Could a soft cap with luxury tax work better for MLS compare to hard cap+DP?

[Dust2]

My suggestion of the soft cap with luxury tax:

Salary cap at $2.5 mil
Minimum salary cap (75%) at $1.88 mil
Luxury tax ($1 for $1 over) starting at $3 mil

Each team can have at most 1 DP (can't be traded). A DP is defined as a player who is exempted from the payroll but cost $1 mil in luxury tax. Teams who are at or below the salary cap ($2.5 mil) will receive luxury tax revenue.

Why would this form of salary cap be superior to the current strict hard cap + DP (that cost $425,000 against the cap)? The answer is growth. All teams are not created equal. There are some teams that have much higher growth potential than others. However, because of the strict hardcap/level playing field, teams that have strong fan base and very high grow potential are not allowed to grow. Under a soft cap with luxury tax structure described above, a few MLS teams like NY, LA, Tor, Sea, Vancouver could have better players. As a result, they retain their current fan base and attract new ones. Potential attendance: Seattle (35,000) Toronto (30,000 in expanded grass BMO) Galaxy (27,000) NY (25,000) would push MLS forward to new height. Which could mean better media coverage, better TV rating. MLS image and reputation among existing soccer fans would increase from better result in the Champions League. Right now, the perception of MLS as a poor quality league is common among many existing soccer fans because of MLS's poor showing in the Champions League. Got beat by 6-1 on aggregate by a team from Trinidad and Tobago and 3-1 on aggregate by a team from Panama only proved their long-held belief.

Another reason why a NBA-style salary cap would benefit MLS overall is that it would give the expansion teams a head-up. They could come out the gate and do well provided that spend and pay luxury tax. The expansion teams have far greater potential than most older MLS cities because they have not gone through "brand damage" that most MLS teams have had. Having a level playing field/hard cap would hinder these expansion teams which have the most potential for growth. The very teams that MLS will depend on for further growth.

Season Tickets:

1996-41,995
1997-37,893
1998-38,683
1999-43,782 (league average was 3,649)

2005-48,300 (league average was 4,025)
2007: -------------5226 average

New expansion teams:

Toronto

2007~16,600 (with 15,000 waiting list)
2008~16,600 (with 15,000 waiting list)
2009~16,600 (with 15,000 waiting list)

Seattle

2009-~25,000

Philly 2010

2010--expecting about 12-14k (currently at 7,000 with 9 months to go)

Vancouver 2011 sold 5000 season ticket deposits within 48 hours.

Portland 2011 sold 4500 season ticket deposits within 3 days.

[Batman]

Agreed.
Great plan. It allows teams to take advantage on the field with their popularity at the gate.
It helps the lesser teams solidify financially.

Yet, at the same time it generally discourages from turning MLS into the problem in baseball where some teams (Yankees etc.) are spending 10 times that of others.

I like it.

[Technorgasm]

YANKEES.



~ I'll get my coat

[Steve]

Is this all that you do? Stay up at night worrying about the salary cap? Because the only posts you've posted here are three difference suggestions on how to change the cap.

And in answer to all three (as well as all of the future suggestions I'm sure you'll post here with a poll) no. A hard cap is the best thing for MLS right now, and probably for the future as well. Parity helps a league like this, since the "haves" will always need competition to play against, and a 5 team league is no fun.

Also, we had 14,000 season's tickets in 2007, not 16,600

[Dust2]

Under a soft cap with luxury tax model, small market teams will have these benefits that most small market soccer teams around the world would love to have:

-Luxury tax ($2-3 mil a year)
-Revenue sharing (equal sharing of 30% of ticket revenue, national TV, national sponsorship and league merchandise )
-Draft system that favor the weakest teams
-8-teams playoff that give each team in the playoff a legitimate shot at winning the title (when MLS have 22+ teams, it is most likely be a 12-teams playoff).

FYI: Red Bull company just bought a 5th division German team with the hope of doing a Hoffenheim. It is willing to put 100 million Euros into RB Leipzig over 10 years in order to get it promoted to Bundesliga.
http://www.independent.co.uk/news/wo...s-1716000.html

The Austrian firm has announced plans to bankroll the club with an estimated €100m (£86m) investment over the next decade. Its aim is to catapult the side into Germany's premier league, the Bundesliga, by 2017 and lift east German football out of the doldrums where it has been stuck for almost two decades. Last season the only east German club in the Bundesliga, Energie Cottbus, was relegated; the rest are rich west German clubs.

The team will play at this stadium after it got promoted to Tier 4. The stadium will be renamed Red Bull Arena. My point is that MLS should let the Red Bull pay $4 mil luxury tax if it wants a $6 mil payroll. The league would be better for it if its premier market, New York City, is successful.

