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The Designated Player Rule: Why David Beckham’s Inter Miami was sanctioned $2 Million by the MLS?

1. Introduction

Recently, in the month of May, 2021, Major League Soccer (hereinafter referred to as “MLS”) announced sanctions against Inter Miami CF, the football club partly owned by former English footballer and celebrity David Beckham. In its statement released on the 28th of May, 2021, the League announced that sanctions had been imposed against the club in lieu of Inter Miami’s violations of the MLS salary budget and roster guidelines during the 2020 season, primarily in respect of the Designated Player Rule as established by the League. In light of the same, the cynosure of this article shall be the analysis of the Designated Player Rule and the concomitant impact of MLS’ decision on global professional football, particularly in respect of the closed league format of football.

2. The Designated Player Rule

As is common knowledge, the imposition of salary caps and regulations is quotidian in professional football leagues. The intention in doing so is to level the playing field and to prevent bigger clubs from extirpating the competition. However, such a practice can sometimes be counterproductive to the growth and popularity of the league as leading players may be discouraged from participating in the league owing to limited revenue and consideration. Therefore, in order to balance the sporting principle of fair and equitable competition with the commercial interests of the clubs and the league, often leagues carve out exceptions to the salary cap rules and regulations. One such exception in Major League Soccer is the Designated Player Rule. The Designated Player Rule allows clubs to acquire up to three players whose total compensation and acquisition costs exceed the Maximum Salary Budget Charge, with the club bearing financial responsibility for the amount of compensation above each player’s Salary Budget Charge (which at present is set at $612,500 for a player over the age of 23 and at $200,000 for a player who is 23 years old or younger). While two Designated Player slots are allotted to the clubs in the roster itself, the third Designated Player spot can be bought by the club by paying $150,000 to the League which is subsequently split among clubs with two or fewer occupied Designated Player slots for use as General Allocation Money in the following season. The Designated Player slot is not tradable.

3. Analogous Regulations: A Global Perspective

Analogous to the Designated Player exception in the MLS, various other football leagues have also made provisions in their regulations allowing clubs to sign players in excess of the salary cap. The Indian Super League, which has recently become quite popular, is one such league with exceptions to the its INR 16.5 Crore cumulative squad salary cap in the form of a ‘Marquee Player’ exception. Defined in its Guidelines as someone with ‘marketable presence in India’, a Marquee Player can be classified as: (i) a Veteran Marquee; or (ii) a Prodigy Marquee.Besides the ISL, the Australian A-League also provides exemptions and allowances in the form of 2 Designated Players and 1 Guest Player, in order to incentivize clubs to spend on strategic areas of football marketing such as towards attracting world class players to the league.

4. Violations by Inter Miami

In an investigation launched in early March this year reviewing the signing of the former Juventus star Blaise Matuidi as the midfielder for Inter Miami, the MLS found that the signing of five players was either incorrectly categorized on the team’s roster or that their salary budget was underreported owing to undisclosed agreements with the players. Reportedly, the investigation found that Blaise Matuidi and another player Andre Reyes should have been classified as Designated Players for the 2020 season. However, since Inter Miami had already exhausted their Designated Player slot allocation through the signing of their three official Designated Players- Gonzalo Higuain, Matias Pellegrini and Rodolfo Pizarro, the classification of Matuidi and Reyes as Designated Players would be a violation of the league rules. Further, the Club also entered into separate agreements with three other players- Gonzalez Pirez, Nicolas Figal and Julian Carranza and failed to disclose them to the League, thereby securing for itself the services of players it may not have otherwise been able to sign owing to Salary Budget restrictions. Consequently, sanctions were imposed by MLS on the Club. The penalties include a $2,000,000 fine to the club, a reduction of $2,271,250 in allocation dollars of the club for the 2022 and 2023 seasons, and a $250,000 fine to the Managing Owner of the Club, Jorge Mas. Additionally, the Sporting Director of the club at the time of the infractions has been suspended through the end of the 2022 MLS season.

5. Analysis and Conclusion

The penalty imposed by MLS on Inter Miami is entirely unprecedented and far greater than any sanction formerly imposed by the League. Previously, the highest fine imposed by MLS on any team was a $150,000 levied against the club Real Salt Lake’s owner Dell Loy Hansen in 2015. Hence, the bone of contention herein is whether the sanctions imposed by MLS are justified or are downright excessive and harsh. Considering the severity of the violations by Inter Miami in the backdrop of the League’s objective in establishing salary caps, which is to ensure fair competition and equitable player distribution, the sanctions imposed, while seemingly austere, do not appear to be entirely unreasonable. Scrutinizing the entire affair from the viewpoint of MLS, it becomes evident that a liberal or forbearing approach of the League towards the violations could be misconceived by many as being indulgent and permissive of such practices. On that account, it is the opinion of the author that the denouement of the matter and the sanctions imposed against Inter Miami are predominantly justified.

In context of the above, what remains to be discerned is the impact that this decision shall have on subsequent determinations in this regard. The stance of MLS is firm. However, the extent of its influence will wholly depend on the orientation of the leagues in the near future. It is entirely possible that various other leagues across the world defer to MLS’ decision and adopt an equally stringent stance towards such violations. However, it is equally probable that they may dismiss MLS’ sanctions as being inordinate and extortionate. Therefore, the true nature of its impact can only be ascertained as and when adjudicative reliance is placed on it. However, irrespective of whether future pronouncements are aligned with MLS’ decision or not, what will remain constant and indisputable is that these sanctions shall invariably serve as a significant point of reference for leagues in the near future.

* We would like to thank Rushika M. (Law Student, St. Joseph's College of Law, Bangalore) who is currently doing an internship with Sensato Sports Law, for her invaluable contribution.

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