Salary Cap, MLS Rules And The Future, Oh My!

JGarrettLieb

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I said a few days ago that I would do a more in depth post concerning our recently released salaries, and here it is.

Before we get to NYCFC in earnest we need to go over the most relevant rules, as I see them. I am directly copy/pasting from the MLS. Here is the relevant link (emphasis is mine) http://pressbox.mlssoccer.com/content/roster-rules-and-regulations

1. Salary Cap – Players occupying roster spots 1-20 count against the club’s 2015 salary budget of $3,490,000, and are referred to collectively as the club’s Senior Roster.

a. The maximum budget charge for a single player is $436,250.

b. Players occupying roster spots 21-28 do not count against the club’s salary budget.

2. Allocation Money – Each MLS club receives an annual allotment of Allocation Money. In 2015, that allotment is $150,000 per club.

3. Designated Players – In 2015, a Designated Player over the age of 23** will carry a salary budget charge of $436,250, unless the player joins his club after the opening of the Secondary Transfer Window, in which case his budget charge will be $218,125.

a. Clubs have the option of “buying down” the budget charge of a Designated Player with allocation money. The reduced charge may not be less than $150,000.

4. Waivers – A club may place a player on Waivers at any time during the regular season at which point he is made available to all other clubs. The Waiver Claiming Period shall commence on the first business day after the League delivers notice to teams and expires at 5 p.m. ET on the second business day after the Waiver Period Commencement Date.

5. Methods of Releasing Players – Clubs may waive players based on performance at any time during the MLS season. Players with guaranteed contracts will continue to have their salary budget charge applied to the club salary budget, subject to any settlement. Players on Semi-Guaranteed Contracts can be waived prior to July 1 of any year and free up the corresponding budget space. If a player on a Semi-Guaranteed Contract is waived after July 1, his salary budget charge will continue to count against the team’s salary budget. Any settlement amount will be charged to the club’s salary budget.

a. Upon loaning a player, Clubs will receive roster relief and budget space, subject to the terms of the loan.

6. Buyout of Guaranteed Contract – Clubs may have the ability to buy out one player who has a Guaranteed Contract.

    1. A club may buy out one (1) player who has a Guaranteed (including a DP’s) Contract during the offseason and free up the corresponding budget space. Such a buyout is at the MLS club’s expense.
b. A club may not free up room in the salary budget with a buyout of a player’s contract during the season.


Additionally, with respect to #2 we know that teams new to the league receive additional allocation money, but like so much else in MLS the exact figure is shrouded in secrecy.

Here is the good and the bad news. The good news is that we can actually cut players without having them still count against our salary cap. The bad news is that we can only cut one. Who do we cut becomes our overriding question? For that we are going to have to turn to the newly released 2015 salary figures.

Please see the picture of my excel spreadsheet detailing my allocation math.

Thus I can, with some degree of confidence state that our bonus allocation money for being a new team in the league is less than $600,000.00. Probably. If you would prefer a higher degree of specificity it is very likely between $ 530,000.00 and $590,000.00

You will notice that Josh Williams is on my list of players even though he was placed on waivers; this is because his salary still counts against our cap space. Williams’ cap hit will continue, under my reading of the MLS salary rules, until his original contract either runs out or some other team picks him up.

Additionally you will notice that I have excluded the new targeted allocation money from my calculations, which is due to two reasons. Firstly, I prefer to take the more conservative approach to my calculations. Secondly, I’m going to go ahead and pay credence to the rumors that we traded all of our targeted allocation money to the LA Galaxy for an additional international spot. And that this deal will occur for the next two years.

Where does this leave us as fans?

Well for me, I believe that the most likely person that we will both cut and use our only buyout of a guaranteed contract on is Adam Nemec. He gets no minutes and has a large amount of guaranteed compensation.

However we are ignoring the elephant in the room, the Mix Diskerud buydown. No one outside of the front office knows how that contract is structured. It could very well be a very frontloaded contract, which would allow us to keep mix for an additional year or three.

And remember next year Pirlo will no longer count against our cap at the $218,125.00 rate, his salary hit will be as big as Lampard’s and Villa’s.

On the bright side the salary cap is going to rise $244,300.00 next year if this si.com article is to be believed. http://www.si.com/planet-futbol/2015/03/06/mls-cba-deal-players-union-bob-foose-todd-dunivant This means that our increase in salary cap is almost entirely eaten by the fact that Pirlo will be playing for us all year, which I am totally ok with.

Here are my takeaways.

1. I really hope that Mix has a front loaded contract, or we are utterly screwed next year.

2. Assuming Mix has a front loaded contract, goodbye Adam Nemec.

3. Lord Kwame Watson-Sirobe, the bane of our defense, will be staying to the end of his contract terms in 2016, it is not worth it for us to release him and take a salary cap hit from that when we don’t take a salary cap hit by his staying with us.

4. The above are contingent on my ability to interpret the salary cap rules in a manner that remotely resembles the way that Don Garber interprets them.

a. This means that my numbers are probably, at best, a ballpark estimate.