My guesstimate of what MLS payroll might look like if MLS follow my suggestion:

NY and LA (with 1 DP): $6 mil payroll ($4 mil luxury tax)
Sea and Tor (with 1 DP): $5 mil payroll ($3 mil luxury tax)
Vancouver, Philly, Chicago (with 1 DP): $4 mil payroll ($2 mil luxury tax)
Portland, Houston, DC, Chivas: $4 mil payroll ($1 mil luxury tax)
SJ, KC, RSL, Colorado, Dallas, Columbus, N.E.: $1.88 - $2.5 mil payroll (receive luxury tax revenue)

The hard cap/DP system has not served the Galaxy well even though it spent 4 times more than the majority of MLS clubs. It could spend $10 mil in a much better way to field the best team possible. $6 mil payroll ($4 mil luxury tax). A $6 mil payroll LA would be a favorite for a playoff spot.

Galaxy: 11th out of 13 teams in the table (2007 season)---$9,179,949 payroll
Galaxy: 13th out of 14 teams in the table (2008 season)----~$9,200,000 payroll
Galaxy: currently 11th out of 15 teams in the table (2009 season)---$9,313,290.53 payroll

LA could put that money to much better used like Snowden suggested:

http://soccer365.com/us_news/story_81208190400.php
Splitting the Cap By Richard Snowden

To see one clear advantage of such a cap system over the DP Rule, one need look no further than the Los Angeles Galaxy. Despite boasting Beckham and Landon Donovan, the Galaxy has missed the playoffs three years running, often playing poor soccer due to being forced to surround their two outstanding players with a cast composed largely of poorly paid players whose performances too often matched their paychecks.

With a two-tier cap system like that described above, teams would have far more leeway to build their rosters than under the DP Rule. If Galaxy chief Tim Leiweke wants to keep Beckham and his $6.5 million salary, for example, he can still do so, but he could also choose to offload Becks and instead use the $7 million of extra cap space to sign seven players at $1 million each, a move that would surely make his club far stronger.

[111_DrummerBoy]

YANKEES.



~ I'll get my coat

Damn it's already been said.

[flatpicker]

Is this all that you do? Stay up at night worrying about the salary cap? Because the only posts you've posted here are three difference suggestions on how to change the cap.

And in answer to all three (as well as all of the future suggestions I'm sure you'll post here with a poll) no. A hard cap is the best thing for MLS right now, and probably for the future as well. Parity helps a league like this, since the "haves" will always need competition to play against, and a 5 team league is no fun.

Also, we had 14,000 season's tickets in 2007, not 16,600

He certainly does like discussing salary options... but that's ok, I think it makes for fun discussions.

I disagree about a league needing complete parity.

I think having some stronger clubs is actually better for marketing the league to the general population.

Especially if you want people to watch MLS when they don't live in a city with a team.
Those people need a team to get behind and they would be more inclined to put support behind one of the "Big Clubs"

Also, I think having a few stronger clubs makes some games more exciting.
The opportunity for smaller teams to cut big teams down to size would make for entertaining football.

I don't think giving advantages to some clubs would put them so far ahead as to assure them of a Cup.
They might be more assured of winning the Supporters Shield though.


Complete parity is kinda dull.
On one hand, it does put most of the emphasis on managing and coaching,
But that isn't quite as exciting to the average Joe as bringing in talent to the league.

[Dust2]

MLS is a single-entity that have 18 teams with a few more to come in the form of expansion teams. Clubs that are more successful in generating revenue and profit should be rewarded. After all, they are the ones that contribute the most revenue to the league. They should be allowed to grow, not hindered. Some would argue that allowing these teams to become more successful would take away fans from the weakest teams. To some extend that is true. However, the weakest teams will be compensated in the form of revenue sharing, luxury tax, and a talent draft. Also, many existing soccer fans view MLS as below average in quality. A few strong teams will help improve its image and perception. As long as the revenue generated by the successful teams more than offset the loss in revenue incurred by the weak teams due to "less parity" in the league, the single-entity league as a whole benefit.

Some facts:

#1. LA attendance 2008: 26,009........2009 after 9 games: 19,292
#2. Columbus the defending champions: 13,056.....not much of an improvement.
#3. Each club provides 30% of their ticket revenue to MLS (Seattle is sending MLS 9000 paid tickets......wouldn't the league benefit if Seattle can continue this success?, same with LA...a drop of almost 7000 in attendance hurt the league....wouldn't the league benefit if LA average 26,000+?)

