LAFC’s Carlos Vela is a Prime Example of Why the Designated Player Rule is Broken

The MLS Designated Player Rule allows clubs the ability to sign expensive players without exceeding the team salary budget. First introduced in 2007, the same year as the original iPhone, it was nicknamed the Beckham Rule. And like Apple’s first smartphone which was revolutionary in its release, it is now clunky, outdated, and just doesn’t work anymore.

Firstly, it should be stated up front that the Designated Player Rule is not so simple and straight forward. In addition, it makes up only a small portion of the Byzantine framework that is otherwise known as MLS Roster Rules and Regulations. Truth be told, there are probably less than 10 people worldwide that fully understand its intricate arrangement and can articulate its labyrinth-like complexities without referring to necessary documentation.

With that said, let’s try to briefly explain the DP Rule as simply as possible.

Each MLS club is allowed to assign up to three players with designated player tags. Any player may qualify for a DP tag if their guaranteed compensation is over the maximum salary budget charge of $612,500. The DP tag provides clubs the opportunity to sign otherwise prohibitively expensive players without going over the team’s salary budget.

Essentially, any portion of a designated player’s salary above $612,500 is not counted towards the team’s salary budget. Therefore, when a club such as LAFC pays Carlos Vela $6.3 million per year, only $612,500 counts towards their salary cap. Additional discounts are provided for any player under 24 years of age, also known as a young designated player.

Each club is allotted two designated player roster slots. However, if a club wishes to have a third designated player on their roster, it can do so by paying a $150,000 luxury tax to the league. To further add to the complexity, this luxury tax is waived if one of those three players is a young designated player.

Let’s take a look at LAFC’s current situation with Vela and examine how the DP Rule is outdated and no longer effective.

Signed to LAFC since 2018, Vela currently has the league’s highest salary at a guaranteed annual compensation of $6.3 million. His signing was originally seen as a good move especially after garnering the MVP Award and the Golden Boot in 2019. Since then, however, he has missed quite a few games for different reasons, mostly stemming from injuries. In the past two years alone, these injuries have forced him to sit out a total of 28 games.

Inter Miami was recently punished for trying to circumvent this obsolete rule. It’s naive to THINK they were the only team TRYING to get around IT — they were simply the only ones WHO GOT caught.

LAFC has the league’s fifth-highest payroll and are currently sitting in ninth place in the Western Conference. They’re not statistically out of the playoff race, but will most likely need to win their last two remaining games in order to sneak in as a lower seed.

The 2021 season has been quite a precipitous drop for LAFC. Just two years ago, the club won the Supporters’ Shield with what was then a record for most points in a single season. Although they did not perform as strongly in 2020 after losing in the first round of playoffs, LAFC came close to lifting a major trophy while reaching the CONCACAF Champions League final.

Today, LAFC is facing a conundrum in regards to Vela’s contract which reportedly has an option year for 2022. But what are their choices?

The team could roll the dice and keep him at a hefty salary and gamble that he will be healthy for a majority of games next year. That’s a pretty big risk to take on someone considering that he is essentially tying up nearly 40% of the team’s payroll. In addition, he would be using up one of the three designated player slots.

The other option would be to let him depart and try to replace him. Regardless, even if they sign a marquee player for a similar or lesser salary, LAFC would still be limited to one designated player as his replacement. The other two designated players on LAFC’s roster are Diego Rossi (currently on loan) and Brian Rodriguez — both young designated players being paid approximately $1 million each. And therein lies the problem.

If the option was available, rather than replacing Vela with a lone player at a comparable salary, I’d rather sign six high level players at $1 million each. This would allow LAFC to spread the risk across multiple players instead of having to risk almost half of their salary budget on an injury prone and aging star.

Additionally, this isn’t a situation that’s unique to LAFC. There are quite a few teams who have tied their fortunes to high-salaried designated players that haven’t produced on-field success. Toronto FC has the league’s third-highest payroll and are currently sitting in second-to-last place in the Eastern Conference. Inter Miami is next with the fourth-highest payroll and are well out of playoff contention.

The presumed idea behind limiting teams to only three DPs was to control league spending and foster league parity. Yet 14 years later, the designated player rule is simply outdated and doesn’t seem to fit the current needs of MLS teams. Inter Miami was recently punished for trying to circumvent this obsolete rule. It’s naive to think they were the only team trying to get around it — they were simply the only ones who got caught.

In today’s modern circumstances, what is the effective point of limiting teams to only three designated players? Although the league continues to promote competitive balance, MLS clubs are fighting for competitive dominance in order to grow their fanbase, increase revenue, and raise their valuation. If clubs are willing to spend out of pocket with that in mind, why should the league prevent it by sticking to an archaic rule that no longer makes sense?

Even though there are thrifty teams along with big spenders, MLS team budgets are all within $10 million of each other. In addition, the higher spending teams allot approximately $10 million in salary divided amongst their three designated players. Therefore, instead of restricting teams to a maximum of three designated players, why not set a separate DP salary cap without limiting how many designated players can be signed?

Imagine MLS teams with starting lineups consisting of players all earning approximately $1 million. Although the team salary budgets wouldn’t necessarily go up by much or at all, the overall level of play would increase dramatically. Teams would no longer be reliant on just a few high level players and unnecessarily impacted by a marquee player being injured or unavailable. Not only would team owners have a more stable environment for their investment, fan engagement along with overall quality of product would inevitably rise up as well.