This winter has seen a spike in transfers out of MLS: Omar Gonzalez from
the LA Galaxy to Pachuca, Juninho from the Galaxy to Tijuana, Jorge Villafana from the champion Portland Timbers to Santos, all in Mexico. But the biggest deal yet involves the impending
move by New York Red Bulls defender Matt Miazga to Chelsea.
ESPN FC reported on Wednesday that the 20-year-old Miazga had left the U.S. national team camp in California to fly to London for a medical exam and join Chelsea on what the Daily Mail reported was a $5 million transfer fee.
Here are three reasons why Miazga's transfer will be a good thing for MLS.
1. MLS clubs will need the allocation money generated by transfer fees.
Miazga's status as a free agent at the end of the season made it imperative that the Red Bulls sell him now if they wanted to get any money for him. And their share of the transfer fee -- three-quarters for a Homegrown Player -- will be a significant source of General Allocation Money ($650,000) that they'll be able use to pay down contracts (or transfer fees) of new signings or re-sign players already under contract.
In the short term, that General Allocation Money the Red Bulls, Galaxy and Timbers have received will give them a significant edge on other clubs, all otherwise starting out on an equal footing in terms of the new Targeted Allocation Money ($800,000 per season in 2016 and 2017) each must spend -- or lose.
As MLS clubs must spend more on transfer fees for players rather than rely on getting lucky with out-of-contract players, they must indeed have generated transfer fees from the sale of players to fund their own spending.'
2. MLS clubs must justify their spending on academy programs.
MLS owners are now spending roughly $40 million on player development -- academy programs and USL second teams -- and they will looking for a return. Obviously, the total amount of money spent has grown as the league has expanded, but this is an investment owners didn't make a decade ago.
As a class of Americans or American products entering MLS, the number of Homegrown players has been growing and the number contributing has jumped -- five MLS Homegrown players are in the January camp -- but clubs still are investing far more on players imported from abroad and that amount will grow as they start to use their TAM funds.
For technical staffs looking to justify to player development expenditures to their owners, the transfer of Miazga -- who entered the Red Bulls academy at the age of 14 -- is Exhibit A.
3. MLS clubs must spend more on the Homegrown players entering the league.
Along with TAM, MLS has introduced another new spending product -- an incremental $125,000 per season will be made available to each club to sign Homegrown Players. Seattle took advantage of that to sign Jordan Morris.
The salary the Sounders offered Morris -- reported by SI.com to be $225,000 a year -- wasn't the only reason he chose them, but it was a competitive offer such that the Sounders were able to then win out because of his family ties to the club.
MLS introduced the Homegrown subsidy to help attract players at the beginning of their careers and avoid the situation that the Red Bulls ended up being in with Miazga, and that's paying him a ridiculously low salary (guaranteed compensation of $66,250, $71,250 and $74,500 over the last three years).
There's no guarantee that Miazga would have stayed if he had started out on Morris-type salary -- or he showed the potential Morris, three years into college, did -- but it would have certainly alleviated some of the inequities and given the Red Bulls a better bargaining position if they decided keeping him was important.
In the end, though, nothing was going to stop the Red Bulls from selling, given the usually high offer they got for Miazga, a defender with just one full season as a starter under his belt.