#4

HOME GAMES                  ROAD GAMES
                       DATES      TOTAL  AVERAGE   DATES      TOTAL  AVERAGE
Chicago Fire               6     70,357   11,726       9    147,341   16,371
Chivas USA                 8    122,494   15,312       7     97,364   13,909
Colorado Rapids            7     91,317   13,045       8    128,123   16,015
Columbus Crew              8    104,446   13,056       8    124,885   15,611
FC Dallas                  9     83,756    9,306       7    101,057   14,437
D.C. United                8    118,491   14,811       9    135,570   15,063
Houston Dynamo             8    125,510   15,689       8     95,679   11,960
Kansas City Wizards        8     78,309    9,789       7    124,753   17,822
Los Angeles Galaxy         9    173,632   19,292       7    120,698   17,243
New England Revolution     5     57,557   11,511       8    114,049   14,256
New York Red Bulls         8     91,076   11,385      11    188,097   17,100
Real Salt Lake             8    128,357   16,045       8    122,633   15,329
San Jose Earthquakes       7     82,421   11,774       8    117,415   14,677
Seattle Sounders FC        9    267,435   29,715       7     98,614   14,088
Toronto FC                10    202,881   20,288       6     81,761   13,627


MLS Totals               118  1,798,039   15,238     118  1,798,039   
15,238

#5

The daily e-mail from MLS Communications of compiled news reports had one notable omission Thursday: the story in the San Diego Union-Tribune on MLS's practice of inflating its attendance figures.

Citing confidential league documents, the newspaper reported that average paid attendance for the 2005 season was 10,746 per match, or 29 percent less than the 15,108 "official attendance'' reported by the league. Excluding international doubleheaders, the league averaged less than 10,000 fans a game.

Not as extreme in padding attendance in 2009 compare to 2005 but I wouldn't be surprised if each club (beside Toronto and Seattle) paid attendance is about 1,000 less than announced attendance. As I stated, not all clubs are created equal. But under the strict hard salary cap, all clubs are treated equal. A level playing field descends on all teams. As a result, teams with the most potential that could push MLS forward are hindered.

[flatpicker]

...As a result, teams with the most potential that could push MLS forward are hindered.

that's how I feel too.

I think this league needs big clubs to increase it's popularity.

If MLS wants to market itself around the USA, Canada, and elsewhere in the world,
then footie fans need to have some "big boys" and "underdogs" to cheer for.

that where the most excitement is, I think.

[zeelaw]

It'd be better for TFC, but not MLS i think.

[Dust2]

http://www.sportsbusinessjournal.com/article/58257

Season tickets number THROUGH FEB 17 ONLY.
Include Full and Partial Season Ticket Packages.

Club 2008 2007 Change

Chicago Fire------ ----    2,759     2,553     +8%
Chivas USA ------------    837     858     -2%
Colorado Rapids-------     2,968     1,866     +59%
Columbus Crew--------    3,227     3,190     +1%
D.C. United ---------    5,976     4,721     +27%
FC Dallas --------------3,002     3,134     -4%
Houston Dynamo   -----4,116     2,205     +87%
Kansas City Wizards     1,539     464     +232%
Los Angeles Galaxy     7,915     9,308     -15%
New England Revolution   4,001     3,502     +14%
New York Red Bulls  -   3,170     2,391     +33%
Real Salt Lake--   ----  4,632     4,421     +5%
San Jose Earthquakes     3,822     N/A     N/A
Toronto FC ----  -----16,641     12,435     +34%
TOTAL -----------  64,605     51,048     +26.6%

compare that to

Seattle ~25,000
Toronto ~16,600 (with 15,000 waiting list)
Philly ~ ?12,000-14,000? possible (passed 7,000 with 9 months to go)
Vancouver, Portland: woudn't be surprised if they reach 15,000+

As I stated, not all clubs are created equal. But under the strict hard salary cap/level playing field/parity is king, all clubs are treated equal.

FYI:

The KC feasibility study...I hope some of you that haven't seen this will find it interesting in the inner working of MLS.

                       Pre-Contraction               Post-Contraction
Revenues          Investor/Operator       MLS      Investor/Operator     MLS

Gate Receipts            50%               50%               70%         30%
Concessions             100%                0%              100%          0%
Parking                 100%                0%              100%          0%
Local Sponsorships      (1)                (1)              100%          0%
National Sponsorships    0%                100%               0%        100%
Other Stadium Revenue  100%                 0%              100%          0%
National Media           0%                100%               0%        100%
Local TV & Radio       100%                 0%              100%          0%


Expenses

Player Salaries          0%               100%                0%        100%
Front Office Expenses  100%                 0%              100%          0%
Team Travel              0%               100%              100%          0%
Broadcast Expenses       0%               100%              100%          0%
Rent                    50%                50%              100%          0%

Game Day Expenses 50% 50% 100% 0%

(1) The first $1.5 million was retained by the team and the remaining
revenue was shared with the league

http://www.kansascity.com/multimedia...nal_Report.pdf

In addition, MLS also take a cut of the shirt sponsorship. Anyway, MLS could still take in these revenue and pay for player salaries under a soft cap/luxury tax. The league will pay up to $1.88 mil. Anything more than that will go to the individual owners.