PS: PM with your e-mail if you want the actual excel file.
 

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mgarbowski

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Wow. Lots of work there and good info. Thanks. You quote the official language about DPs joining after the opening of the Secondary Transfer Window with respect to Pirlo, and count his cap hit accordingly. You also count Lampard for the full amount. This leaves me wondering what exactly does it mean for a player to join his club after the opening of the Secondary Transfer Window. Lampard signed in January, long before the window opened, and joined us - I'm pretty sure - the day the window opened. What I'm wondering is what would we have had to do to get him to count as half against the cap. Would it have been necessary to delay his signing from January until the day after the window opened? Or could we have signed him in January but have him report a day later than he did? I'm guessing it is based on the signing otherwise it would be too easy to manipulate. I take it this means Gerrard counts full amount as well.
 

JGarrettLieb

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Wow. Lots of work there and good info. Thanks. You quote the official language about DPs joining after the opening of the Secondary Transfer Window with respect to Pirlo, and count his cap hit accordingly. You also count Lampard for the full amount. This leaves me wondering what exactly does it mean for a player to join his club after the opening of the Secondary Transfer Window. Lampard signed in January, long before the window opened, and joined us - I'm pretty sure - the day the window opened. What I'm wondering is what would we have had to do to get him to count as half against the cap. Would it have been necessary to delay his signing from January until the day after the window opened? Or could we have signed him in January but have him report a day later than he did? I'm guessing it is based on the signing otherwise it would be too easy to manipulate. I take it this means Gerrard counts full amount as well.
I'm away from my computer for a day or two right now so I can't give the most detailed answers.

Two things. I always want to take the more conservative approach when doing a numbers estimate like this.

And I'm still kind of hazy on how salaries count when someone is on loan and joins in the middle of the season. I just don't know how Lampard's salary counts. If it only counts for half then we are in a much better place cap wise for next season.

But since I genuinely don't know how how it works I'm going to assume we took the full cap hit.

If anyone can help me clarify I will adjust the numbers accordingly.
 

mgarbowski

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I'm away from my computer for a day or two right now so I can't give the most detailed answers.

Two things. I always want to take the more conservative approach when doing a numbers estimate like this.

And I'm still kind of hazy on how salaries count when someone is on loan and joins in the middle of the season. I just don't know how Lampard's salary counts. If it only counts for half then we are in a much better place cap wise for next season.

But since I genuinely don't know how how it works I'm going to assume we took the full cap hit.

If anyone can help me clarify I will adjust the numbers accordingly.
Fair enough. The rule as stated is kind of ambiguous since "join" is undefined.
 

NYCFC_Dan

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Hurts the eyes to see how much Nemec and Grabavoy make.
It will be interesting to see the approach we take into next season with freeing up space.
You have to assume Mix will be the core player.
But having so many players earning high salaries while warming the bench hurts. And they've shown nothing to demand that kind of $$ elsewhere so dumping them will be tough.
 
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Tom in Fairfield CT

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Hurts the eyes to see how much Nemec and Grabavoy make.
It will be interesting to see the approach we take into next season with freeing up space.
You have to assume Mix will be the core player.
But having so many players earning high salaries while warming the bench hurts. And they've shown nothing to demand that kind of $$ elsewhere so dumping them will be tough.
Can we get kreis to run another teams expansion draft?
 

NYCFCfan

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Hurts the eyes to see how much Nemec and Grabavoy make.
It will be interesting to see the approach we take into next season with freeing up space.
You have to assume Mix will be the core player.
But having so many players earning high salaries while warming the bench hurts. And they've shown nothing to demand that kind of $$ elsewhere so dumping them will be tough.
If they're not gone by the time the next expansion draft comes along I know who to not protect.
 

Gotham Gator

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This is great work and interesting stuff. The key is to figure out what next year might look like to see if we have to do any major restructuring to stay under the cap or have any room to make a new aquisition. As you mention, the big question is whether Mix's contract is front-end loaded.

I have to think Lampard only counts for half this year, but he will carry the full DP charge next season regardless. That might also be higher than it is this season - worth checking.

I wonder if there is any extra allocation money for expansion teams in Year 2, or if it drops all the way to zero.

I have to agree that buying down Nemec seems a no brainer.
 

sbrylski

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Reposting at JGarrettLieb JGarrettLieb's request:

To clarify, your spreadsheet concludes that we have used about $313k AM to buy down Mix below DP level, plus another $421k AM to lower our overall qualified salaries (top 20) below the cap? (Total of ~$735k.) Then when you subtract the $150k in AM everyone gets, we are down to the $585k number as "expansion team AM spent?"

Good analysis, my comments earlier in this thread were going off of memory from seeing your post a few weeks ago.

As Tom mentioned, we also traded some allocation money away. To throw out a a completely speculative number, I'll say $100k in each of the two separate trades, for a total of $800k AM spent.

If we were actually awarded a full $1M in AM as an expansion team, that would leave us with ~$200k left, which is around the rumored number of "cap space" we had when the summer transfer window opened.

