MLS announced on Thursday morning an update of the Designated Player rule to allow every MLS club to sign two DPs. Teams will also have the option to purchase a third DP slot.
In a mechanism that works similar to a luxury tax in other professional sports, an MLS team seeking a third DP slot would be required to pay $250,000 that would be evenly shared as allocation money with all the other MLS clubs that do not have three DPs.
The Designated Player rule, popularly referred to as the “Beckham Rule," was first introduced in 2007. It allowed MLS teams to pay a “designated” player above the club’s league designated salary budget.
Each DP player signing will now count as $335,000 toward a team’s salary budget and $167,500 if the DP is signed midseason. According to the league, the $335,000 figure represents approximately 13 percent of a team’s salary budget. Previously, teams were charged $415,000 against the salary budget for the first DP. A team can also use its allocation money to bring that salary budget hit down to just $150,000.
MLS confirmed that these new rules will be effective immediately.