05 January 2007

The Deal Needs to be Done

As you know, the DCenters is reporting that an announcement on DC United's ownership will be coming within the next week. Now while we have very specific reasons for believing this (even in the absence of major media confirmation at this point), the fact is that if this deal is to happen, the next week is probably the best time for it to happen. As one commenter wrote "If DCU are soon to be sold, that would explain why no player signings have been announced. Hopefully soon - I would like to see who United are going to sign." Well, true to a degree, but even with the ownership situation in flux, DC has clearly found the ability to make deals this offseason. We can imagine that any potential ownership group was informed about these deals, and had some tacit, or perhaps even explicit role, in making these deals happen. Still, there's one major reason why new player signings, especially this year, are somewhat contingent on new ownership: The Designated Player (DP)/Beckham Rule slot.

For the past years, by-and-large, player contracts (and salaries) would be paid by MLS. Yet when you use the designated player slot, MLS only picks up the first $400K of the salary, the rest is paid for directly by the Investor/Operator group of the team. Now, if you are on the verge of selling a team, I can't imagine you'd finalize a DP acquisition before finishing the ownership transfer. The potential risk of being on the hook for a big salary if the deal falls through is too big. Similarly, you can't deal away your DP slot until ownership is settled because it would appear like you had screwed over the group you were to which you were selling the team. The use of a DP acquisition in any form depends on having a stable ownership situation where the risk/rewards of any usage can be judged financially.

DCU can go ahead and make other acquisitions, trades, signings, and such without the ownership deal being settled, but the DP acquisition will only come into play once the team is sold.

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1 Comments:

At 05 January, 2007 18:55, Anonymous Paul said...

I don't think DC will use it's DP this season...what player is going to draw enough (extra) people to RFK to make the idea profitable?

 

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