Where did Inter Miami get the money to sign Messi, Busquets, and Alba?
The owners of Inter Miami have managed to bring down seven Ballon d'Or winners to the team. After Messi, Sergio Busquets and Jordi Alba will join the American club. The strict salary rules of MLS have posed barriers for Inter Miami in acquiring these three stars.
Bringing Messi to Miami is a tremendous financial burden. Owner Jorge Mas confirmed that the former PSG player will earn between $50 million to $60 million per year, surpassing the combined 2023 salary budgets of Real Salt Lake, Orlando City SC, New York Red Bulls, St. Louis City SC, and CF Montreal. Messi's contract runs until 2025 with an option to extend until 2026.
According to MLS financial rules, each club can have a maximum of three Designated Players (DP). These players have a limited base salary of $612,500 per year regardless of how much they actually earn. In Messi's case, this base salary represents only 1% of his actual income at Inter Miami. In other words, Inter Miami has three players who exceed the salary threshold under the "Beckham Rule" introduced in 2007 when David Beckham joined LA Galaxy.
The challenge for Inter Miami is that they already had three DPs before Messi arrived, including forward Leonardo Campana, midfielder Gregore, and forward Rodolfo Pizarro. Miami will not dare to break the barrier for a fourth DP after receiving a record $2 million fine for violating this rule in 2020. Now, the Southern Florida team will have to exploit every loophole in the MLS regulations to have Messi, and later Busquets and Alba.
In the case of Messi, it's relatively straightforward. Inter Miami successfully convinced Pizarro to terminate his contract early last Friday. The Mexican striker has also found a new destination at AEK Athens. Thus, one DP spot has been freed up for Messi.
For the remaining two DP spots, Inter Miami has to find alternative solutions. With Gregore, who currently earns $826,000 per year, the club will repurchase his contract using General Allocation Money (GAM), one of the mechanisms in MLS to help clubs build quality squads. When Inter Miami uses GAM for the midfielder from Brazil, the club's budget will only bear a small portion of Gregore's salary. This means that he will no longer be classified as a Designated Player due to the reduced salary. The DP spot vacated by Gregore will be reserved for Busquets.
As for Alba, things are slightly more complicated. Inter Miami is expected to acquire Alba using Targeted Allocation Money (TAM) and a salary cap for the Spanish defender set at $1,612,500 per year. Each MLS team is allocated $2,720,000 TAM in 2023 to supplement the salary cap. However, due to past violations, Inter Miami has been deducted $2,271,250 from their TAM funds in 2022 and 2023. If Inter Miami can maneuver TAM funds to cover Alba's base salary, the Spanish defender will not be considered a Designated Player.
The "Beckham Rule" introduced in 2007 has incentivized American clubs to recruit stars. However, after two decades, the rule limiting DPs to three has become outdated. That is why Inter Miami and other strong clubs are hoping to increase the number of Designated Players to five. Is it time to replace the "Beckham Rule" with the "Messi Rule" and expand the number of DPs?
