MLS clubs forced to find bargain deals

Investing in the MLS offseason requires a hefty dose of patience and a keen appreciation for complex and convoluted mechanisms.

Casual appreciation won’t provide a full picture of the process like it might in most American sports. The MLS offseason isn’t an exercise where expansive debates about coaching searches, free agent contracts and recruiting coups carry the day. The timeline isn’t even structured to concentrate most of the action into an easy-to-grasp event like transfer deadline day in European soccer or the winter meetings in MLB.

Blame MLS’ operating principles and single-entity structure for its opaque approach to player movement. MLS designed its system to limit player expenditures, reduce the flow of information about pertinent details typically used to create leverage in negotiations and restrict internal competition between its clubs. MLS signs players to undisclosed contracts and clubs then often trade those players for undisclosed amounts of allocation money (a term to describe cash used to buy down the budget hit for a contract, pay transfer fees or sign players under specific circumstances) to protect those tenets.

By wisely protecting its business principles, MLS makes it difficult for sports fans to assess the importance of its transactions or discuss the pertinent points in an accurate forum. Recent measures to increase transparency have improved matters a bit, but they have not solved the problem entirely. The usual links to established players from Europe and prominent trades do generate some buzz, but typical player movement often proceeds with minimal fanfare or notice.

The convoluted nature of the system ensures the issue won’t fade away any time soon. Despite those lingering concerns and the time required to sort through them, the transactions still warrant attention. This explanation of three key facets to the offseason should make the process just a little bit easier to track:

Exercising contract options: MLS, as a league, prefers to structure its contracts with a series of option years (think of the typical contract for a domestic player like a basic math problem: 1 + 1 + 1 + 1) to avoid cumbersome long-term guarantees and retain the flexibility necessary to adjust its player pool on a yearly basis. Each club decides whether to decline or exercise the option. The league sets a deadline – usually a day or two after MLS Cup – for clubs to notify players of their intentions for next year.

In other leagues and sports, this decision would result in one of two outcomes: the player would continue with his current club or hit the free agent market. Not in MLS.

A few players continue with their current clubs at the option price if the terms are mutually amenable or strike new deals at a lower salary. Some unfortunate souls without the necessary service time hit the little-used waiver wire. Clubs tie down the MLS rights to some out-of-contract players by extending a bona fide offer to retain them, even if they do not re-sign. And the rest fall into a complex mechanism designed to distribute players to new teams at a significant discount from their previous salaries or shepherd them out of the league entirely.

Re-entry process: MLS and the MLS Players’ Union concocted this unorthodox idea during the last round of collective bargaining negotiations in 2010 to provide players with an opportunity to move to new clubs without granting them free agency.

Qualifying players for the two-step process (first stage: Dec. 7, second stage: Dec. 14) fall into one of three categories: (1) 23-years-old with three years of service time and a declined option (initially available at option salary), (2) 25-years-old with four years of service, an expired contract and a club that does not wish to re-sign them at their previous salary (initially available at a wage no lower than their previous salary) and (3) 30-years-old with eight years of service, an expired contract and a club that does not wish to re-sign them (initially available at 105 percent of their previous salary).

If players do not pull themselves out of the process and sign new contracts with their previous clubs (or another club that has acquired the rights to sign them) before the first stage or the second stage, then they are placed into the re-entry process.

As one might suspect, clubs usually wait until the second stage of the process to snag players at a reduced price. Just five players were chosen in the opening stage during the first two editions of the re-entry process. The uptick in movement during the second part of the process (19 players selected over the past two years) confirms the fundamental principle underpinning all of these machinations: MLS clubs want to acquire talent at the lowest possible price point to enhance a player’s value within the restrictive salary budget ($2.81 million in 2012, according to the league website).

SuperDraft: There really isn’t anything particularly complicated or super about the way MLS distributes the rights to college players, though some prospects are claimed as home grown Players (developed through club academies and placed into this category according to a murky set of guidelines) and excluded from the draft pool.

Coaches and technical directors scout players during the college season and survey a selected group of hopefuls (including college seniors and a handful of underclassmen signed to Generation adidas contracts) at the MLS Player Combine in Lauderhill, Fla. from Jan. 11-15. The two-round draft occurs in Indianapolis on Jan. 17. A four-round supplemental draft takes place via conference call on Jan. 22 to complete the process.