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What Is The Designated Player Rule? How MLS Clubs Sign Superstars

29 January 2023
Phil Boats

Across Major League Soccer, there is a salary cap restricting clubs from going out and ‘buying it all’. No Saudi consortiums here.

However, there is a loophole of sorts that allows sides to recruit some of the best players in the world: the Designated Player (DP) rule. In an effort to keep the MLS as an appealing prospect for superstars from around the world, each team in the division is able to register three DPs and pay them whatever wages they fancy. This has become heavily utilised as the MLS has become a popular home for hot prospects from South America, as well as veteran names from Europe.

Join us here at SinkorSwimSports as we run through what the Designated Player rule is, how it came about, and how it works! 

Blame It On Becks

To get to where the DP rule first came about, we have to go all the way back to 2007. In what marked arguably the first instance of the MLS taking its first step to becoming a serious football division, LA Galaxy secured the signature of David Beckham from Real Madrid.

David Beckham LA Galaxy
David Beckham made 118 appearances across six years with LA Galaxy

It was one of the seismic shifts for sports in North America, and the rule was introduced as a way for clubs to be competitive in the international transfer market.

Ever since its formation in 1996, the MLS has operated under a tight salary cap to promote a more level playing field and encourage more unpredictable seasons. Registered Designated Players don’t have either their transfer fee or wages counted as part of this cap, though sides can only sign three of these.

Across the 2022 season, DPs only accounted for $612,500 against the salary cap, however. 

With that being said, there are still some hefty players making their fortunes in the division. Toronto FC’s Lorenzo Insigne is the highest-paid player in the MLS with a guaranteed compensation package worth $14 million. Behind him is Chicago Fire’s Xherdan Shaqiri at $8.2 million. 

Additionally, Major League Soccer has introduced a new rule for DPs under the age of 23. This is to keep the division looking enticing for exciting talents across the globe, and grant greater flexibility in the market. The Young Designated Player salary cap currently stands at: 

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

MLS Salary Cap Rules

In football, it isn’t transfer fees that make the biggest dents in a club’s finances, it’s the wages players demand. Currently, the MLS Salary Cap stands at $5.2 million per team ahead of the 2023 season, with clubs allowed to splash a further $1.9 million in General Allocation Money (GAM) and $2.7 million in Targeted Allocation Money (TAM), on top of the Designated Player spots.

MLS Squads are split into these ‘slots’, with the 21st-28th slots in a side reserved for Homegrowns, Generation Adidas players and minimum-salary players. These players are usually Youth Academy graduates and ‘prospect’ players that have been signed locally and generally act as back-ups for injuries, suspensions and international duty. 

It should be noted that the calls for the relaxation of these salary cap rules has been steadily rising over the years. As the MLS finds itself increasingly competitive with major European leagues, clubs and owners are keen to keep pace. The abolishment of these caps looks unlikely for the foreseeable, however, don’t be surprised to see clubs being handed an extra DP slot or two in the next few seasons. 

Who Are The Biggest Designated Players In MLS History?

When talking about the biggest Designated Players in MLS history, you can’t look much further than David Beckham. The former England captain made 118 appearances across six seasons with LA Galaxy in a deal worth $6.5 million per year. The impact it had on football in America, however, was immeasurable. 

In the years since, the likes of Zlatan Ibrahimovic, Steven Gerrard, Frank Lampard, Andrea Pirlo, Kaka, David Villa and Thierry Henry have all called the MLS home. 

However, as the division has switched its focus, the DP spots has been increasingly reserved for rising stars such as Miguel Almiron and Diego Rossi, who have both gone on to have successful spells in Europe. These days, prospects like Thiago Almada is among the next superstar prospect holding a DP slot. 

Elsewhere, Alan Velasco, Facundo Torres and Talles Magno are also hoped to be the next big things in North American soccer. 

Thiago Almada Atlanta United
Thiago Almada scored 7 goals in 31 games during 2022