According to Ryan Nelsen, Darren O'Dea was "the most expensive player in the whole of the league, in terms of salary cap." The number that got thrown around was "half a million" in other quotes.
Of course what happens here is that reporters go and reference the MLSPU's list of player salaries, quote the higher guaranteed number, and use that as a proxy for the poorly phrased "cap hit". So yes, Darren O'Dea's listed guaranteed compensation was (an extortionate) $456,250.00, or, roughly "half a million" if you're inclined to think of it that way.
But what does that really mean?[PRBREAK][/PRBREAK]
First, let’s review what the MLSPU says their projection of guaranteed compensation represents:
The key phrase is “all signing and guaranteed bonuses annualized”. They go on to write that performance bonuses are specifically excluded because it is not guaranteed that they will be achieved.
The problem is that none of this speaks to the way that MLS calculates a player’s contract’s impact on a given team’s salary budget (not “cap”). Guaranteed compensation, as reported by the MLSPU, excludes some expenses -- performances bonuses, agent fees, and probably transfer fees -- and projects the impact of others over the life of a contract. It’s an artificial number, published by the MLSPU, for the benefit of its members. The idea is that they and their agents can use it as a benchmark in future contract negotiations with the league.
I would suggest that the safest assumption is that MLS teams are given an annual salary budget, set by the league, simply equal to the published salary budget plus any accumulated allocation money. Certain players’ status – designated player, home grown, or Generation Adidas - excludes either all or part of their salary from the salary budget. Outside those exceptions, any expense incurred by MLS as a result of signing a player is charged against the team’s salary budget in the year that it is spent.
There’s no reason to believe that MLS would engage in any sort of calculation like the MLSPU does to compare the impact of annualized bonuses. Teams have their budget for a year and, within the published rules, spend that budget. Allocation can be carried over from year-to-year but not indefinitely and, apparently, will eventually expire if unused. Remember, the point of MLS’s salary budget is not to induce parity in a given season, though that may be a happy side effect; it’s designed to control spending and provide a predictable labour expense for the league.
So, if my assumption is correct, in example provided by the MLSPU the imaginary player’s contract would cost his club $60,000 of their salary budget in his first season (plus any achieved performance bonuses and agent fees) and $50,000 in each subsequent season; not the $52,500 “guaranteed” compensation that would likely be quoted.
If the team were to decline to renew the player’s contract in his option years (or before that if he’s only on a semi-guaranteed contract) they wouldn’t “get back $52,500” in “cap space” either. They’d simply end up having an unused $50,000 of salary budget that could be allocated elsewhere in that year and the future.
To return to Darren O’Dea, let’s look at the two most recent sets of salary numbers reported by the MLSPU:
Oct., 2012: $330,000.00 base, $436,250.00 guaranteed
May, 2013: $350,000.00 base, $456,250.00 guaranteed
Notice that the difference between base salary and guaranteed compensation, $106,250.00, did not change. The difference from year-to-year is exclusively a result of a marginal (in the context of O’Dea’s salary, if not league economics) increase in the base salary.
So what does that $106,250.00 difference represent? The most obvious suggestion, based on the explanation of how the MLSPU calculates guaranteed compensation, is that it is the result of a signing bonus Darren O’Dea was paid in 2012.
Interestingly, thanks to some good reporting by Kurt Larson of the Toronto Sun, we now seem to know that Darren O’Dea’s contract was set to expire at the conclusion of the 2013 season. Thus, he had only been contracted for one and a half seasons; that’s the length of time any signing bonus would have been annualized over in the MLSPU calculations.
By applying the formula of how the MLSPU calculates guaranteed compensation, a significantly more reasonable scenario with regards to Darren O’Dea’s contract starts to be sketched out. $106,250.00 might represent the annualized effect of a roughly $160,000 signing bonus ($106,250.00 * 1.5 = $159,375.00) paid in 2012 to lure O’Dea to MLS.