[Steve]

It'd be better for TFC, but not MLS i think.

That's just it, isn't it? It's always fans from teams who think they would be a "have" that suggest changing the cap structure to benefit them, claiming how good it would be for the league. Sorry, but I don't see it.

Personally, I don't like leagues with no parity. I hate the competition format of the EPL. I hate that I could name the teams that would finish top 4 in the league before it even started. I hated that if I had tried to make a bet on that, the odds would be so in my favour it wouldn't have been worth my time. I hate that the same could be said for winning the league. What's the point? What's the point in having that kind of disparity in a league? How about I play chess with you, and I have all queens, and you have all pawns. Seems like a good idea, no? Even if TFC was a have, I wouldn't enjoy it as much.

As for the financial health of the league, there are many arguments against dropping a hard salary cap in this league, especially so young. I may get into them later, but I'm tired of rehashing the same stuff. Essentially, you will lose teams at the bottom as fans completely lose interest in supporting a team that cannot win, and you will lose teams at the top as ownership groups are forced to keep up with the joneses because their fan bases expect a winner, leading to financial collapse. North America is not the rest of the world, we don't live and breath soccer, we won't put up with being relegated to the basement of the league just because we're not a "have" market, because people just don't love soccer enough to stick to a team with no hope. The salary cap ensures each team has a chance of winning. It allows the most important aspect of sport, hope, to stay alive. Sport shouldn't be about who can spend more money, it should be about overcoming your opponent on an equal playing ground, with the same rules in place for everyone.

As for the salary cap itself, I hope it goes up significantly, but not until it is sustainable (it may already be, I'm not privy to inside league financials). I want the league to grow steadily, so it is around for my kids in the future.

[rocker]

i don't know enough about MLS revenue (none of us do really) to know whether a cap of this sort would be financially feasible. Only Garber and his cronies know for sure (they don't even share all info with the players union in the current bargaining). any cap change must be linked with revenue levels.
And why would there be a minimum below the cap when the league itself pays all the salaries up to a point? Teams don't need a minimum when the actual cap amount up to 2.5 is paid for by the league anyways. The money is not the teams, so they would just use all they could. The single entity situation, with MLS signing all contracts, must be taken into consideration.

also, there's no proof that the current cap inhibits the growth of the league. That's a hypothesis, but it's presented here as "fact" to justify a new cap regime. Many would saw the cap has helped the league grow, bringing in investors who would be scared away by a "wild west" of spending typical of other leagues.

I think the great way of growing the game is just increasing the cap to a level that allows a certain level of quality that draws in the Euro fan -- a quality they can get behind.
If that quality is the same across all teams, the games themselves would be amazing! Imagine if the cap was 50 million for every team*??? you'd have stars on every team, great competitive matches.. nobody ever out of it for money reasons... wow!

* of course, that 50 mil number is a pipe dream and may take 30 years... but i'm exaggerating for effect

I say just increase the cap to a reasonable number and we'll have that quality we want, and competitiveness too!

TFC is always lumped in with the spenders, but be careful what you wish for... they might not always be. Then we'll be lamenting LA's big spending or NY's big spending....

Lastly, the Raptors never spend into the tax range of the NBA. Actually very few NBA teams do. So it's not like TFC would.

[OneLoveOneEric]

I'm all for soft cap + tax, but that's because I'm anti-cap.
A soft cap and tax system will do nothing to limit spending by the big teams, though, which I'd love to see happen, whether TFC could keep up or not.

[Beach_Red]

* of course, that 50 mil number is a pipe dream and may take 30 years... but i'm exaggerating for effect

Or there could be a tipping point. Or the league may take a few big steps instead of lots of small ones.

Or the league might fold.

These threads always use successful league's caps and luxury taxes but it might be just as useful to look at the many sports leagues that have failed to see if there's anything they've done wrong consistently.

NASL was looking good for a while. NFL Europe was supposed to be a big deal. The WHA almost competed for a while. USFL, XFL, there's even a new United Football League starting up (they're looking to sign Michael Vick).

Why did none of these leagues work?

[Jack]

Didn't you already have a huge thread about this same subject?

[Pookie]

Here we go again.

Let's try a few different counter points this time around.

Parity

If a cap system creates parity why have the Leafs not been able to make the playoffs 3 years in a row?

A cap system doesn't necessarily lend itself to parity. It goes miles towards cost certainty and stability but performance is still a function of quality of play, management, training, etc.

A cap levels the ability of teams to spend their way out of (or into trouble). That's it.

Fans will flock to see the "big guys"

Really? Are the big guys defined by the number of "stars" they have or are they defined by performance on the field (ie winning)?

