US Soccer’s Player Market: Shedding the Weights
In previous articles, I discussed US soccer’s unfavorable player market. The problem stems from an assortment of factors that act like weights on the American player’s value — each one making him heavier and more difficult to move. Some — like training compensation — make Americans more expensive and, therefore, less attractive to foreign clubs. Others — like MLS’ free agent policy and single-entity structure — leave them with almost no domestic market. Combined, the weights can limit players’ options to such a degree that they have little chance to step outside the path MLS has marked for them.
Still, necessity is the mother of invention, and so, some American players have found clever strategies to shed the weights. Two recent cases serve as good examples: (1) Byang Kayo’s signing with Orange County SC and (2) Caden Clark’s signing with New York Red Bulls II. Both demonstrate that, with smart, deliberate moves, American players can lighten their burdens and protect their options.
The Market Weights
The market weights can apply to American youth players or professionals in MLS. The following is a basic recap of each:
Training compensation for MLS academy players. Recently, MLS announced it would pursue training compensation for academy players who move abroad. This makes the players more expensive and, at least somewhat, less attractive to foreign clubs.
Players under age 18 without an EU passport. Generally, FIFA rules bar players without an EU passport from signing with a foreign club until they turn 18. In the US, this means MLS’ right to sign these players is virtually exclusive.
Training compensation after age 15. At age 16, a player’s training compensation accelerates. Specifically, from 12 to 15, a player moving to Europe only requires €10,000 of training compensation per season, regardless of the club signing him. Thereafter, the number can jump to as much as €90,000 per season. So the difference between joining a European club at 16 versus 18 could be as much as €180,000. For an unproven player, that is significant.
Territorial rights. Domestically, at least for now, MLS teams enjoy the exclusive right to sign players in their home territories. And though MLS may rescind this policy, the replacement could take several different forms. For example, MLS may still give teams who trained players in their academies exclusive rights to sign them.
Professionals in MLS
Team-friendly MLS contracts. In many cases, a player’s first MLS contract is 2–3 years with 2 team options. This is a long time and, thus, gives the team substantial leverage. In addition, if the player signs during or before the season he turns 18, training compensation will remain attached to him when the contract expires.
Less incentive to sell. MLS’ rules and structure reduce its teams’ incentives to sell. The reasons are complicated enough to fill their own article. But the short version is that MLS teams do not get the same benefit from sales as teams in other leagues. The examples are many, including that MLS teams can only use a limited amount of the sale proceeds to improve their rosters and they are not as harmed by losing players for free.
At bottom, from age 16 to at least his early 20’s, if a player cannot get an EU passport, MLS holds substantial control over his career and salary. Domestically, he cannot shop his talent for the best offer or environment. And if he wants to consider the foreign market, MLS can raise the cost of signing him to a prohibitive level. In short, the typical American player has few options and even less leverage.
Case Studies: Kayo and Clark
While the market weights leave American players at a disadvantage, some can be avoided. The Kayo and Clark cases offer good examples.
Kayo is a 17-year-old midfielder, who made the US team for the most recent U-17 World Cup. From 2017 until September 2019, he played in DC United’s academy, during which time, he drew interest from German Bundesliga club Wolfsburg. Because Kayo played in an MLS academy, Wolfsburg would have had to pay training compensation to sign him. In Kayo’s case, the number would have been around €100,000.
So rather than sign with Wolfsburg directly, Kayo signed with Orange County SC, in the 2nd Division United Soccer League. This eliminated both instances where DC United could obtain training compensation for him. Specifically, clubs can receive training compensation in two situations: (1) when one of their players signs his first professional contract with a foreign club; and (2) when one of their players is transferred to a foreign club after turning professional. In the second instance, only the club transferring the player can obtain training compensation.
Here, if Kayo had signed with Wolfsburg directly, it would have triggered the first situation: a player who signs his first professional contract with a foreign club. DC United would have requested training compensation, leaving Wolfsburg with a €100,000 bill. But by signing with OCSC, Kayo’s first professional contract was with a domestic club. As such, DC lost that path to training compensation. This also meant DC could not get training compensation through the second method because they would not be the one transferring Kayo to a foreign club. So Kayo’s move to OCSC severed DC United’s link to training compensation.
