Just before 7 p.m. on the Friday of Memorial Day weekend, MLS announced unprecedented sanctions against Inter Miami for violating the league’s roster rules.
According to the league, Miami rostered five designated players in the 2020 season, two more than the limit. The club also underreported salary budget charges for three other players. MLS punished Miami severely. It fined the club $2 million and docked managing owner Jorge Mas $250,000, suspended former COO and sporting director Paul McDonough through the 2022 season and stripped the team of more than $2.27 million in allocation money through the 2023 campaign.
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In his first interview since those punishments were announced, Mas acknowledged that Miami operated outside of the league’s salary restraints and provided detail as to how much the team was paying French World Cup winner Blaise Matuidi (one of the two players who should have been categorized as a DP last year). He also called for the league to strengthen its compliance efforts and vowed to continue to push MLS to allow owners to spend more aggressively.
“We’ll push the envelope, but you got to do things right,” Mas said. “And I said this in statements to everyone in the league, I will push the envelope, but within the envelope.”
Miami is the first team in MLS history to be publicly punished for these kinds of violations, but they’re hardly the first club to push the figurative envelope when it comes to navigating MLS’s labyrinthine roster rules. The Athletic spoke with more than a dozen sources — current and former players, agents and front office employees around the league, all of whom requested anonymity so as to not incriminate themselves or others or to speak freely about league operations — most of whom said that while the Matuidi deal was rare for its scale, it’s accepted around MLS that teams operate in regulatory gray areas.
Miami didn’t invent this sort of behavior, they just got caught.
Mas told The Athletic that midfielder Blaise Matuidi will make between $13 and $14 million over the course of his two-and-a-half year contract with Miami.
Miami is paying Matuidi on average between $5.2 and $5.6 million per year, well over the $1.6125 million threshold at which a player must be considered a designated player (DP) in 2020 and 2021. Based on that average compensation, Matuidi would be the fourth-highest-paid player in MLS this year, one spot behind Miami teammate Gonzalo Higuain. Those averages reflect what his budget charges should be for the life of his current contract with Miami and are roughly four times the salaries that the MLS Players Association logged for Matuidi — $1.33 million in 2020 and $1.5 million in 2021.
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The union’s numbers only reflect the agreement that was filed to the league, however, and Miami didn’t submit Matuidi’s full compensation to MLS at the time of his signing. Despite his pay coming in well over the DP borderline, Matuidi counted as a targeted allocation money (TAM) player last season.
Mas said Miami intended to make Matuidi a DP and move young DP Matias Pellegrini to one of MLS’s new under-22 player slots in 2021. Pellegrini ended up ineligible for the U-22 classification because his salary was too high. Because budget charges are calculated by amortizing compensation over the life of a contract, Matuidi would have already been considered a DP, even if his deal called for Miami to pay him a comparatively low number in 2020 and significantly increased his salary for 2021 or 2022. Mas said he was unaware at the time the deal was completed that is how MLS determined budget hits. Mas said McDonough was hired to manage the cap and noted that the team and McDonough parted ways at the end of the season prior to the investigation, for reasons not related to Matuidi. McDonough, as noted above, was suspended through the end of the 2022 season. The MLSPA salary releases show that the contract turned into the league didn’t include a massive jump from 2020 to 2021, and as the investigation bore out and Mas confirmed, did not include a significant portion of the compensation Miami was paying Matuidi.
In its press release announcing the punishments, MLS said Mas was “ultimately responsible for making sure Inter Miami had sufficient controls and protocols in place to ensure compliance with the rules” and that he “failed to disclose his knowledge of the Matuidi violation at the appropriate time required under MLS rules.”
Of course, Matuidi isn’t the first high-profile player to arrive in the league on a TAM contract that seemed questionable. Two-and-a-half years before the midfielder moved to Miami, Zlatan Ibrahimovic joined the LA Galaxy in similar fashion.