Setting aside that fact that the "stars" we are talking about are not those with the names like Lampard, Gerrard, Rooney, etc. Rather "stars" that are relatively unknown in North American circles.

Let's explore the winning = attendance boost.

Columbus (MLS Champs) - 13,055 per game average - 1.36% increase in attendance (2009) - approx 130 extra fans per game
Houston (Top of the Western Table) - 15,688 per game - a -5.29% decrease - approx 750 less fans per game
Chivas (2nd in West) - 15,311 per game - a 6.51% increase per game - approx 800 extra fans per game
DC United (Tied Top of Eastern Table) - 14,811 per game - a 28.85% decrease per game - appox 4,000 fans per game
Chicago (Tied Top of Eastern Table) - 11,726 per game - a 28.67% decrease per game - approx 2,800 fans per game

Interestingly, DC, Columbus, Chicago all have a designated player too. They have a "star" and a winning club. Yet, attendance is down (or flat) in all 3 of those markets.

Can anyone reasonably conclude that winning on the field (or winning with a star(s) in the line up) will result in fans flocking to see them?

Toronto would be a big spender

This is my favourite one. We have a team that hasn't yet finished its third season. It competes in a market that requires expenses (salaries) to be paid in $US, yet it's revenue stream is in $CDN.

They have the good fortune of being able to enter the league at a time in which the $CDN has been around 85-95 cents but was actually worth more than $1.00 (2007-2008).

There was a time when the dollar was worth 63 cents. That was just 7 years ago.

You think that we'd be big spenders if for every dollar we spend, we have to spend an additional 40% just to be on par with the US buck? A 3 million dollar player would cost TFC $4.2M in Canadian dollars if this system was in place 7 years ago.

Since history repeats itself, fans of TFC should be arguing to hold the cap. It levels the playing field and protects against this inherent disadvantage of a Canadian club competing in US dollars.

[Cashcleaner]

I don't want to see a situation where parity between clubs is enforced arbitrarily, but on the other hand, a hard cap is probably the easiest solution to control spending. Personally, I believe that success shouldn't be penalized and have a bit of a problem with clubs having their pursestrings tied by the league. However, with MLS you have an awful lot of clubs that seem to be just hanging by the skin of their teeth, financially. Like it was mentioned, a 5-team league isn't all that exciting.

There's good points for and against the whole thing.

[Steve]

I don't want to see a situation where parity between clubs is enforced arbitrarily, but on the other hand, a hard cap is probably the easiest solution to control spending. Personally, I believe that success shouldn't be penalized and have a bit of a problem with clubs having their pursestrings tied by the league. However, with MLS you have an awful lot of clubs that seem to be just hanging by the skin of their teeth, financially. Like it was mentioned, a 5-team league isn't all that exciting.

There's good points for and against the whole thing.

Success isn't really penalized in MLS, it just isn't rewarded by being able to sign whoever you want. Why should it? Personally, I like the strategy of hard cap, but successful clubs being able to give themselves an advantage in other ways. Bring in a great coaching staff (and pay them what you want), bring in a great training staff, bring in great scouts. Create facilities that will allow the team to train in the best possible fashion. All of these things exist, and should, in the long run, give a successful team the edge it needs.

The only change I would like to see to the competition format of MLS is to academies. The rules to sign academy players need to be changed so the club developing the players benefits as much as possible (be it financially through selling the player, or by using them on their roster).

To me, the combination of the ability to develop a first rate academy, and bring in top quality coaches, will not only keep parity mostly intact while giving teams the ability to find an edge, but will also push north american soccer much further, much faster, than throwing money at players would. Think about it, if you can spend money on players to be good, you'll focus on bringing in internationals, if you have to spend money on development (coaching is involved in that) you will push Canadian and American soccer to new levels.

[rocker]

true Steve... a cap changes the source of success.. the source of success moves from economic advantage over others to scouting, coaching, training. sounds almost too pure!

maybe the solution is keep the hard cap but reduce all the restrictions that actually protect teams from making mistakes, like the draft. then the emphasis moves even more to making smart decisions, as money provides no advantage to correct mistakes.
Leaving more risk to teams with a hard cap, plus a higher cap for all teams, means if you screw up it has a greater financial risk -- more room where scouting badly, coaching badly, and training badly, expose yourself.

[Yohan]

MLS already has a bit of soft cap system anyways.

It's called allocation money. Hence why Toronto can field a team way over its cap limit right now

[james]

soft cap for sure.

You cant hav a hard cap in soccer when 98% of the other soccer leagues around the world dont even have a salary cap what so ever. We need some space to spend what we want to compete.

[Dust2]

Lastly, the Raptors never spend into the tax range of the NBA. Actually very few NBA teams do. So it's not like TFC would.

http://www.nba.com/news/salarycapset_080709.html

The National Basketball Association today announced that the Salary Cap for the 2008-09 season will be $58.680 million.