OCSC could have requested compensation for any subsequent transfer of Kayo to a foreign club (like Wolfsburg). But OCSC does not seem interested in that. According to their general manager, the club wants to sign young American players and move them abroad in return for sell-on fees. This works better if they waive training compensation because the player would be unencumbered.
And based on outward appearances, this is how the process transpired. Kayo signed with OCSC in September 2019. By March 2020, reports were that he agreed to sign with Wolfsburg when he turned 18. While there is no word on whether OCSC waived training compensation, it would not fit their business model.
In short, Kayo slipped through the market’s constraints, which allowed him to move abroad for free.
Clark is a year younger than Kayo and also considered a top prospect. He played the last 2 seasons with Barcelona’s residential academy in Arizona. Clark has never played for an MLS academy, and there is no indication he can obtain an EU passport.
Despite the passport issue, European clubs have been circling around Clark for at least a year, with several bringing him in for trials last summer (2019). One of these was perennial Bundesliga contender RB Leipzig (officially, the “RB” does not stand for energy drink behemoth Red Bull, though, in reality, it does).
Nonetheless, without the passport, Clark’s European tour was more like an investment — deposit his talent in the minds of club decision-makers, hoping for a return in 2 years.
In the meantime, Clark had to evaluate a limited set of professional options. If he signed with MLS directly, the league’s allocation rules would have forced him into the SuperDraft. In this scenario, Clark would lose control over his eventual destination.
Further, Clark’s likely contract would have allowed MLS to tighten its grip. Again, a standard initial MLS contract is 2–3 years with two team options. For Clark, this would leave him tethered to MLS until age 21. And then, his MLS team could demand up to €540,000 from a European team trying to get him.
But shrewdly, Clark found another way. Rather than sign with MLS, he signed with the New York Red Bulls II, the reserve team for MLS’ New York Red Bulls. As NYRB II plays in the USL, Clark was not subject to MLS’ allocation rules and, therefore, controlled his destination.
The more intriguing part is that Clark signed within the Red Bull organization. Given his European interest, especially from RB Leipzig, it is tough to view this as coincidental. Or put another way, if it were coincidental, Clark and RB Leipzig both lucked into a great situation.
Let’s assume Clark impressed RB Leipzig so much that they wanted to sign him (and there’s airtight speculation to support this). Technically, they could not complete the deal until Clark turned 18. During that time, Leipzig could not direct his development and, ultimately, could lose him to another club.
But signing Clark to another Red Bull team eliminated that problem. The most obvious reason is that, with Clark in the Red Bull organization, Leipzig cannot lose him to another club. Further, they can continue to monitor his development in New York, both with the reserves and, eventually, the first team. In fact, if RB Leipzig had been able to sign Clark directly, they may have guided him along a similar path. That is, they may have started him with their U17’s or U19’s, where he could have played for about a year. Then, depending on his progress, Clark could climb Leipzig’s ladder toward their first team. This is not much different than the current plan, only instead of the U19’s in Leipzig, Clark is starting with the reserves in New York. And after a year, he could still work slowly toward the Leipzig first team, only through Red Bull’s New York first team, rather than the U19’s or reserves in Leipzig. Regardless, by signing Clark to a USL contract, rather than an RB Leipzig contract, Red Bull lost almost nothing.
Red Bull also will be able to move Clark to Europe free of the typical MLS-related weights. For example, because Clark will be a homegrown player by age 18, the New York Red Bulls would get 100% of any transfer fee for him. This means they could transfer Clark to Leipzig without MLS involvement. And because Red Bull would be simply moving Clark from one of its teams to another, the transfer would be immune from the factors that can discourage MLS teams from selling. For one, as part of the Red Bull organization, the New York Red Bulls would have an incentive to sell that most MLS teams lack: moving a good player higher up the organization’s ladder. Nor would costs spoil the deal. Indeed, effectively, the transfer fee would be $0 (or, converted, €0) because Red Bull is only moving Clark between different parts of its organization. The same would apply to training compensation, which Red Bull would only owe to itself.
All told, though Clark could not sign with a European team, he found a way to achieve, in effect, the same result. He can now travel through professional soccer unencumbered, as if he were under contract with RB Leipzig.
For obvious reasons, MLS wants to prevent young American players from bypassing the league. And despite being caught off guard initially, MLS has now built a multi-layered security system that makes signing abroad more complicated. If players want to avoid these burdens, they will have to consider each move and summon a measure of (off-field) creativity.