Let me tell you a story…
A long time ago, in a Galaxy far far away…the evil empire (AEG) decided that they needed a marquee signing to increase ticket sales and publicity. As luck would have it, there was a Jedi nearing the end of his lightsabering days who was looking for one more battle to go into. Moreover, this was a Jedi who had actually been heard of by some of the as-yet-unconvinced American sporting public, even though this was perhaps more for because of his wife than for any prowess with said lightsaber. This Jedi’s name was David Beckham, who helped paved the way for other high-profile soccer players to come to the New World.
The financial constraints placed upon the teams by MLS - a mere $2.1M per season at the time - meant that Beckham was way out of LA’s price range, even assuming that he would be prepared to take a pay cut to come to the US (in the end, he did, although he also regained 100% of his image rights, which is where those fantastical "$250M!!" headlines came from). So, MLS established the Designated Player rule - colloquially known as the "Beckham Rule" - to allow teams to sign higher-earning players. What happened is that the $400,000 per year of the player’s salary is applied to the Salary Cap, and the remaining remuneration is paid directly by the team. In the intervening period, the actual figure has changed (in 2010 it is $335,000), and teams are allowed more than one DP, but the essentials have remained pretty much the same. Currently, teams are allowed 2 Designated Players on their roster, although they can add a third by paying the league a ‘luxury tax’ of $250,000.
In my view, this rule has had two adverse affects. First, because the excess salaries are covered by the team’s owner, designated players are almost always going to be the type that attracts crowds, publicity and shirt sales, rather than improve the team in key areas. Potentially this will result in players not being signed exclusively for sporting reasons – rather, a clever accountant at Team HQ will calculate the number of shirt sales that said player will accrue and decide if the required salary will be covered by extra income generated by their arrival.
Even if the quality of player attracted is high, we next need to look at the type of player being brought in. Currently there are 14 designated players, all of whom are described as either midfielders or attackers. That means that no defender or goalkeeper in MLS is getting more than the aforementioned $335,000 figure. In actual fact, the highest paid defenders in the league are Philadelphia’s Daniel Califf and Columbus' Chad Marshal, who are on a base salary of $250,000 per year (source: MLS Players Union) At which point does the commercial agenda of MLS become more important than the quality of the league itself? In many ways this strategy could speak to the perception of soccer in the U.S. as much as it does to the relative merits of defenders and attackers.
Let me explain; one of the main criticisms leveled at soccer (by non-soccer followers, usually) is that it’s “too boring” and that there is "not enough scoring". By loading the teams with as much attacking ability as possible while also neglecting the defensive side of the game, MLS could conceivably increase the number of goals that are scored in a given season. I doubt this is actually a genuine tactic on the part of MLS, but regardless I find it a rather intriguing prospect. It’ll be worth keeping an eye on the average goals per game in future seasons. It also far easier to explain to somebody that Player X is worth this huge salary when you can simply show them a highlights reel of goals and clever tricks. Defenders very rarely have that kind of glamour attached to them; it’s hard to get excited about seeing a tremendous clearing header under pressure or a last-ditch tackle.
The other effect which I would be concerned about is the disparity that the Designated Players can create in the league. Team owners have to make up the salary of their DPs, and this results in the playing field becoming slanted in favor of the owners with the most money. New York Red Bulls currently have 3 designated players, earning a combined $12,164,000 per year. The Beckham Rule currently allows for just over $1M of that amount to be covered by the Salary Cap, which means that the NYRB owners are liable for the remaining $11M+. It just so happens that New York is backed by a huge multinational company that has clearly made soccer in the US a major part of their business strategy (as evidenced by the $180M+ spent on Red Bull Arena). The Salary Cap is designed in part to maintain parity in the league, but the Designated Player rule renders the cap almost meaningless.
It appears to me that MLS needs to find a balance between providing ‘big’ names that can fill arenas, and keeping the parity that makes the league (and American sport generally) so competitive. If the league turns into a procession between two or three teams every season, those potential fans and viewers while switch off, and that would be very dangerous for the long-term future of soccer in the U.S.
[edited for correction and clarification of defenders' salaries]