Photo: Daniel Gajdamowicz
Three teams made trades Thursday. Two teams improved immediately. The other was Philadelphia Union.
Chivas USA effectively traded surplus midfielder Michael Lahoud and allocation money they probably weren’t going to use for Juan Agudelo. Their acquisition of Danny Califf made Heath Pearce expendable, and the replacement of Pearce with Califf is pretty much a wash. Chivas USA’s day of wheeling and dealing is one of the most impressive in MLS history.
New York parted ways with a starlet (Agudelo) who couldn’t crack their starting lineup and whose lack of playing time was an occasional controversy. In return, they significantly improved their back line by adding a good, versatile defender in Pearce.
Philadelphia got a midfielder (Lahoud) for whom they have no room in the lineup and an unknown amount of allocation money by trading Califf.
Califf is the second popular, key veteran Philadelphia sent away this year for allocation money. The other, of course, was Sebastien Le Toux.
The allocation money chase
Allocation money is one of Major League Soccer’s most nebulous aspects. Basically, the league makes available to teams money that doesn’t count toward the clubs’ $2.81 million salary budget. Teams can use it in several ways:
- Sign or resign a player;
- Exercise an option to buy a player’s rights;
- “Buy down” or decrease a player’s salary budget hit below the $350,000 league maximum budget charge.
The league doles out allocation money for one of six reasons. Philadelphia only qualifies for one this year: trading an off-budget roster spot. (Or two, if one counts money received from last year’s Carlos Ruiz transfer.) With 29 players on their roster, the maximum the Union could get from the league is $35,000.
In previous years, the Union qualified for more allocation money by being an expansion club and missing the playoffs in 2010. It’s unclear how much they received for that because MLS keeps that secret “to protect the interests of MLS and its clubs during discussions with prospective players or clubs in other leagues,” as league rules put it.
This year, the Union have gone looking for allocation money in a new way: By dumping their most valuable players.
New signings cost money
Over the last nine months, the Union have acquired their first designated player, Freddy Adu, and the rights to six players who likely required transfer fees. (It’s unknown if all did because the Union seldom make those acquisition details public.) Those six are:
- Lionard Pajoy
- Porfirio Lopez
- Gabriel Gomez
- Josue Martinez
- Carlos Valdes (previously on loan)
- Roger Torres (previously on loan)
Each hails from Costa Rica, Panama, or Colombia, three adjacent countries in Latin America. That’s clearly the work of Union sporting director Diego Gutierrez, a former player agent and Chicago Fire teammate of Union manager Peter Nowak whose solid ties to the region helped build the MLS talent pipeline to Colombia.
Only four current Union players predate Gutierrez joining the Union: the team’s three 2010 first round draft picks (Danny Mwanga, Amobi Okugo, and Jack McInerney) and Torres, whose permanent rights the Union acquired this year. All were teenagers when Gutierrez signed on.
Califf and Le Toux were among the last to go.
Where did the money come from to pay for the Latin American influx and Adu’s $594,884 in compensation? The Union probably used allocation money to a degree, but we just don’t know. The veil of secrecy over MLS salaries, transfer fees, and signings makes it difficult to track these things. The other major American professional sports are more transparent (but often just as complicated). In the NBA, for example, terms like “mid-level exception” are thrown around because the public has more knowledge of the salary cap mechanisms.
Today, nobody outside the league knows how much allocation money the Union have built up from the departures of Califf and Le Toux, so it’s difficult to objectively and fully evaluate the deals on merit alone (i.e. without factoring in Nowak’s clashes with his players), particularly until after the summer transfer window. On paper, both look like salary dumps for a financially troubled Union team whose primary owner leads a real estate firm that lost over $1 billion over the last four years. Each deal made the team immediately worse. One took away the man who created half the team’s goals during his two-year tenure. The other sent off the team captain and anchor of one of the league’s best defenses last season. They were arguably the team’s most popular players.
“It made me want to throw up”
On Wednesday, Nowak sought to justify the deal by getting ahead of the story, which he failed to do in prior deals (Le Toux, Michael Orozco Fiscal, Faryd Mondragon) by acting secretly. This time, he portrayed himself as transparent.
“At some point, [Califf] mentioned to me that it’s going to be time to go home with his family and go back to California,” Nowak said during the news conference. “This was going to happen sooner or later, so we met together and, after the talks, we decided to conclude this trade.”
On four occasions, Nowak repeated the notion that Califf was “going home,” as if to hammer home that Califf wanted to leave Philadelphia for the state in which he was raised, and the trade would make him happy.
In public relations, that’s called a “talking point.” Politicians use talking points all the time. When asked a question on a controversial topic, you fall back to the talking point you want to stress. It’s how you stay disciplined and “on message,” never deviating from the central message you want to convey, which in this case was that Califf was “going home” and everyone wins.