The tax level for the 2008-09 season has been set at $71.150 million. Any team whose team salary exceeds that figure will pay a $1 tax for each $1 by which it exceeds $71.150 million.

The mid-level exception is $5.585 million for the 2008-09 season and the minimum team salary, which is set at 75% of the Salary Cap, is $44.010 million.

2008-2009 payroll
http://hoopshype.com/salaries.htm

1. New York Knicks $94,842,168
2. Dallas Maverick $92,758,122
3. Cleveland Cavaliers $91,650,943
4. Boston Celtics $80,659,701
5. Portland Trail Blazers $80,600,059
6. Phoenix Suns $75,626,030
7. Houston Rockets $75,469,051
8. Los Angeles Lakers $75,255,408
9. Sacramento Kings $73,129,886
10. Detroit Pistons $72,076,423
11. Toronto Raptors $71,965,453
12. Milwaukee Bucks $71,421,682

------------pay luxury tax----------

13. Washington Wizards $70,259,475
14. Indiana Pacers $70,036,797
15. Denver Nuggets $70,478,826
16. Miami Heat $69,865,650
17. San Antonio Spurs $69,299,039
18. Orlando Magic $68,713,618
19. Oklahoma City Thunder $68,533,648
20. Chicago Bulls $68,520,301
21. Golden State Warriors $68,461,515
22. Philadelphia 76ers $68,393,588
23. Atlanta Hawks $68,012,336
24. New Orleans Hornets $67,866,515
25. Minnesota Timberwolves $66,066,569
26. Utah Jazz $65,632,827
27. New Jersey Nets $62,609,434
28. Charlotte Bobcats $61,787,680
29. Los Angeles Clippers $60,775,937
30. Memphis Grizzlies $55,705,279


As for MLSE don't want to exceed the cap, that's their choice.

Salary cap at $2.5 mil
Minimum salary cap (75%) at $1.88 mil
Luxury tax ($1 for $1 over) starting at $3 mil

Each team can have at most 1 DP (can't be traded). A DP is defined as a player who is exempted from the payroll but cost $1 mil in luxury tax. Teams who are at or below the salary cap ($2.5 mil) will receive luxury tax revenue.

[Dust2]

And why would there be a minimum below the cap when the league itself pays all the salaries up to a point? Teams don't need a minimum when the actual cap amount up to 2.5 is paid for by the league anyways.

The league will pay up to $1.88 mil. Not $2.5 mil.

also, there's no proof that the current cap inhibits the growth of the league. That's a hypothesis, but it's presented here as "fact" to justify a new cap regime.

Take a look at LA and tell me that the whole situation there in the last 3 years benefit the league?

Galaxy: 11th out of 13 teams in the table (2007 season)---$9,179,949 payroll
Galaxy: 13th out of 14 teams in the table (2008 season)----~$9,200,000 payroll
Galaxy: currently 11th out of 15 teams in the table (2009 season)---$9,313,290.53 payroll

Would MLS benefits as a whole if teams like NY, LA, Tor, Sea win a little more often?

Many would saw the cap has helped the league grow, bringing in investors who would be scared away by a "wild west" of spending typical of other leagues.

How is it wild west spending? It's still a cap. It's not like a free spending of the 98% of other soccer leagues out there?

If NY and LA want to spend $6 mil in payroll, they will pay $4 mil luxury tax. This revenue will be shared by the "have-nots" of MLS. The gap between a $2.5 mil team and a $6 mil team is not that big. Yes, the $2.5 mil team will be at a disadvantage but not one that can't be overcome. In addition, the $2.5 mil team will be getting $2-3 mil a year in luxury tax revenue. Surely, that help the team in their quest for profitability.

[Cashcleaner]

The only change I would like to see to the competition format of MLS is to academies. The rules to sign academy players need to be changed so the club developing the players benefits as much as possible (be it financially through selling the player, or by using them on their roster).

Oh man, I couldn't agree more with the academies. Right now the restrictions to signing an academy player for your own team or making a trade is just plain stupid. The academy should be operating specifically to benefit the club by developing players for its own use on the pitch or trading to other clubs for their use. I can't believe they went and made the whole thing so complicated.

Good point.

[Yohan]

Oh man, I couldn't agree more with the academies. Right now the restrictions to signing an academy player for your own team or making a trade is just plain stupid. The academy should be operating specifically to benefit the club by developing players for its own use on the pitch or trading to other clubs for their use. I can't believe they went and made the whole thing so complicated.

Good point.

the counterpoint is that a team can use academy to get too much of advantage over other teams

not every team is willing, or can afford to spend multi million bucks to set up an academy program

[Pookie]

soft cap for sure.

You cant hav a hard cap in soccer when 98% of the other soccer leagues around the world dont even have a salary cap what so ever. We need some space to spend what we want to compete.

