With the U-22 Initiative Kicking In, MLS is About to Splash Some Cash

Update 2/21/2021: Additional details have been revealed about the U-22 Initiative via reporting by Sam Stejskal of The Athletic. It was originally stated teams could sign up to three U-22 players, but it’s dependent on the clubs current DP situation. If a club has one “young DP” or a DP that is a TAM level player (max salary $1,612,500 for 2021), they can sign three U-22 players. If they have three “true” DPs, they can only sign one U-22 player. The math just got more complicated. For Sporting KC, it’s possible Johnny Russell is a TAM level DP, but that is unconfirmed.

With all the hubbub around the recent MLS labor negotiations, it’s possible you’ve heard whispers of a “new” mechanism making it’s way into the league for the 2021 season. The Under-22 Initiative is just coming to fruition in 2021, but it was actually a part of the 2020 CBA negotiations.

The U-22 Initiative, or Young Money as Sam Stejskal and Paul Tenorio have taken to calling it on their delightful Allocation Disorder podcast, is potentially a huge injection of money into the league (just as the league was crying they can’t afford the recently altered CBA).

Here are the basics:

• A player cannot turn 23 in the first year of their contract (hence, U-22)
• Players can stay in the program until they turn 25
• Homegrown players and drafted players are eligible for the “tag”
• Up to three players per team can have this designation
• There is no limit to acquisition costs (just like a Designated Player)
• Players tagged cannot make more than the MLS budget max ($612,500 in 2021)
• The budget charge against the MLS salary budget is only $150k to $200k

Nothing is official at this point on the above outline, but the rule is in effect for 2021. Presumably the league will make an announcement at some point or at least put it in their 2021 roster rules.

What Does that All Mean?

Essentially, teams can now add three more players that would have previously been Designated Players (because of transfer fees) but they won’t count as DPs (as long as they make under the max budget charge). That would allow a team to splash around lower amounts of money for young players with potential that aren’t yet ready for huge annual contracts, but still might fetch a multi-million dollar transfer fee.

It wouldn’t work for someone like Atlanta United’s Ezequiel Barco because of his $1.4+ million dollar contract or FC Cincinnati’s Brenner (pictured above) because their salaries are reportedly too high. But for a player near that class but willing to sign for the budget max ($612,500 in 2021) or less, they suddenly are less risky. One, because the team still has three open DP slots and two, because they only take up $150,000 to $200,000 of the actual salary budget.

The idea of these deals is that MLS clubs could then sell the player on for huge profits. The risk is still huge of course, because many young players never quite pan out. But when they do, the windfall of their sale could be very, very big. MLS hopes to become a selling league and this should help.

How are Sporting KC Impacted?

This is tougher to tell, but let’s lay out a couple ways Sporting Kansas City could take advantage. Of course, they could go find new players, as outlined above, that cost a few million and might not be expected to be a day-in, day-out starters.

On the other hand, they could use a mechanism like this to re-sign existing Homegrowns, like Gianluca Busio to richer deals. The last known salary for Busio was just $92,500 in 2019 and his contract runs through the end of the 2022 season. Of course, it’s expected the team will sell him to a European club well before then, but what if Busio isn’t ready to go? What if he would take a big raise to stay in MLS and could insert something in his contract to still incentivize SKC to sell much like FC Dallas did with Reggie Cannon?

Who Really Benefits?

The big spenders, of course. There are a lot of owners out there still trying to slide by being cheap, just watching the value of MLS franchises climb, but never really spending on DPs to the level of other teams. Then there are the Atlanta United’s, NYCFC’s, LA Galaxy’s and LAFC’s of the world. They consistently use all three of their DP slots and often try to find ways to skirt the rules to spend more (you know I’m talking about the Galaxy).

It’s rumored two of Atlanta’s rumored offseason signings are already under this rule: Franco Ibarra (19) and Santiago Sosa (21). There would appear to be no doubt the other “super clubs” will attempt to do the same thing.

Does the Rule Really Make Sense?

Here is where I run into a bit of a roadblock. Why U-22? Why not U-23? Or U-25? It seems artificial and forced to arbitrarily make the age limit 22. And it’s another way that MLS is complicating how teams want to spend money. The greatest example is Miguel Almiron. He turned 23 just before Atlanta United’s first season. He is the record holder for outgoing transfers in the league. He wouldn’t have been eligible under this initiative. By artificially skewing too young, MLS is taking a greater risk on potential “flops.”

It seems to me, the league sees the recent success of selling on some talented youth players as an opportunity to establish Major League Soccer as a selling league. A league the top teams in the world look to when they are about to overpay to try and compete in their league or Champions League.

At the same time, it seems MLS still doesn’t trust it’s owners to just let them spend more freely. Instead of DPs, U-22 Initiatives, TAM, GAM and all the other Garber Buck mechanisms out there, why not just have a salary cap and a salary floor? The cheap teams could spend at or near the floor and the more ambitious teams could spend at or near the cap. I won’t pretend to know what those numbers should be set at, but with the new CBA set to run through 2027, it feels we are a long way from that happening and by extension we’ll continue to have 127 drafts a year (expansion, waiver, re-entry, etc.) to move players around.

Despite my cynicism, I’m actually kind of okay with this rule. It will bring more talented young players to MLS and hopefully teams will be successful with it and it will encourage more talented players (young and older) to want to come to America. The artificial age limit just feels a bit arbitrary.