I wasn't planning on doing an LA Galaxy salary cap compliance post until the new salaries are posted by the MLS players association, but well I couldn't let Sounder at Heart have all the fun. The first thing we have to do is understand how the salary cap works, then some math to see how close the Galaxy came to the cap, what they've been able to shed in the offseason. We have to look at allocation money, and see how it's awarded. Finally, we have a do a funny dance!
Okay, you don't have to do a funny dance, but I will.
A refresher: Players 1-20 on an MLS teams roster are classified as the Senior or Salary Budget players. These are the players who count against the salary cap budget of $2,675,000. Now the maximum a player on the Senior Roster can count for against the budget is $335,000 (Robbie Keane counts for $167,500 because he came midseason). The rest of a DPs salary is out of the team's pocket. The minimum a player occupying roster spots 1-24 can make is $42,000.
Now the Galaxy had 26 players making at least $42k last season. Jack McBean is Home Grown so his salary is eliminated, and we can also take off third goalkeeper Brian Perk (who makes a big chunk o cash). To the best of our knowledge, those occupying spots 21-24 are Daniel Keat, Bryan Jordan, Paolo Cardozo, and Adam Cristman.
This puts the Salary Budget Players roster at $2,768,719.58. Now Josie, you might say, that's more than the Salary Budget! Deficit spending! However, there is a nice neat little rule that I'm more than sure the Galaxy are taking advantage of:
Clubs have the option of "buying down" the budget charge of a Designated Player with allocation money. The reduced charge may not be less than $150,000.
Were the Galaxy to do this with say Landon Donovan's contract, that'd bring them under the cap. Since I have no proof this is what the Galaxy did (it could have been Donovan, it could have been David Beckham, it could have been both), but the only other possibility is the Galaxy traded Don Garber some magic beans. Which admittedly are a fantastic legume.
The Galaxy would have received allocation money for qualifying in the CONCACAF Champions League the past two years. This explains how the Galaxy were able to come under budget last year.
So far this year, the Galaxy have unloaded the salary of Donovan Ricketts, Chris Birchall, Greg Berhalter, Jovan Kirovski, and Frankie Hejduk. That's $630,125 that came off the books. The Galaxy have signed Marcelo Sarvas, Edson Buddle, Pat Noonan, Nick Noble, Kyle Nakazawa, and Jose Villareal (non-roster). It's not absurd to believe five players could split that available cash.
Especially when you consider Noonan made $48k and Nakazawa $44K last year. Buddle's last MLS salary was in the $100k range, and it's likely Sarvas is in that range as well. Heck, there's still room for signing the two SuperDraft picks.
I mentioned that the Galaxy were given allocation money for Champions League, but this offseason the Galaxy earned allocation money dealing Donovan Ricketts, and there's also the loan fees for Landon Donovan, Robbie Keane, and Omar Gonzalez. So the Galaxy have number fudging money, especially if they're buying down the salary cap hit for all three DPs.
While the voodoo economics and fuzzy math of Allocation Money play a role, the key to all this is most MLS players have very little leverage in negotiation. I'd be surprised if the Galaxy went too much higher than their last bonafide offer to Edson Buddle, given how quickly the negotiation went. Ditto with Juninho. Those selected in the Re-Entry draft, very little leverage.
MLS players with leverage don't test the waters with other MLS teams because of the single entity structure. Those players test the waters overseas. So here we are.
Two notes, first from RSL Soapbox: In 2012 DP’s over the age of 23 will count $350,000 against the cap, which is up $15,000 over the 2011 numbers.
I forgot to account for the annual 5% increase in the salary cap budget as agreed in the CBA in 2010, which means the 2012 salary cap will be closer to $2.8 million