What if the other leagues start to introduce financial restrictions? Does that change your position?

It's funny. We have a successful financial model that is envied by a number of leagues around the world for its cost certainty. Yet, some insist it is broken and want to follow the European model.

Yet in Europe, many think that model is broken and look to leagues with financial restrictions for guidance.

UEFA president Platini eyes up spending cap as clubs risk 'imploding'

Michel Platini has told the European parliament that UEFA are considering capping spending by clubs and suggested that Manchester City's pursuit of Kaka had increased the need for action.

The UEFA president has been a critic of outlandish buying by Europe's elite clubs - much of which is based on borrowed credit or the personal spending of wealthy benefactors - and insists it is the clubs themselves who have requested the move.

'European clubs are telling us that our system is in danger of financially imploding in the medium term,' Platini told MEPs in Brussels.

'In consultation with them we are looking at limiting to a certain degree a club's expenditure on staff - salary and transfer fees combined - to an as yet undecided percentage of their direct and indirect sporting revenue.'

Platini hinted discussions over a salary cap were accelerated by one club's "astronomical bids" last month. Although he did not name Manchester City, who are owned by Sheikh Mansour's Abu Dhabi United Investment Group, he appears to have been referring to their move for Kaka.

City were willing to pay AC Milan £108million and Kaka wages of £250,000 per week but the forward decided to stay at the San Siro.

'During this year's festive season, one club which had suddenly become very rich made various astronomical bids in the transfer market,' said Platini.


'Of course, there was a tremendous outcry in the football family, people called it outrageous and scandalous.

'Is it acceptable to offer such sums of money for a single player? Many people have responded by talking about limiting players' wages by introducing a European salary cap.'

Platini said that clubs such as Real Madrid and Manchester United are not immune to the global economic downturn and regulation must be put into force.

'For the past 15 or 20 years, we have grown tired of hearing that the market regulates itself perfectly, that excesses and imbalances will disappear of their own accord and that the growth of income in football is an endless upward spiral,' he said. 'We now know none of this is true.'

Platini stressed this was "only the beginning of the discussion" and any legislation limiting spending would only come in "on a consensual basis and with a view to strengthening this system".


Read more: http://www.dailymail.co.uk/sport/football/article-1148897/UEFA-president-Platini-eyes-spending-cap-clubs-risk-imploding.html#ixzz0Kl0ynKQF&C

More...

• Platini war cry: UEFA chief on collision course with Premier League over curbing spending
• Charles Sale: Platini shows little English patience
• Platini asks for EU powers that could see English clubs barred from Champions League

[Dust2]

Let's explore the winning = attendance boost.

Columbus (MLS Champs) - 13,055 per game average - 1.36% increase in attendance (2009) - approx 130 extra fans per game
Houston (Top of the Western Table) - 15,688 per game - a -5.29% decrease - approx 750 less fans per game
Chivas (2nd in West) - 15,311 per game - a 6.51% increase per game - approx 800 extra fans per game
DC United (Tied Top of Eastern Table) - 14,811 per game - a 28.85% decrease per game - appox 4,000 fans per game
Chicago (Tied Top of Eastern Table) - 11,726 per game - a 28.67% decrease per game - approx 2,800 fans per game

Interestingly, DC, Columbus, Chicago all have a designated player too. They have a "star" and a winning club. Yet, attendance is down (or flat) in all 3 of those markets.

Can anyone reasonably conclude that winning on the field (or winning with a star(s) in the line up) will result in fans flocking to see them?

Have you taken the state of the economy into consideration? Also, these clubs you listed above do not have as great growth potential compare to Seattle, LA, NY, Tor, Vancouver.

Winning "on the field (or winning with a star(s) in the line up" for the like of Seattle, Toronto (in expanded stadium), LA, Vancouver, Philly...would result in increase attendance for them unlike Columbus, Chivas, Chicago.

Which would more likely to result in 3,000 increase in attendance from winning the MLS Cup? Seattle/Toronto/Vancouver or Columbus (which barely grow at all)?

As I stated, not all teams are created equal. Some have much higher growth potential than others. Put a winning team in Seattle, Toronto would generate much more revenue for the league as a whole than a winning team in Columbus, San Jose, Kansas City, Dallas.

[Dust2]

What if the other leagues start to introduce financial restrictions? Does that change your position?

It's funny. We have a successful financial model that is envied by a number of leagues around the world for its cost certainty. Yet, some insist it is broken and want to follow the European model.

Yet in Europe, many think that model is broken and look to leagues with financial restrictions for guidance.

UEFA president Platini eyes up spending cap as clubs risk 'imploding'

Michel Platini has told the European parliament that UEFA are considering capping spending by clubs and suggested that Manchester City's pursuit of Kaka had increased the need for action.

