(This is the second in my series of posts called “Why This Lifelong Soccer Fan Is (Currently) Unenthused About Major League Soccer)
When Major League Soccer was founded in 1993, the new league was determined to avoid the veritable orgy of overspending and lack of restraint that has sunk the North American Soccer League in the 80’s (notably, it seems that, unlike the MLS, the US Housing market did not pay attention to this lesson). Because of this, the MLS structure has some major differences from the professional soccer leagues in Europe. Major League Soccer is operated as a single-entity model, with the league tightly controlling team spending and salaries, by having a salary cap (currently at $2.6 million per year) and a maximum per player cap salary (currently $375,000). All player contracts are owned by the league, and the league pays player salaries from a pool collected from all the teams.
The single entity model ensures sustained growth and responsible financial behavior, but completely hamstrings teams’ ability to sign big name players. And so, in 2006, the owners of the Los Angeles Galaxy, who, behind the scenes were orchestrating the possibility of signing David Beckham, proposed the Designated Player Rule. The rule would enable each team to sign one player in excess of the per-player spending limit. The player’s contract would be paid for by the league, and count against the cap only up to the limit. Any amount in excess was the responsibility of the team. The thinking was that importing high-priced talent with instantly recognizable names and skill level far exceeding that of current MLS players will help the league leap forward both in terms of off-the-field marketing and on-the-field play level. This, in turn will increase the prestige of the league, further increasing profits and attraction to high caliber players. Specifically for the Galaxy, the rule will allow them to reap the incredible windfall of signing Beckham, the most marketable soccer star in the world. Because of this, the unofficial name given to the Designated Player Rule was the Beckham Rule.