MLS 101: The Designated Player Rule

Major League Soccer (MLS) has incredibly complicated roster rules. Frankly, too complicated. However, if you want to have any depth of knowledge about MLS or the team you follow, understanding how roster construction works will go a long way towards that.

Be sure to check out the MLS 101 hub to see all the stories in the ongoing series.

One of the original weird, MLS-only rules is the Designated Player (DP) rule. Sometimes referred to as the David Beckham rule, back in 2007 the league forever changed the way big stars would be brought in with an alteration of the rules to allow the LA Galaxy to sign David Beckham.

The rule has evolved over the years, but we’ll focus on how the rule works now.

The Basics

In the simplest terms, teams are allowed to sign up to three players that have unlimited acquisition costs (transfer fees) and/or unlimited salaries.

The unlimited salaries are how teams like Sporting Kansas City can court Cristiano Ronaldo or how Inter Miami CF are constantly linked to Lionel Messi. Or how Toronto FC signed Lorenzo Insigne could be paid $14 million when nine teams in 2022 has smaller payrolls for their entire roster.

For a further understanding of the rules, keep reading, but otherwise, that’s the basics.

In Depth

Despite the unlimited salaries and acquisition costs, Designated Players only count for the maximum salary budget charge against the salary budget (the MLS doesn’t have a hard cap, that gets its own MLS 101 article in the future). For the last three seasons, the max charge was $612,500 as the result of a renegotiated Collective Bargaining Agreement.

In 2023 that number climbs to $651,250. That accounts for 12.5 percent of the $5,210,000 salary budget. As the budget climbs, a DP always counts for 12.5 percent of the budget unless the team uses General Allocation Money (GAM) to buy down the budget charge (yet another future MLS 101 article).

Here are the known max budget charges and salary budgets through 2027, the end of the current CBA.

However, it’s not even that simple. That is only for DPs that are 24-years-old or older. If a Designated Player is under 24 (based on the year of their birth compared to the League Year) they count as a Young DP. Their budget charge is further delineated based on how young they are.

• Ages 20 and younger: $150,000
• Ages 21-23: $200,000

Further Rule Nuances

• If a Designated Player signs after the opening of the secondary transfer window, their budget charge will be halved. However, if it’s a Young DP, they still count as $150,000 against the budget.
• Clubs get two DP spots, but they can purchase the previously mentioned third slot for $150,000 (unless it’s a Young DP, then it’s free). That money is then shared with all the teams in the league that only carry two DPs.
• Designated Player slots are not tradable, but DPs can be traded (but only after the start of the player’s second league year).
• When a DP goes out on loan, if they had acquisition costs they still count as a DP against a team’s salary budget (Nashville SC’s Ake Loba is a good example in 2023, Rodolfo Pizzaro from Inter Miami in 2022).
• When a DP goes on the season-ending injury list, in prior years, the club does not get a new DP slot. Starting with the 2023 season, this rule has been altered and a new DP can be signed as long as his budget charge isn’t more than who he is replacing.
• Any player whose salary and pro-rated acquisition costs above the salary budget max charge can be counted as a DP, but if they are less than $1 million above, they may qualify as a Targeted Allocation Money (TAM) signing (explainer coming in the future for TAM). They are sometimes referred to as a TAMable DP or a DP in name only.
• Though not listed in the official MLS roster rules, it was previously believed teams are able to allocate transfer fees over the first three years of a contract, thus making a player with a low enough salary, not a DP in the fourth year. This was the situation as we understood it for Gadi Kinda and Sporting KC in 2023. Peter Vermes confirmed to us that this is not the case, hence it’s lack of inclusion in the roster rules.

Examples

• Player A: Free transfer (no fee), $2 million annual salary — Designated Player no matter how long the contract is
• Player B: $7 million transfer fee, $500k annual salary, 4-year deal — Designated Player
• Player C: $4 million transfer fee, $250k annual salary, 4-year deal — TAMable DP ($1.25m average could be bought down with TAM)
• Player D: $4 million transfer fee, $250k annual salary, 2-year deal — Designated Player (can’t be bought down because the average is $2.25m per year)
• Player E: $1 million transfer fee, $800k annual salary, 3-year-deal — TAMable DP ($1.133m average, can be bought down)
• Player F: $1 million transfer fee, $250k annual salary, 3-year-deal — Not a DP ($583k average)

This is the first of a multi-part series on MLS roster rules. This was written right before SB Nation stopped funding this website, so we delayed publishing it, but wanted to get it up before our big site move this week.

What rule do you want to grab a better understanding of next? Let us know in the comments.