Ibrahimovic, who played with Matuidi at PSG from 2012-2016, joined LA in March 2018. As was the case with Miami and Matuidi, it was a significant surprise that the Galaxy landed the star striker on a TAM contract, even if only for one year. The designation meant that LA could only pay Ibrahimovic $1.5 million in his first season in MLS, after he previously made around $25 million per year for Manchester United (according to the book “Football Leaks: The Dirty Business of Football”). Though he was 36 and coming off ACL surgery at the time of the signing, his 2018 salary in LA was viewed as unfathomably low.
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But as was the case with Matuidi’s contract, there may have been more to Ibrahimovic’s initial deal than met the eye. Following his first season with the Galaxy, Ibrahimovic signed a new designated player contract with LA that made him the highest-paid player in MLS in 2019. He left LA after that season. Exactly two weeks after he revealed he wouldn’t return to the Galaxy, it was announced that Ibrahimovic purchased a 50 percent share of the Swedish branch of AEG, the company that owns the LA Galaxy. The investment gave him a minority stake in Swedish club Hammarby.
The AEG news raised plenty of eyebrows around MLS. The general perception among sources, spoken to at the time and in recent days, was that Ibrahimovic got a sweetheart deal on AEG Sweden as a make-good for taking that below-market $1.5 million salary from the Galaxy in 2018. The details of the Ibrahimovic-AEG transaction have never been made public or reported. A source pointed out that, if Ibrahimovic did not sign that AEG deal until he was a DP in 2019, it would not violate any rules.
The Galaxy pulled off another eyebrow-raising move a little more than a year later, when the club signed Cristian Pavón to a TAM deal after acquiring him on a free loan from Boca Juniors. Pavon was just 23 at the time and only a year removed from playing for Argentina at the 2018 World Cup, where he started a remarkable Round of 16 match against Matuidi and eventual champions France. On the surface, he seemed like far too valuable a player for Boca to send out on a free loan, even if he had a prior relationship with former Boca head coach Guillermo Barros Schelotto, who was then managing the Galaxy. Pavon returned to the Galaxy in 2020 after LA exercised an option to extend the loan, this time, presumably, with a fee, as Pavon became a designated player, filling the DP slot vacated by the departing Ibrahimovic.
“MLS reviewed both the Zlatan Ibrahimovic and Cristian Pavón signings and found both agreements to be compliant with the League’s roster guidelines,” MLS spokesperson Dan Courtemanche said in a statement.
It also approved the Matuidi deal, only to learn of the extra compensation in it months later.
In the wake of those Matuidi revelations, several sources said it is harder for the league to convincingly say the hard-to-explain dynamics needed to bring Pavon and Ibrahimovic as TAM players were legal under roster rules. Or that any deals that put a team up against the budget rules aren’t utilizing some sort of off-books workarounds.
Lower-level schemes to hide money that should count towards a team’s salary budget also exist, and Miami had less extreme violations of its own in its deals for defenders Leandro González Pírez and Nico Figal and forward Julian Carranza. Defender Andres Reyes didn’t receive the extra compensation that Matuidi did, but he too should have counted as a DP last season.
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Mas said that Matuidi was the only one of Miami’s five violations in which the club directly paid extra money to a player. The four other deals broke the rules through other payments to third parties, such as transfer fees to teams, and agent and intermediary fees, multiple sources with knowledge of the situation said.
Multiple agents said those types of payments are obscured by other teams, too.
In a usual player contract, agents usually receive a percentage from the team — or, in these cases, MLS itself, due to the league’s single-entity structure. In MLS, that fee, which typically runs from five to 10 percent of the overall value of the contract, counts toward a player’s salary budget charge. Agents that spoke to The Athletic said that MLS teams have used “contracting” and “scouting” agreements to supplement agent fees that otherwise count against a player’s cap hit. The supplemental contracts allow clubs to minimize or eliminate the budget charge associated with agent fees by paying the agents directly or creating contracts for “other services rendered.”
MLS attempted to “clarify” its rules internally several years ago to emphasize that “a side deal can’t be used as something to circumvent” cap hits, a source with knowledge of the situation said. However, the sources who spoke with The Athletic for this story referenced payments that happened in recent seasons.
