What is a designated player in MLS?

The designated player rule, known as the Beckham Rule, is a rule adopted by Major League Soccer since 2007 as part of salary cap enforcement, to which it serves as an exception.

The rule allows each MLS franchise to sign up to three players who are considered outside the club's salary cap because they are paid at a salary above the established salary cap, in order to increase the competitiveness of U.S. clubs in the international soccer market by giving them greater spending money.

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The rule is also known as the Beckham rule because in 2007 English soccer player David Beckham was the first to be hired observing the aforementioned rule when he signed a five-year contract with the Los Angeles Galaxy for a salary of €6.5 million per year.

In 2006, the salary cap in Major League Soccer was around $1.9 million; in 2007 it was $2.1 million. In 2008 it was raised to 2.3 million. Under the 2010 Collective Bargaining Agreement between MLS and the MLS Players'' Union, in 2010 the salary cap was increased to $2.55 million, with an automatic 5% increase each year, until the expiration of the agreement, scheduled for the end of 2014.

Landon Donovan was among the first Designated Players

The 2007 rule would expire at the end of the 2009 season. For each designated player, $400,000 of his salary fell within the salary cap and was paid by the league, while the remaining portion was paid by the club to which he belonged. In 2009 this threshold was raised to $415,000. Prior to the 2007 season, only three players received a salary of more than $400,000: Landon Donovan, Carlos Ruiz, and Eddie Johnson. 

In 2010, the rule was changed. First, the rule no longer has an expiration date. Designated Players may be new players signed to MLS via the Allocation Ranking List or the Discovery Process, or they may be re-signed existing players on a club's roster.

A player's Salary Budget Charge, and therefore Designated Player status, is generally determined by averaging all guaranteed amounts payable over the guaranteed term.

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In 2021, a Designated Player who is at least 24 years old during the League Year will carry the Maximum Salary Budget Charge ($612,500) unless the player joins his club after the opening of the Secondary Transfer Window, in which case his budget charge will be $306,250.

What is the MLS Salary Budget?

The Salary Budget is the amount that each MLS team is allowed to spend on their respective 30-man rosters. In 2021, the Salary Budget will be set at $5,210,000.

The maximum that can be spent on any player is $651,250.Designated Players are an exception to this rule. Their salaries may exceed the maximum charge.