Califf”s reaction when he heard it was, responded by posting on the Union’s Facebook page, “My husband DID NOT WANT to be traded. -The truth.” The post was promptly deleted.
Trades happen all the time in American professional sports, and their merits are debated just as often.
But rarely do player departures happen the way they do with Philadelphia Union, a club that exists in part because of an unprecedented grass roots effort by local soccer fans to draw an MLS franchise.
Now, many fans are calling for Nowak to be fired because of how he’s treated his players and dismantled a 2011 playoff team that’s suddenly one of the worst in MLS. It’s not just that Nowak sent off popular, successful veterans. Rather, for many in a region known for embracing brutally honest athletes who give their all and wear their hearts on their sleeves (Allen Iverson, Brian Dawkins, etc.), it’s as one Union fan put it :
“At what point should an organization lying to its fanbase and throwing its own employees and former employees under the bus stop being acceptable behavior? It’s classless. And to do that and then ask us for money… It’s unspeakable to me. At some point, someone over there should step up and say “this isn’t right.” I think the fact that no one in senior management or ownership has said that shows that we’re looking at a very difficult future path and that we’re supporting a group of people with little to no integrity, and those aren’t people I want to support.”
Good article- thanks. A question I have is- does allocation money expire? You mentioned the Union can’t be using too much of it this year- I am wondering if they might be sitting on the equivalent of a large MLS gift card?
I think that Novak will be gone soon. Just a prediction.
I talked with someone with the Union about that same question. He explained certain allocation money does have an expiration date. There’s different rules for it depending on how it was acquired.
Mabne Will Smith can buy the team and become a more financially stable owner.
“On paper, both look like salary dumps for a financially troubled Union team whose primary owner leads a real estate firm that lost over $1 billion over the last four years.”
Great. Now we’re dumping the team’s best to bail out a New Yorker who could give two shits what happens to anything other than his personal bottom line. And we thought Nowak was detached.
Well, I wouldn’t make that leap. If you click on the link from that section, you’ll see Sugarman made $26 million last year, but $24 million of it was in the form of 2 million shares of iStar stock. Whether those shares are still that valuable or not, I don’t know. Last fall, he sold at least 375,000 shares for around $6 per share. I don’t know what the Union’s net revenue is, but they apparently bring in $20 million before expenses.
I must’ve misread the implication. Would you say Sugarman’s pocket is any factor at all in these decisions?
No, I think you read me right. 🙂 I’m obviously wondering about it. Do we have concrete facts indicating iStar’s problems have hurt the team? No. But it’s also unlikely Sugarman’s dumping money into the team like owners in LA, Seattle, NY, etc. So yeah, it probably is a factor, but there’s just no proof yet.
Re: your earlier comment, I just meant I wouldn’t draw the conclusion that anything the Union do will “bail out” Sugarman. (I should’ve been clearer on that. My bad.) If those iStar shares really do translate to $26 million in cash, then that’s more than the Union’s gross annual revenue ($20 million).
Hey, maybe they should go public and sell of some of the team to raise funds. It would work, but it won’t happen. 🙂
i would totally buy shares in the union. make this like a bundesliga team.
It would be interesting to see if MLS would even allow one of their teams to go public. I know that the Green Bay Packers are the only publicly traded NFL franchise, but they were grandfathered in and the NFL has since created rules that effectively ban any other team from becoming public.
Doubt mls will allow it.
Growing up in Cleveleand I saw this happen already. The Indians sold CC and our bleoved Cliff Lee as well as several others that were dear to me. 94-97 Jacobs Field was sold out every game. Now it’s worse than going to an Orieles game. Selling players will not make money. How can you get rid of your product and expect to stay in the black. Do we think McDonalds would make any money if they got rid of the Big Mac? Or maybe Starbucks should sell Goatsmilk instead of coffee b/c it’s probably cheaper.My point is nobody wants a losing team and getting rid of a fan favorite is a bad decision.
So…you are saying Diego Gutierrez is an agent who might be getting a percentage of compensation received by players he signs, AND he is a paid employee of the Union getting paid by the team for signing those same players? How is that not a conflict of interest? How does that not affect his lobbying for playing time for players he might represent as an agent? Am I missing something?
I think the article is poorly worded. Gutierrez made his name as an agent working in that community and is now, as a Union emplyee, mining those relationships. No one has, at least to my knowledge, ever accused him of an actual conflict of interest like you describe.
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However, there is always a risk with the transition from agent to management and (presumptively) eventually back — it is very hard to be willing to hardball in negotiations for the benefit of a current employer if you will eventually be mining the same sources for referrals on something as personal as representation. And, from everything I have seen, Gutierrez is certainly building positive relationships with certain Central/South American powers by overpaying for talent (JDG, Lopez, etc).