Keep in mind that O’Dea would only be playing for half a season in 2012, so he’d only be making half his base salary in that season as well. Is it unreasonable to suggest that what Toronto’s then management did was essentially offer a signing bonus for the other missing “half” of O’Dea’s annual salary? Doubling $160,000.00 to $320,000.00 comes out to nearly exactly O’Dea’s 2012 reported base salary of $330,000.00
Toronto FC didn’t make any other significant signings in the summer of 2012 other than being willing to take on Eric Hassli’s designated player contract from Vancouver after moving Julian DeGuzman to FC Dallas. They had once again qualified for the CONCACAF Champions League and the league now has a program to reward clubs that do so with allocation money. Would it be surprising, or even inefficient, if it was that allocation money that was used to lure O’Dea to MLS in the form a signing bonus, since TFC didn’t need to pay a transfer fee?
Now, even if all the above suppositions are correct, it’s still worth noting that even at $350,000.00, the league’s maximum salary budget charge for a non-designated player in 2012, Darren O’Dea was a very expensive defender in Major League Soccer. Overly expensive is not even unfair. But it’s certainly a lot different from the suggestion that he cost the team “half a million dollars” in 2013 and provides a much different interpretation to Larson’s reporting that he was offered a new contract worth roughly half of his existing deal. O’Dea’s notion of “half”, possibly $175K per year, might be quite different from Larson’s.
What seems to have been lost in the conversation around O’Dea is the realization that once allocation money has been spent it’s a sunk cost and is not returned when the player is traded, transferred, or released (unless the player is sold for a fee). So, if Toronto FC, could have kept Darren O’Dea on a contract in the $225,000.00 to $275,000.00 range going forward, it might not have represented a drastic cut in his actual annual compensation and would have moved him closer to the range of typical MLS starting centre backs. Maybe that’s exactly what they tried to work out, there’s really no way to be certain.
Why does any of this matter? Well, have a look at the reported base salary for some of the Vancouver Whitecaps’ defenders from the MLSPU’s May numbers:
Jay DeMerit: $325,000.00
Jordan Harvey: $125,000.00
Andy O’Brien: $200,000.00
Alain Rochat: $190,000.00
Brad Rusin: $120,000.00
Lee Young-Pyo: $196,900.00
Yes, Alain Rochat has since moved on and the ‘Caps are ostensibly getting a great deal on Johnny Leveron. But a May 1st backline with a combined base salary of over $1mil didn’t stop Vancouver from assembling a roster that also included Joe Cannon, Camilo Sanvezzo, Daigo Kobayashi, Gershon Koffie, and Nigel Reo-Coker all on higher end regular contracts and Kenny Miller on a designated player contract.
So, as I wrote previously, the suggestion that Darren O’Dea’s contract situation was completely unmanageable might be overstated. Now, with 10 days left in the transfer window, only one international player signed, and reports of a possible transfer fee for a Swiss second division left back, the argument over the immediate necessity of Toronto’s nearly complete roster overhaul takes on a different character.
Trading Luis Silva, releasing Terry Dunfield, transferring Darren O’Dea, the retirement of Danny Califf (who claims he was recruited more by Paul Mariner and Earl Cochrane), and the suggestion that TFC tried to trade Stefan Frei and Ashtone Morgan: was any of that really about clearing desperately needed budget space per se? Was budget space really at such a premium after shedding the designated player contracts of Torsten Frings and Eric Hassli before the start of the season?
Or has this always been more about Kevin Payne and Ryan Nelsen wanting Toronto FC to be their team and not being burdened with any of the prior regime’s players? That’s their prerogative, and it certainly fits with previous approaches to management at the club, but this much is certain: the past is now the past and they can no longer reasonably claim to be hindered by any previous mistakes. How long it takes to turn around Toronto FC and whether or not they'll be successful is entirely on them.
Finally, it should be noted that all of the above comes with one major caveat: I am not an expert. I do not have contacts at Toronto FC or Major League Soccer. There is no one on background confirming my interpretation. Everything written comes from the perspective of an observer without access to the inner-workings of the club interpreting, in my own way, the shadows I see reflected on the wall.
In fact, there’s nothing I’d like more than to have someone with actual information come forward, show me where I’m in error, and enhance my understanding of the minutiae of MLS. But, as always, “as per team and league policies terms of the deal were not disclosed.” So be it.
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