And that's how, from memory, I completely prognosticated my way into the $1M AM prediction.

This post is dripping in speculation. Employ my conclusions with caution.

EDIT: Btw, Mena would have cost us a net $120k in AM, because his $200k salary bumped Watson-Siriboe's ~$80k off of the top 20. Which means, if any of this is close to correct, we are carrying somewhere between $50k and $150k AM in the wallet right now. (Plus an additional $150k next year still leaves us slightly short of the amount we need to buy Mix down with regular AM.)

EDIT 2: With Williams being claimed by Toronto, looks like we freed up another $65k (Losing Williams $125k from the equation and adding back in KWS's $80k).
 
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MagnusPax

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Reposting at JGarrettLieb JGarrettLieb's request:

To clarify, your spreadsheet concludes that we have used about $313k AM to buy down Mix below DP level, plus another $421k AM to lower our overall qualified salaries (top 20) below the cap? (Total of ~$735k.) Then when you subtract the $150k in AM everyone gets, we are down to the $585k number as "expansion team AM spent?"

Good analysis, my comments earlier in this thread were going off of memory from seeing your post a few weeks ago.

As Tom mentioned, we also traded some allocation money away. To throw out a a completely speculative number, I'll say $100k in each of the two separate trades, for a total of $800k AM spent.

If we were actually awarded a full $1M in AM as an expansion team, that would leave us with ~$200k left, which is around the rumored number of "cap space" we had when the summer transfer window opened.

And that's how, from memory, I completely prognosticated my way into the $1M AM prediction.

This post is dripping in speculation. Employ my conclusions with caution.

EDIT: Btw, Mena would have cost us a net $120k in AM, because his $200k salary bumped Watson-Siriboe's ~$80k off of the top 20. Which means, if any of this is close to correct, we are carrying somewhere between $50k and $150k AM in the wallet right now. (Plus an additional $150k next year still leaves us slightly short of the amount we need to buy Mix down with regular AM.)

EDIT 2: With Williams being claimed by Toronto, looks like we freed up another $65k (Losing Williams $125k from the equation and adding back in KWS's $80k).
Going along with this, didn't we get some Allocation Money from other teams in trades? I know we got at least one International Slot, wasn't there some AM exchanges in there as well?

Great discussion. Sorry I missed it earlier.
 

LionNYC

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derek_villa

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Question how do our Facey and Angelino loans affect the cap?

I have to think Lampard only counts for half this year, but he will carry the full DP charge next season regardless. That might also be higher than it is this season - worth checking.
This is what I thought as well.

This article from SI says, "The Chelsea legend, who is spending the 2014-15 English Premier League season with Manchester City, will earn an annual base salary of $6 million according to the terms of the 1.5-year NYCFC deal he signed in January, a source with knowledge of the contract told SI.com. Lampard’s wages will be pro-rated this season. He’ll then earn the full $6 million in 2016, as well as a marketing bonus."

But the MLS Player Union has his base salary and guaranteed compensation listed at 6 million.
 

SoupInNYC

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Question how do our Facey and Angelino loans affect the cap?



This is what I thought as well.

This article from SI says, "The Chelsea legend, who is spending the 2014-15 English Premier League season with Manchester City, will earn an annual base salary of $6 million according to the terms of the 1.5-year NYCFC deal he signed in January, a source with knowledge of the contract told SI.com. Lampard’s wages will be pro-rated this season. He’ll then earn the full $6 million in 2016, as well as a marketing bonus."

But the MLS Player Union has his base salary and guaranteed compensation listed at 6 million.
I'm not really sure what to make out of that MLS Player Union list. For example, consider the following players coming here mid-season:
  • Pirlo at $2m
  • Lampard at $6m
  • Dos Santos at $4m
  • Gerrard at $6.2m
Its been well documented that Pirlo's salary is well over $2m/year and I also doubt that LA is on the books for a combined $10.2m for Dos Santos and Gerrard for this year.
 

MagnusPax

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Full salaries don't matter for DPs and the cap. What is important is players like Gerrard, Dos Santos or Pirlo only hit the cap at 1/2. So if the normal hit is $485k+, its now like $245k+ per DP.
 

SoupInNYC

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Full salaries don't matter for DPs and the cap. What is important is players like Gerrard, Dos Santos or Pirlo only hit the cap at 1/2. So if the normal hit is $485k+, its now like $245k+ per DP.
I think we are aware of that. It seemed like the question was regarding to how much Lampard was getting paid, not how much cap hit he had.
 

MagnusPax

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I think we are aware of that. It seemed like the question was regarding to how much Lampard was getting paid, not how much cap hit he had.
CFG and Yankees make billions, if it doesn't hit the cap, I am not sure we should care too much. I don't.
 

Paul

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CFG and Yankees make billions, if it doesn't hit the cap, I am not sure we should care too much. I don't.
I care. I expect players to earn their salaries just like I have to do. So far Lampard hasn't IMO.