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This doesn’t seem to trouble Nowak/NS, for some reason I don’t get.
Correct. Former agent. I’ve seen no indication he’s still an agent. No intent to say there’s a conflict of interest. I’ve reworded it bit for clarity’s sake so no other readers draw that conclusion.
Didnt a Billionaire buy into the team recently? or is he the guy who’s having the real estate losses? This guy also owns a piece of LA and NYRB right? A championship starts in the front office. This is a from the top issue that needs to be addressed. It’s disheartening that the Union has become an MLS equivalent of the Cleveland Indians or KC Royals.
Don’t forget the marlins, but at least the won a championship before they sold everyone off
Thank you, Dan, for this!
So… what happens next? What can we as paying, loyal fans and supporters do to change anything? We’ll keep going to the games, buying the merchandise (not me), watching on TV like nothing is wrong. It’s what, 2 weeks (?) until the next home game? How many people planning to go to that game will have moved-on from this by then which will equal less booing/anti-No-wack sentiment at the game? (Does any of that matter anyway? It hasn’t changed anything yet). Between this latest trade (and the impact that it *HAS* to be having psychologically on the rest of the team, along with all of the other changes to the team that just keep coming) and the proposed taxes coming from Chester (i know they are only proposed but still), the future of this franchise looks pretty bleak, to me at least… and God only knows what else is next…
Lets not panic. At the same time lets not forget. Large signs calling for Nowaks removal would be a nice start to effecting change at the club.
And taking down his banners in the TRE wouldn’t hurt either.
Taking down his banners should already have happened by now…
Good, let’s do it…
Sign suggestion: Cowardly Behavior Is Nauseating
How about a simple: Fire Nowak. 🙂 or Fire Comrade Nowak.
It rhymes. Just saying…
How is that going to fit on a sign, dummy?
As long as there isn’t a boycott. I can’t stand what Nowak is doing and I’m puzzled by the lack of action in the front office as he dismantles the team, but I will continue to use my season tickets to support the players on the field and continue to wear my jerseys, because it’s not their fault. I’m sure they’re concerned about their future. If our leading scorer and captain aren’t safe, who is?
I fully endorse the booing of Nowak, and his sign removals from TRE, but I hope that everyone else (non-SOBs, I’m sure TRE will be full) continues to support the players by coming to games.
Salaries (other than designated players) are paid by the league, out of revenue sharing. The league essentially gives you a use-or-lose check, so it would make no sense for an owner to trade salary away for allocation money.
In fact, the latter is actually *more* expensive, in a way, because it requires scouting.
That said, the team would keep a chunk of the cash if they transfer players out of the league for cash. The theory may be to do that.
(By the linked article, though, Sugarman seems to be doing just fine, even if his company isn’t.)
I have to say, by the way, that Califf seems to have almost nothing left, and that this looks like a good trade to me, unlike the Le Toux deal. (There’s a certain ‘magic’ in the ability to create and score goals. It can’t be taught, which is why you see it being compensated better than defense all over the world. You should never trade that quality unless you’re getting serious value in return.)
As I recall, earlier this season we set a new club record for shutout streak and it happened right around the time Califf was healthiest (aka not in Nowak’s doghouse). I think that shows he has something left.
how getting practically nothing for something is ‘a good trade’ is beyond me.
Yea, even if Califf has nothing left (I firmly believe he still does) we got something we have no use for. If Nowak wants to throw his little hissy fits because he wants complete and utter control of his dictatorship then fine, it doesn’t appear that any of us are going to stop him. But at least get something valuable in return! Trading away your top scorer and captain doesn’t make you a very good manager. Doing that for allocation money and a midfielder who couldn’t even get minutes on a mediocre Chivas team makes you a moron.
Nowak is quickly running out of chances to prove himself a good manager, because very little he’s done so far has worked (Lopez this year, the Ruiz saga, Diego Gonzalez).
can we talk somemore about how this trade aside from making the union worse actually helped makes NJ better? wtf!
In terms of allocation money, in February, in Orlando at the preseason camp, Nick said to me (in front of others), that the Union had more allocation by far than any other team in the MLS. He told me that some of the money from LeToux’s trade went to acquire Torres and Valdes. I understand the need to improve the team – its the complete apparent lack of vision and the disrespect of the fan base that is keeping me up at night.
When you start making banners, then you’re more than welcome to take them down. Until then, you have no say.
What I don’t understand is why we have so many midfield players and so few central defenders. It reminds me of the 76rs always having too many G-F swingmen but no shooters or big bodies. The theory (I guess) was to have “athletic, quick, and agile players….never worked!
You need ‘some’ size to defend against set pieces don’t you? It just seems disorganized or foolish to have zero depth in central defense. Not even old guys…nobody. So we play guys out of position. Nick? Diego? What’s your excuse guys?