Some examples of attempted rule-breaking are more straightforward. A former MLS player described one such case to The Athletic. The player said that he became an MLS free agent in a recent offseason. One club made him a standard free agent offer — terms within the range allowed to MLS free agents in the collective bargaining agreement — but with a little something extra on the side. The club offered the player’s wife a $100,000 salary for what would have amounted to a no-show job. That extra $100,000 never would have appeared on the team’s salary budget. It would have been an extreme case of a team bending — perhaps breaking — MLS rules, but the player ultimately signed elsewhere.
These sorts of schemes have long flown under the league’s radar. MLS has a competition department that approves every player contract in the league, but it only reviews the agreements that it sees. As illustrated by the Miami case and the above examples, teams can and have entered into separate side agreements — sometimes formal, sometimes informal — that they do not share with the league office.
The league has multiple officials at each team sign an annual certification contract that they follow league rules. Those contracts include punishments for violations. MLS also has disclosure requirements in its league rules, but, on a practical level, it would be difficult for the league’s small competition department to catch a committed violator.
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If it opens an investigation, the league has the ability to review internal communications, emails and messages, a source with knowledge of the situation said. It can also request any documentation from teams, and it has the ability to review documentation from affiliate clubs for owners with teams in different leagues, like NYCFC, Montreal and the New York Red Bulls. It’s unclear, though, how often MLS invokes those powers. The source said the league often reviews deals it flags as potentially problematic when teams first submit contracts to be reviewed.
“The league has at its disposal tools to be able to evaluate transactions that there have been credible claims about,” the source said. “Any time there is any credible claim that there has been a violation, the league is going to follow up on it extensively.”
The league does not have plans to investigate any other teams at this time, the source said.
The league declined to share details of how MLS first learned about the Miami violations. Mas said he received a call from MLS commissioner Don Garber in February telling him that the league was going to look into the Matuidi signing. He added that Miami self-reported all violations after the league opened its investigation in March.
“Major League Soccer has comprehensive compliance rules and procedures which worked in this (Miami) case,” Courtemanche said. “The league is evaluating additional disclosure requirements and compliance personnel at the league office to further strengthen its resources in this area.”
MLS deserves credit for the public nature of its investigation and the severity of Miami’s punishments. Though some sources around the league complained to The Athletic that McDonough was punished more harshly than Mas, the league is betting that McDonough’s suspension will significantly deter executives from cheating the way Miami did in 2020. The fines for Mas and the club will be manageable, but the substantial amount of allocation money that Miami is being docked will make managing the roster difficult over the next two seasons. According to sources, that allocation money will be redistributed to the other MLS teams in 2022 and 2023, maintaining the same minimum league-wide spend on players while still punishing Miami. It’s unclear if or how that redistribution will fit under the CBA, which governs the amount of allocation money given to each team each year.
However, as illustrated, this problem extends beyond Miami. The club went above and beyond with its violations and ended up getting caught, but the league still faces real questions about how it should proceed.
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“Speaking for Miami, we will follow the rules and rules need to be followed,” Mas said. “But if you have rules, you need to be able to enforce them. And you need to be able to track them. Therefore, the league will have to have a compliance system, because I am establishing a compliance system at Inter Miami here, but the league will have to establish a compliance system that tracks every single negotiation and payment with foreign teams, foreign players, foreign agents and foreign intermediaries. I think, as has been the case in Inter Miami, besides self-reporting or besides telling the league these things, the league will have to figure out how are they going to have a system that promotes you bringing in international stars, and yet somehow avoids the pitfalls of having to pay agents or intermediaries on the side. That’s difficult and that’s I think going to be something the league has to look at.”
That Miami was allowed to carry five DPs for the home stretch of the 2020 season is more than just embarrassing for MLS. The stakes of this scandal are significant. MLS is built around the idea that its teams construct their rosters under the same rules. If the league can’t ensure that is the case, the integrity of its competition comes into question.
