15% above the prior salary up to $500,000 above the maximum salary budget charge and 12.5% of such salary from $500,000 above the maximum salary up to the maximum TAM amount.”[9]
For a player making over the Maximum TAM amount, MLS will negotiate a contract with the player, at which point he may choose to sign with his previous MLS club. If said player decides to sign with an MLS club other than the previous club:
- if the contract is below $3M, he will have to take a salary at 10% less than the MLS-negotiated salary; and
- if the salary is above $3M, he will have to take a salary at 15% less than the MLS-negotiated salary.[10]
Which Previous Salary
MLS doesn’t really make clear if the “prior salary” means their salary in their current or most recent contract, or if it means their last MLS contract.[11]
Because no longform 2020/1 MLS CBA has been published, we can try to look to the 2015 CBA to get idea of the operative language of the new CBA. The 2015 CBA does not often distinguish and seems to just assume that the player’s previous contract will have been in MLS. In the compensation for out of contract players section, the CBA refers to the player’s “previous year’s base salary.”[12] However for the eligibility section, the CBA refers to a player’s “Salary Budget Charge.”
The swapping of “Salary Budget Charge” and “base salary” seems to show the assumption (by at least one of the parties) was that players who were eligible for free agency would still be in the MLS system, so the MLS Free Agency related back to a player’s previous MLS salary.
This assumption is also evident in the timeline MLS releases for free agency-related offers and signings, which is tied to the end of the MLS season.[13]
This makes it unclear how new out-of-league MLS Free Agents like Cameron might have their maximum Free-Agent salary calculated: is it based off their last MLS contract, or their salary from their most recent (Non-MLS) contract.
Geoff Cameron Case Study
For Cameron, His last MLSPA-reported salary was listed at $245K for the 2011 MLS season.[14] Cameron left MLS for Stoke City in July of 2012. To work from his last MLS salary in 2012, let’s assume a 10% salary increase from the previous season, or $269.5K.
By Contrast, Geoff’s reported 2020/21 season salary at QPR was $916.5K.[15]
So, if we go by Cameron’s previous MLS base salary, since it’s below (both the 2012 and 2020) MLS Maximum Budget Charge, he would be entitled to the greater of a 15% increase on his previous deal, or $25K above max salary, or $637,500 in 2021. If we add 15% to his assumed 2012 MLS salary, you get $310K, so since it’s higher, his Free Agency cap based off his last MLS deal is $637,500.
If we go by his QPR salary, since it is between the 2021 Maximum Budget Charge, and the 2021 Maximum TAM charge (in 2021, $1,612,500), he can receive between 15% and 12.5% above his QPR salary, depending on whether such salary is above $500K over the 2021 Maximum Budget Charge.
Luckily for us, since adding 15% onto his reported QPR salary only gets us to $441,475 over the 2021 MLS Maximum Budget Charge, there’s no need to dive further into the complicated math of that provision.[16] So the maximum salary Cameron would be entitled to under the new MLS Free Agency regime based off his last contract proper would be $1.05M.
For Cameron, MLS, and his MLS suitors, that means that whether the calculation for the cap on his Free Agency salary is a function of his previous MLS salary or his immediately preceding QPR salary is a question of $416,575.
Not a small figure.
Side Note: Acquisition Costs
It is unclear whether the mechanism would apply to players under contract with clubs outside MLS that would require an MLS club to acquire said “free agent” via a loan/transfer fee.
The removal of Free Agency-eligible players from MLS’s Allocation List[17] seems to say that it might- that the only means to sign any Free Agency-eligible player, regardless of their non-MLS contract status is via the Free Agency regime.
If that is the case, the question becomes: do acquisition fees for an MLS Free Agent entering the league from non-MLS clubs count towards the cap on spend for these players established in the Free Agency provisions under the CBA?
If we look at the 2015 CBA, it often conflates salaries and MLS Salary Budget Charges, which include (among other things) acquisition fees and player salaries. Eligibility was determined on Salary Budget Charges, but the income cap calculations were based on salaries.
On the one hand, if the language only explicitly discusses salaries, like the 2015 CBA, it seems that any acquisition fee would not apply. On the other hand, the entire point of Free Agency scheme limiting how much MLS teams can bid against each other for players goes out the window if they can bid against each other for un-capped acquisition fees.
