LAFC’s deal with Bale and why they had to pay Inter Miami for their ‘discovery rights’

Gareth Bale’s move to Los Angeles FC surprised many.

Linked with a move to Cardiff City after his contract at Real Madrid expired, Bale joined the MLS Western Conference top side instead.

So, for those who don’t follow MLS closely, who is LAFC? How much will the case cost them? Why did David Beckham’s Inter Miami receive payment from LAFC as part of Bale’s move? And when could it make its debut?

Paul Tenorio explains all this — and more…

I remember when David Beckham went to LA Galaxy, but who is Los Angeles FC?

LAFC is an MLS expansion team which played its first season in 2018. They hired former US national team and Swansea City head coach Bob Bradley as their first manager and their first signing was former Arsenal and Mexico striker Carlos Vela. They also have several famous owners, including actor Will Ferrell, NBA Hall of Famer Magic Johnson, U.S. Women’s National Team legend Mia Hamm and her husband, former baseball star Nomar Garciaparra.

LAFC has been among the top teams in the league since its launch, finishing top in 2019 and leading the way again this season. Their success helped them establish an immediate foothold in Los Angeles despite the Galaxy’s 22-year lead. Another important factor is that LAFC plays at Banc of California Stadium in downtown Los Angeles (the Galaxy plays at Dignity Health Sports Park about 12 miles south in Carson, CA). They regularly sell out home games, averaging around 22,000 fans per game.

Their current coach is former Hannover 96 and US men’s national team defender Steve Cherundolo, and Juventus legend Giorgio Chiellini will join the club with Bale this summer.

Why did LAFC have to pay Inter Miami $75,000 for Bale’s ‘discovery’ rights? Surely Beckham wasn’t the only person in America who knew Bale before now?

MLS operates as a “single entity” league, which means that all teams are part of Major League Soccer’s umbrella corporation. When players sign with an MLS team, their contract is actually with MLS and not with that specific team. Under this single-entity structure, the league wants to avoid competition between MLS teams for the same player that could drive up the price, because it would essentially be MLS negotiating against itself. In an attempt to avoid this type of competition in the transfer market, MLS has created what is called a “discovery list”, where each team can place up to seven players. If a player is on Team X’s roster, Team Y must negotiate directly with Team X for those rights.

This is an outdated feature of league rules. In a anonymous survey of MLS sporting directorsthe majority chose the discovery rule as the most boring in MLS.

“What the league is trying to avoid always happens,” one executive said. “There are still auctions to sign players.”

What does it mean to be a “designated actor”?

When Beckham joined Galaxy in 2007, the league had to create a rule that would allow clubs to sign players with salaries above the MLS salary cap. Thus came the Designated Player, then nicknamed “The Beckham Rule”. Today, MLS teams are allowed to sign three Designated Players regardless of the salary cap, which stands at $4.9 million. These players fit into a designated player slot, which has a maximum salary budget charge of $612,500 (or $200,000 or $150,000 if said player is 21-23 or 20 or younger) regardless of player’s actual salary.

There are other ways to spend beyond this cap – General Allocation Money, Targeted Allocation Money, and Under 22 Player Initiative slots. Targeted allowance money is relevant in this case as Bale didn’t sign as a Designated Player.

David Beckham was the league’s first Designated Player (Photo: AP/Mark J. Terrill)

So what is “targeted cash allocation”? And why is Bale going to be paid so little in the first year of his contract?

Because Bale did not sign as a Designated Player, he must fall under a roster designation which, in MLS parlance, we call “Targeted Allocation Money” (TAM). Under this designation, he is only allowed to earn a maximum of $1 million above the maximum budget load on a roster, which is $612,500. Therefore, Bale’s maximum possible salary was $1.6125 million. But the budget charges also factor in things like agent fees, which is likely why the LA Times reported that Bale’s salary on his one-year deal was $1.3m.

Allocation money exists, essentially, as a way to create both an internal transfer market (or trade market, so to speak, in American sports) and additional fiscal space above the 4 .9 million. The league started out with just General Allocation Money (GAM), which is essentially a league-funded accounting currency that can be used to buy out players’ respective cap fees – think of it less like cash. money and more as additional salary cap space. Teams can acquire allocation money through trades or by selling players on the international market – teams that sell a player can convert up to $1.1 million of that real money into MAG to extend their ceiling space. Each team was also given a general allocation of $1.525 million at the start of this season by the league.

In 2015, the league introduced TAM as a way to try to improve the level of play in MLS. The league determined it needed more balance in its roster between Designated Players, who earned millions of dollars, and the Base, most of whom earned a few hundred thousand or less. But the league wanted to keep control of How? ‘Or’ What teams spent that money, so they created this new form of allocation money, TAM, which could only be used for players earning between the maximum budget load and $1 million over the maximum budget load . The goal is to increase the number of quality players in MLS by forcing teams to shop in a market of players earning between $612,500 and $1.6125 million this year.

Each MLS team has up to $2.8 million in TAMs they can spend per season. While MAG is a mandatory expense – it has an expiration date and teams will use or redeem it in full – MAG cannot be redeemed within the league as it is entirely discretionary and funded by the owner. Teams are not required to use it or use the full $2.8 million; they can sign up and then basically buy it with real money from the owner.

How does one understand all of this, and why does MLS do things the way they do?

There are calls within MLS to accommodate league growth by simplifying roster rules and giving teams more autonomy in how they spend their money – a simple floor and a cap that would remove buckets like GAM and TAM – but so far the league has resisted.

The design of these rules was based on budgetary prudence – slow and steady growth that would avoid the kind of spending that brought down the old NASL – but the league is now at a point where the vast majority of teams belong to billionaires and there is a level of permanence that has never existed before in American football; namely, the stadiums and training facilities that have been built for billions of dollars, collectively, around the league.

There’s a feeling the league is ready for growth in its rulebook that will better align it with the growth of the game and the league, but so far any changes have only created more rules. instead of simplifying the system.

Until those changes actually happen, hang on to this MLS glossary.

Will Bale have a chance of eventually buying an MLS team like Beckham did?

MLS commissioner Don Garber said the league would never again grant the rights to an expansion franchise as part of a player’s contract. Makes sense. When Beckham was given the option in his contract to buy an MLS team for $25 million, Real Salt Lake’s expansion fee two years earlier was $10 million. When Charlotte joined MLS this season, owner David Tepper paid a $325 million expansion fee. This figure is indicative of the growth of the league in this country over the past 15 years.

So no, Bale doesn’t have that option built into his contract.

When will Bale make his debut?

He will be eligible to play as soon as the MLS secondary transfer window opens on July 7 and the transfer can be made official. LAFC will play the following night against crosstown rivals LA Galaxy on July 8.

(Top photo: Gareth Bale/Twitter)