You Be The G.M.: Spending The Union Salary Budget

All is pretty quiet on the Union front and some of the faithful are getting restless. But there have been a number of offseason moves that have significant salary budget implications. Let's take a moment to see where the Union stand from a salary perspective and set expectations for what might be coming.

The Union currently has 24 of the 30 possible roster spots filled (if you count Zach Pfeffer who is currently listed on the roster as inactive). Only 20 of those spots actually count against the MLS salary budget. But at this point we don't know who the top 20 will be. To be conservative, I assume that the 20 highest salaried players will count against the MLS salary budget. As the Union add players to the roster some of those dollars will shift into the off budget category for roster spots 21 to 30.

I think we all understand by now that despite the wonderfully transparent bi-annual release of MLS player compensation, this information doesn't give us complete insight into the actual salary budget impact. We are given base salary and total guaranteed compensation of each player but are told neither of them reflect the actual salary budget hit. So much for transparency. But I think it's safe to assume the budget hit lies somewhere in between those two numbers.

The top 20 current roster players had a base salary of $2.08M in 2013. The total guaranteed compensation of those same 20 players is $2.36M. See the chart below ranked by base salary. Last year's MLS salary budget limit was $2.95M. That number was 5% higher than the salary budget number in 2012. And we know from the most recent MLS deal that there will be another 5% increase in 2014. That puts the salary budget limit at roughly $3.1M for each team.

But the Union will give raises to their core team and many of these are already contractually determined. In 2013 there were 14 raises given to players who also played for the Union in 2012. The average raise was 20%. The number made me cough when I calculated it. That's a lot of investment in a core given the MLS budget only went up 5%. But again, to hopefully be conservative, let's assume that the top 20 players again get a 20% salary increase. That puts the base Union salaries for next year at $2.5M. And that would put the guaranteed compensation at $2.78M.

Put it all together and the Union has between $422K and $600K in salary budget available going into next year. You could argue more if the raises are not as high as 2013. Of course this also assumes that all sins of the past (i.e. Freddy) are off the books, and that those would not count against the budget anyway. Fingers crossed on that being true. Prior quotes from Hackworth suggest this new financial freedom is indeed the case.

This doesn't count any allocation money the MLS has granted the Union (money they can go over the salary budget) or any dollars the Union FO is willing to spend beyond the budget. Allocation dollars are not publicly released so we can only speculate on how much that might be. It's unlikely that the Union will have Clint Dempsey-like dollars available to them and their current financial situation wouldn't support that kind of salary anyway. But it's safe to say they can afford more than the $3.1 salary budget limit. Last year their total base salary paid out was $3.36M and their total compensation was $3.7M, not counting all the dead money.

The Union also has both designated player (DP) slots available to them. The Designated Player Rule allows clubs to sign players whose salary exceeds their budget charge. The maximum charge for a DP was $368,750 in 2013. It was exactly $350K in 2012. Extrapolating that change would result in a DP maximum of $388,500 in 2014. A DP spot would cost the Union approximately $342K against the salary budget (as one of the top 20 spots would move off budget and I assumed a salary of $46,500 would move).

With between $422K and $600K in salary budget room and allocation money the Union should have the means to sign a DP and they potentially could finagle a move for a 2^nd DP in mid-season if the situation warranted. Mid-season DPs count half as much against the salary budget.

If these numbers are in the ballpark, what should the Union do? Should they sign a DP now and then hope to find more big name help during the season and use their 2^nd DP slot? Or just sign one DP and spend the rest of the budget with mid-priced depth? Or should they forego the DP altogether and just sign solid mid-priced players to address needs at midfield, left back and backup goalkeep?