Designated Player Rule

The Designated Player Rule, nicknamed the Beckham Rule, was adopted as part of the salary cap regulations of Major League Soccer for the 2007 season. The rule allows each MLS franchise to sign players that would be considered outside of the team's salary cap (either by offering the player higher wages or by paying a transfer fee for the player), allowing MLS teams to compete for star players in the international soccer market. Clubs have the option to use allocation money against a player's contract, so to avoid a player with a Designated Player level salary using one of the club's Designated Player slots. As of December 2015, there have been 114 designated players in the MLS.

The rule is informally named after David Beckham, in anticipation of MLS teams signing lucrative deals with internationally recognized players of Beckham's caliber. Beckham was the first player signed under this rule, signing a five-year contract with the Los Angeles Galaxy with guaranteed annual salary of $6.5 million.

The team salary cap was estimated to be around US$1.9 million in 2006, was $2.1 million in 2007, and was raised to $2.3 million for the 2008 season. As part of the 2010 Collective Bargaining Agreement between MLS and the MLS Players' Union, the 2010 salary cap was $2.55 million, with an automatic five percent increase each year until the expiration of the agreement at the end of the 2014 season.

Under the 2007 rule:

The 2010 changes:

The 2012 changes:

Starting with the 2012 season, the rule was changed with respect to younger players. MLS announced the changes in August 2011 after clubs expressed concern about signing young international players with no guarantees that they would develop into stars.

The maximum budget charge for Designated Players over age 23 was increased to $368,750 for 2013, $387,500 in 2014, $436,250 in 2015, $457,500 in 2016, and $480,625 in 2017. The budget charge for those who join during the midseason transfer window has remained at one-half of the full-season cap charge since the inception of the rule. The budget charges for younger players have not changed since 2012.

The rule is informally named after soccer star David Beckham, in anticipation of MLS teams signing lucrative deals with internationally recognized players of Beckham's caliber. As it turned out, Beckham was indeed the first player to be signed under this rule, signing a lucrative contract with the Los Angeles Galaxy worth up to $250 million over five years, with direct guaranteed compensation from MLS and Galaxy at $6.5 million a year. The rest of Beckham's increased earnings would come from Beckham regaining the entirety of his image rights, of which Real Madrid had owned fifty percent, effectively doubling his existing endorsement income, as well as new endorsement deals, a share of jersey sales, bonuses, etc.

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