Free Essay Example: MLS Salary Cap

North America implemented salary caps to all of their major league sports. The salary cap for Major League Soccer was introduced in 1996 same year the MLS was established. The two main components for having a salary cap are to promote parity between teams and control costs. These two simple constants in theory could work at the cost of bringing in talent outside the US. There needs to be an increase to the MLS salary cap so that we may attract other talent from other parts of the world and not be stuck to our own ideals. When we look at salary caps throughout our sports, the MLS is almost 45 million dollars behind the next league (NHL). By 2001 the league had lost 250 million dollars due to financial problems and fan attendance. The MLS was losing money each year and a few owners pulled out leaving 3 owners of which one was left with 6 teams for own. Some of the MLS stars departed for more prominent teams in Europe. Never the les, his paper argues that a salary cap increase is not only possible but also sustainable.

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Present conundrum

While the last CBA was signed in 2020 allowing for an increase in salary cap for four years, the current salary cap is still based on the previous agreement. Many of the clubs were waiting for the revision (increase) of the salary cap since 2014 was the last years, the last salary cap increase become effective. Many team adjusted their budget in anticipation of the salary cap increase and considering the economic situation, the salary cap would have been useful for the league as a source of motivation and to the team players as an incentive to give their best.

Inequality between and within teams

The selective nature of the salary cap increase demonstrates that there is discrimination in the allocation of the salary cap increase. For example, looking at the new rules in which only the first 20 players by largest salary count against the cap while the rest are denied the right clearly demonstrates favoritism. Is this a way to divide strong team and rule them? Then again, the Generation Adidas players receive an increase in salary cap while the other players are selectively awarded the salary cap increase also demonstrates the CBA discrimination (Gordon).

The criteria used by the CBA is not clearly, and there is no consistency in the award of the salary cap increase considering the fact that if the generation aides players are awarded he salary wage increase, they are denied the top 20 slot. With their Generation Adidas players occupying spots 21 to 24, they are eligible for o more than $46,000 while the rest of the team earns $35,000. Considering the fact that Generation Adidas player are younger than the MLS players or US soccer, what is the criteria used. Even if the salary cap increase is meant to be an incentive to the young players, if beats logics as the Generation Adidas players enter the MLS without having to go through college graduation (Danzer). It is difficult to earn more than $46000 as a Generation Adidas player then graduate to MLS only to be surprised to a salary cap decrease from $46,000 to $35,000. From logics one should earn less as a Generation Adidas player, then graduate and earn more as an MLS. Why would MLS pay former Generation Adidas players salary while their salary does not count against the MLS players salary cap? It is only prudent that all the players paid by MLS and are paid by the MLS teams count against the MLS teams cap (Gates).

Salary cap increase for the impact designated player

As at 2014, the salary cap was expected to increase when MLS received more money after selling 25% of its shares in Soccer United Marketing (SUM) for $125milion. Therefore, as was expected the salary cap increase was not as it was expected as the league created the impact designated player program which was also a cost driver in the MLS. Howe could a list of few (last then 5%) of the league players costs the league the same amount that the league is paying more than 80%. For example, spending more than $1milionon three players viz a viz Gabriel Torres (Colorado), Max Urruti Toronto, and Diego Valeri. (Portland) is unrealistic. The MLS cold have distributed the money sparingly to all the league teams as each team members contributed to the MLSs revenue (Gates). All players should be given priority once they join the MLS. Which means that the discriminative compensation model should scrapped in exchange for a more fair compensation model for all players.

MLS earning potential is enough to cover salary cap increase

Considering the earning potential of the MLS through its Soccer United Marketing (SUM), it is clear that MLS can afford a salary increase for all its players. A salary cap increase may not be possible every year, but then the players are revenue driver. Giving only a smaller percentage of the players a salary cap increase does no justice to the other entire player (Meador). With new TV deal estimated at over $74 million per year in the US alone, it is quite clear that the company can make much more in Canada, Spain and Mexico with their Spanish language rights, as well as the international rights. Therefore, even after paying a hefty portion to the SUM, and USSF, MLS still remains with a lot of money at its disposal to give the players a salary cap increase. The revenue can cover each and every teams payroll at the current salary cap level and still a lot will remain for the MLS to offer modest salary increase cap (Gordon).

Conclusion

The Salary Discrepancies in Major League Soccer is not a new thing considering the fact that the MLS is currently among the most loved events in the US and Canada. However, with the poor salaries paid to the players, the MLS seems to be courting its undoing. The MLS is just as profitable as the NBA, rugby, American football and National Hockey League. Based on the amount that MLS earns in revenue and deal, the MLS can easily offer significant salary cap increase in its2016, and 2017 fiscal year by taping in on its TV revenue alone. While its true that the main objective of any company is to maximize its shareholders wealth, the MLS. The MLS can afford better pay for all teams and still offer hefty dividends from the revenue its gets from ticket sales, merchandise sales, MLS live, transfer fees as well as the expansion fees. A good salary cap increase is affordable as every player in each team that makes MLS a success deserve better pay without shrinking its payroll.

Works cited

Danzer, Paul. "Draft Day Successful For Portland Timbers". The Columbian. N.p., 2011. Web. 14 Apr. 2016.

Gates, Ryan. "MLS Salary Cap: Where Is It Now And Where Is It Going?". Stumptown Footy. N.p., 2014. Web. 14 Apr. 2016.

Gordon, James Patrick. "Six Things We Learned From The MLS Player Salary Data Dump".pastemagazine.com. N.p., 2016. Web. 14 Apr. 2016.

Meador, Jake. "Why European Soccer Needs To Be Americanized". The Inside Channel. N.p., 2015. Web. 14 Apr. 2016.