It also does not help the MLSPA if MLS clubs are bidding against each other on acquisition fees for players when that money could be allocated to salaries for other MLSPA member. Especially considering MLS’s salary cap.
Conclusion
All these questions show the importance of the wording of the yet unpublished forthcoming MLS CBA’s Free Agency provisions.
If the CBA fails to account for this new dimension of MLS Free Agents – those former MLS players who are no longer in the league – it will lead to numerous (possibly expensive) disputes between the league, the MLSPA, and MLS clubs over what these players can make, and how much clubs can spend. If drafted well, it can show players and clubs a path to building and improving their roster efficiently and effectively with Free Agents.
With all that, there is still a question as to whether MLS Free Agency’s limits on compensation for individual eligible players (and possibly transfer fees), and requirements that negotiations for some players’ contracts be done by the league, and not the clubs are impermissible under FIFA’s bar on Third Party Influence.[18] It also raises questions about whether such a provision violates the principles of the free movement of players established in the Bosman ruling.
That is a whole lot to say that CBA drafting is important, and that the new Free Agency rules open a whole new dimension of player movement for MLS that require careful consideration.
[1] Author’s Note, FC Cincinnati was one of my consultancy’s first clients. However, to be clear, I am not involved in any matters related to the player signing with the club, and all statements in this piece are subject to my own speculation and opinion. I have no inside information involving any deal, bargaining, or negotiation between Cameron, MLS, and FC Cincinnati. If I did, I would not be publishing this piece about this deal.
[2] Because MLS Free Agency is a very specific ~thing~, with a very specific meaning, we’ll be capitalizing “Free Agency” throughout this piece. For our non-American readers, generally, “free agency” is the same as a “Boseman” or “free” transfer. However, as you’ll see MLS Free Agency covers a whole lot of signing situations for players of various contract statuses.
[3] See, MLS 2015 CBA at § 29.5-29.8 (hereinafter the 2015 CBA)
[4] Id. at § 29.6.
[5] See, Free Agency, MLSSoccer, at https://www.mlssoccer.com/news/free-agency-404642
[6] See, Garcep, Ives, Sources: Cameron, Lawrence, and Castillo no longer on MLS Allocation Ranking List, Soccer By Ives, at, https://sbisoccer.com/2020/12/sources-cameron-lawrence-and-castillo-no-longer-on-mls-allocation-ranking-list
[7] Or Salary Budget Charge, who knows! We’ll discuss later in the piece.
[8] Free Agency, MLSSoccer, at https://www.mlssoccer.com/news/free-agency-404642, emphasis added.
[9] Id. The Maximum TAM amount is $1M over the Max Salary of that year, so in 2021, $1,612,500).
[10] Id.
[11] See, Free Agency, MLSSoccer, at https://www.mlssoccer.com/news/free-agency-404642.
[12] See, 2015 MLS CBA § 29.6(b)(iii)
[13] See, MLS Free Agency: Rules & Procedure, MLSSoccer, at https://www.mlssoccer.com/news/mls-free-agency-rules-procedure
[14] See, 2011 Salary Report, MLS Players’ Association, at http://s3.amazonaws.com/mlspa/2011-09-01-Salary-Information-Alphabetical.pdf?mtime=20190611125323
[15] See, Queens Park Rangers 2020-21 Player Wages, Football League FC, at https://footballleaguefc.com/queens-park-rangers-2019-20-player-wages/. Per Football League FC, Cameron’s 2020/21 weekly QPR wages are £12,500. That’s a £650K yearly wage, which, assuming an exchange rate at 1.41 dollars per pound sterling, makes Geoff’s QPR salary for Free Agency calculation purposes $916,500. Id.
[16] Thanks, QPR, I guess.
[17] Which itself is an acquisition mechanism for certain USMNT and former MLS players transferred out of MLS above a certain transfer fee threshold.
[18] See, FIFA Regulations on the Status and Transfer of Players, art. 18bis, at https://resources.fifa.com/image/upload/status-and-transfer-february-2021-february-2021.pdf?cloudid=qdjmoxn91xciw41tojii
Andrew Visnovsky 