The UEFA president has been a critic of outlandish buying by Europe's elite clubs - much of which is based on borrowed credit or the personal spending of wealthy benefactors - and insists it is the clubs themselves who have requested the move.

'European clubs are telling us that our system is in danger of financially imploding in the medium term,' Platini told MEPs in Brussels.

'In consultation with them we are looking at limiting to a certain degree a club's expenditure on staff - salary and transfer fees combined - to an as yet undecided percentage of their direct and indirect sporting revenue.'

Platini hinted discussions over a salary cap were accelerated by one club's "astronomical bids" last month. Although he did not name Manchester City, who are owned by Sheikh Mansour's Abu Dhabi United Investment Group, he appears to have been referring to their move for Kaka.

City were willing to pay AC Milan £108million and Kaka wages of £250,000 per week but the forward decided to stay at the San Siro.

'During this year's festive season, one club which had suddenly become very rich made various astronomical bids in the transfer market,' said Platini.


'Of course, there was a tremendous outcry in the football family, people called it outrageous and scandalous.

'Is it acceptable to offer such sums of money for a single player? Many people have responded by talking about limiting players' wages by introducing a European salary cap.'

Platini said that clubs such as Real Madrid and Manchester United are not immune to the global economic downturn and regulation must be put into force.

'For the past 15 or 20 years, we have grown tired of hearing that the market regulates itself perfectly, that excesses and imbalances will disappear of their own accord and that the growth of income in football is an endless upward spiral,' he said. 'We now know none of this is true.'

Platini stressed this was "only the beginning of the discussion" and any legislation limiting spending would only come in "on a consensual basis and with a view to strengthening this system".


Read more: http://www.dailymail.co.uk/sport/football/article-1148897/UEFA-president-Platini-eyes-spending-cap-clubs-risk-imploding.html#ixzz0Kl0ynKQF&C

More...

• Platini war cry: UEFA chief on collision course with Premier League over curbing spending
• Charles Sale: Platini shows little English patience
• Platini asks for EU powers that could see English clubs barred from Champions League

This thread is not advocating the free for all spending of 98% of soccer leagues. This thread is about a soft cap. It's still a very effective salary cap to limit spending.

Teams can spend but pay a hefty penalty for it. ($1 penalty for $1 of extra spending). At some point, it will not make sense to spend $2 mil just to get $1 mil in cap space. A team like NY, LA, Sea could spend $9 mil, but they only get $6 mil for payroll (with $3 mil luxury tax). A $2.5 mil team vs $6 mil team will not make MLS like Scottish Premier League or EPL where the gap is so large ($300 mil payroll Chelsea vs $20 mil payroll Hull/Stoke).

In addition, teams will have a very good reason to stay under the salary cap. They would receive $2-3 mil of luxury tax revenue. For a team like SJ, KC, Columbus who probably won't spend big anyway, they can just spend $2.5 mil a year in payroll, and receive $2-3 mil a year in luxury tax revenue.

The NBA has a soft cap since the 1980s and the league as significantly prosper as a result.

[rocker]

The NBA has a soft cap since the 1980s and the league as significantly prosper as a result.

But what correlation can you make between the NBA having a "soft cap" and its prosperous history?
The NBA's success may or may not be connected to having a soft cap. If you're going to advocate a soft cap so strongly you need to provide direct evidence of that cap leading to the success if the NBA. But the NBA's success could also be related to things like promoting star players in the 80s (Jordan/Bird), a generation that grew up with basketball and appreciated it, and massive media promotion. There could be many more factors I haven't thought of...

The NFL has a hard cap and it has prospered even more than the NBA.

So I would suggest that great success in North American leagues is not primarily a factor of whether the cap is soft or hard. A cap is important (i think it's great!) but the nitty gritty details of the cap probably mean less to success than things like culture.

Here's a thought: Imagine if you swapped the culture of NFL football with soccer in America.
Imagine if Americans (even in small town Texas) grew up with soccer not football. Imagine if all those highschool football stadiums down there were soccer stadiums. Imagine if this big pro soccer league, like the NFL now, had salary caps PER TEAM of $128 million US dollars (91 million Euros) PER SEASON. (yeah, that's the per team cap amount of the NFL this coming season!).

If every team in that imaginary soccer league could spend $128mil US/91 mil Euro per season, we'd have perhaps the greatest footy league on the PLANET. Yeah, Man U and Barcelona would outspend TFC, but this league would be, from top to bottom, the greatest league in the world. Every team, even the worst, would have the money to outspend every team in the world except perhaps the biggest 4-6 teams in the big leagues elsewhere.

But that wouldn't happen just because of a cap, but because the culture of the society came to think soccer was the greatest. The cap just ensures spending doesn't get out of hand and every team's fans have hope. A soft cap wouldn't make a difference in that.