Miami made the expanded playoffs last season in the 10th and final spot in the Eastern Conference. They qualified with one point more than the 11th-place Chicago Fire. After a poor start to the 2021 season, Fire coach Raphael Wicky now seems firmly on the hot seat. Would Wicky be in that same position had the Fire snuck into the postseason last year? Miami ended up losing in the first round of the playoffs. Had the team gone further, the validity of the postseason would have been harmed. This all could have been much, much worse for MLS.
And while Miami is ultimately responsible for its own actions, the system in which the club was able to hide two DPs and artificially deflate the budget charges for three other players was designed and managed by the league.
MLS continues to create different types of roster designations — DPs, TAM players, GAM players, U-22 signings, special discovery players and senior, supplemental and reserve roster spots — in order to restrict and control exactly how teams are allowed to spend the capped and uncapped money available to them. MLS also limits transparency both publicly and internally amongst teams despite the fact that transparency can drive accountability.
The MLS budget system is structured around prioritizing parity and keeping costs manageable. That structure has been perpetuated by longstanding, fiscally conservative ownership groups that still hold great sway within the league, even as bigger-spending owners enter MLS at much higher buy-ins, with nine-figure expansion fees and stadium and training facility costs rising into the hundreds of millions of dollars.
“It’s no secret that there are a segment of owners in the league that do not want to spend money, that are OK with the status quo, that are very happy with their financial situation and circumstances because they invested in the league X amount of years ago and it’s just a cash cow, they’re clipping coupons and life is good,” said Mas. “That’s not why we got into this. We got into this for very different reasons.”
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This isn’t to say that MLS shouldn’t have some way of governing how teams build their rosters. A system of roster rules is sensible, in some ways — it can even the playing field and keep finances stable for all teams. But the Miami saga has exposed real cracks in how MLS enforces its rules and reinforced the idea that there are a number of owners who are willing to spend in ways the league doesn’t currently allow. That two teams, the Galaxy and Miami, have utilized multi-million dollar offseason buyouts of designated players in order to get roster compliant in recent seasons — Giovani dos Santos for LA and Pellegrini for Miami — indicates at bare minimum the difficult balance the more aggressive teams sometimes have to strike under the current structure.
For all of Miami’s flaws, as Mas mentioned, the club does not lack ambition. Teams like the Galaxy, Atlanta, LAFC, Toronto and even Cincinnati fall into the same category. With MLS continuing to attract new, richer owners at higher and higher price points, that number should only grow in the coming years.
Over time, those more aggressive owners will likely end up pushing the league to be less and less restrictive in how it allows teams to build rosters. That process will probably play out over time no matter how or if the league further responds to the Miami fiasco, but the aftermath of the club’s violations is a good time for the league to reflect. Clearly, there is a need for MLS to police its teams more effectively. But the league should also ask if the current system of roster rules still makes sense, or if it’s become outdated.
It doesn’t seem like that sort of introspection is imminent. While the league has added new buckets of spending, it is not currently considering any major roster rule overhauls.
“That’s not a direction the league is looking at,” the source with knowledge said.
Mas and many sources at different clubs believe it’s time for a rethink, however — and some see the Miami scandal as illustrative of that need. The club might have gone above and beyond in the breadth of its cheating, but it isn’t the only team that’s broken the rules over the years. Others have done so more on the margins, but they’ve still spent extra, off-the-books money in an attempt to gain an edge over the competition. Not every MLS club does that, of course, and no matter how strict or loose a system of rules, certain individuals will always push to the absolute limit and beyond.
But to Mas and those sources, the status quo feels more than past due.
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“A majority of the owners in the league understand that in order for us to elevate our league, it’s going to take higher investment in players,” Mas said. “And there are conversations ongoing as to how we restructure player acquisitions and attract in talent to the league. … I think (a lot of) things put together will not necessarily force the league, but it will, in conjunction with the growth of the league, will make rosters much more flexible for us to spend. So, I think that we’re going to see rule changes, yes, based on the inertia and growth of the sport and the significant investment by new owners coming into the league.”
(Photo: Jasen Vinlove / USA TODAY Sports)