There’s no way to know how many transfer requests and inquiries MLS’s New York City headquarters deals with on a daily basis. As a single entity, MLS is under no obligation to release that information, and in fact it probably behooves them to keep it under lock and key. To a certain extent it allows them to control market cost on transfers, and if nothing else it keeps outside clubs from knowing whether or not MLS players are being consistently low-balled by foreign markets.
Like most things MLS allocation related, it is all so very confusing.
Under its single entity format, MLS does its best to emulate the rest of the world’s transfer cauldrons while maintaining top-down institutional control. All of the contracts, after all, are ultimately owned by the league itself. So the LA Galaxy can “sell” a player to, say, Newcastle, but in reality it’s only a shell agreement from club to club. The league is technically the one selling him in a financial sense, and MLS is the ultimate gatekeeper. Although in most cases it would be a disastrous PR fiasco to do so, it can technically put the brakes on any transfer it deems expedient.
In each outbound MLS transfer, the first cut of the transfer fee doled out by the buyer goes to any previous roster clauses (like sell-on riders attached by previous clubs) and to refund MLS for any original fees they paid for the player. Once those are dealt with, the remaining pool of cash is split between the league office and the club. If the player is a Homegrown, MLS skims one fourth off the top and the remaining 75 percent goes to the club. If he’s not, the club’s cut is dimmed to two thirds.
Of course none of this is ideal. A club should reasonably expect 100 percent of the transfer fee, but the real disincentive is that only $650,000 of the club’s cut – whether 66% or 75% – can be fed back into the club’s allocation kitty. The rest is pumped into operations cost (read: academy costs, training facilities, USL teams) and front office expenses. This isn’t bad, insofar as it helps clubs in some manner, but it absolutely kills the on-field incentive.
If you sell on a player for $4 million, and you can only use 16 percent of that to drill back into actual first team player allocation, well, you’ll see the effects pretty quickly. It’ll simply take that much longer to refill the well.
In a roundabout way, the league’s convoluted and difficult-to-understand transfer system brings us about to Fabian Castillo.
Late last week, Goal.com’s Ives Galarcep reported Turkish first division side Trabzonspor had handed FC Dallas a transfer offer for Castillo worth somewhere in the neighborhood of $3-4 million. This was a significant hike from the rumored initial fee of $1-2 million, which would mean MLS had to essentially triple the initial offer just to reach its final point of sale.
The customary disclaimers apply: until the ink is dry we won’t know the cost, and the league could conceivably (though not likely) block the move if HQ has a higher valuation of his fee than they’ve seen slid across the table. And, as always, the player has to assent as well. MLS players have turned down transfers before.
But if reports are correct, and Castillo’s fee really is $4 million, then the beacons should be lit across Europe that the true value buys have migrated from South to North America.
We can have a frank argument about value, and whether buying Castillo for $4 million is a steal or an overvaluation or somewhere in the middle. You buy the player’s development history alongside the player himself, and certainly Trabzonspor views the refining fires of MLS to be a bit cooler than time spent in your early 20’s in a more heavily scouted world league. Which is fine. It discounts individual performance at times, but international scouting is only so comprehensive.
But those value judgments are ultimately moot. We can get relatively metaphysical with this, but transfer fees are ultimately part of what sets a player’s value. It’s all intrinsic until you see a number, and then we are quick to react based on previous transfer fees and our own latent bias. Whether or not Castillo is worth $4 million – as if such a thing could even be quantified – that’s what (we think, based on reports) the market says he’s worth. It has to be our ballast, if only one of several.
The real takeaway in this is that the Castillo sale, if it goes off, should be a landmark in the European scouting apparatus in North America. Put simply, quality first team caliber players – whether that’s now or a year or two down the line – can be had cheaply over the cost of dealing with other leagues. MLS’s global opinion has yet to really catch up with the product it’s now fronting on the field, and transfer costs will reflect that for a time. But that won’t last forever.
Anyone who’s watched Castillo over the years knows he can hack it in Europe’s high places, and as one of the most exciting players in all of the Americas, the fact that even rumors have him commanding a relatively modest sum of $4 million – which, adjusted for Euros, is even less – will set the negotiating table for the rest of Europe.
Meanwhile, Premier League clubs are blasting estimated market values of almost every player they sign by an average of almost double, Graziano Pelle goes to China for almost $20 million and average role players in the Bundesliga switch hands for an average of $10-15 million.
There has almost always been a diminished valuation placed on MLS players in Europe, in the sense that even the best ones command less than their counterparts. Part of this is simply talent level – they often aren’t as good. But transfer market factors tend to involve speculation as much as factual bedrock, and for want of American scouts, European clubs are simply content to stay in their own pool for players. It has, to put it mildly, worked out fine for them, if not expensively so.
But MLS is an emerging poacher market for clubs willing to spend the time to scout it. Make no mistake, if Castillo was doing the same exact things in Mexico’s Liga MX or France’s Ligue 1 or the Dutch Eredivisie – same highlight reels, same production, same blistering pace – he’d command twice his price tag. If not more. If, say, the Eredivisie’s step up from MLS is worth that much on the market – remember, this is a league Jozy Altidore ripped apart – then it becomes much easier to agree with the assessment that MLS players are waiting to be had on the cheap.
In 2008, Altidore was sold to Villarreal for $10 million. Nobody had so much as approached that total before or since, and it doesn’t seem as though it’ll fall any time soon. With outsize, low-risk talent in MLS like Dom Dwyer (who was just offered at $3 million by Olympiakos), Wil Trapp, Jack Harrison and Cyle Larin waiting to be had in the $3-6 million range, what is there to lose from a European perspective? Especially as revenues in top leagues escalate and that becomes couch cushion money?
Value buys abound in MLS. Until the market adjusts, expect more Castillos to flee for the relative prestige of Europe. And on the cheap.