Waiving Waivers, a No-Trade Clause Story.
Jozy is a Rev, and the way that he got there is absolutely the most convoluted, most MLS thing possible. If you want a deep dive into the wild world of MLS rules, you’re in for a treat.
Here’s the main points of Jozy’s move, thanks to ESPN soccer columnist @JeffreyCarlisle:
OK so here’s what we know:
Jozy and was TFC’s one-time off-season buyout.
His TFC Deal has a “no-trade” clause
While most players who have their contracts bought out must go through Waivers, MLS determined that Jozy, having said “no-trade” clause was free to sign with any MLS club he wished.
He then signed a new, Max-TAM deal with New England that added an extra year of guaranteed employment with MLS compared to his previous TFC deal.
This is all very complicated but to break all of this down we need to first understand a couple core concepts:
The Waiver process in MLS
No Trade Clauses
One-time offseason buyouts
Once we have those locked down, we can look at Jozy’s situation and discuss a) whether he should have gone through waivers, b) what kind of “free agency” he was under, and c) how this all applies to the wider MLS and global soccer system.
Waiver Process
A good way to think of MLS and player movement in, out, and around MLS is to think of the league as a mansion.1 There are lots of doors to go in and out of the MLS mansion, and many hallway that connect the various rooms (which, for our purposes are clubs).
The purpose of waivers essentially is to check in with all the rooms to make sure no one wants to have the player stay with them before the player leaves the mansion for good.
Here are how the Current MLS Roster Rules discuss some of the MLS players that are eligible for waivers:
Players who are eligible to be placed on Waivers are as follows:
· Contracted Players: Any player with an SPA.
. . .
· Returning Players: A player returning to MLS who the League was unable to re-sign and his last MLS club does not wish to exercise their Right of First Refusal, or who was previously terminated without going through Waivers.
. . .
· Out-of-Contract/Option Decline Players: Any player whose contract has expired or option has been declined, is not eligible for the Re-Entry Process or Free Agency, and who was not offered a genuine offer by his former club. Such a player will be typically made available in a year-end Waiver Draft or prior to the start of the next MLS League Season.
To be clear, any player who is terminated by MLS (an active occurrence) goes through waivers, but if the player’s contract comes to an end naturally (a passive occurrence) they may also go through either the Re-Entry or Free Agency doors to the mansion, depending on their eligibility.
For our purposes: a player can be waived either when they’re still under contract or after their contract has been terminated by MLS. While the mechanism for these two scenarios is the same, what teams get for selecting the players is very different.
For players who are still under contract, they are reassigned to the team that selects them. Basically, since they are still under contract with MLS, MLS just sends them to a new club. Same contract terms (comp, bonuses, length, option years) apply. Same as an MLS trade. Like trades, under the CBA, players can’t object to this reassignment (more on this later), and basically have to go.
For players whose contracts have been terminated, the player’s signing priority is given to the team that selects them. The player is under no obligation to sign with that club, and can sign anywhere else in the world, but if they want to stay in MLS, the only club permitted to negotiate and sign with that club is the club that selected that player via waivers.
This distinction crucial in analyzing Jozy’s move to the revs.
No Trade Clauses:
As hinted earlier, the CBA waives their right to players’ consent, or, rather withhold their consent from being re-registered to a new club in MLS . The (now expired) 2015 MLS CBA puts it this way:
Section 15.1 Unless otherwise agreed to in an SPA addendum, a Player may be required, without his consent, to relocate to any Team in the League as directed by MLS.
That language obviously leaves open the door for players to negotiate no-trade clauses. However such clauses are exceedingly rare. In my three years at the league office, I worked directly on exactly zero no-trade deals. If you told me that as of writing this article Jozy was the only player in MLS to have one, I’d believe you.
This entire no-trade scheme might come as a shock to the non-American readers. FIFA’s regulations are clear that all players must consent to any transfer of their registration. Thanks to the Bosman ruling, that consent is a key pillar of the international player transfer system. That fact likely contributes to why these clauses are so rare: foreign agents of big-money Designated Players simply don’t know to ask for them, don’t know they exist and take such rights to consent for granted.
Given no-trade clauses are so rare I haven’t personally set eyes on them. However, A no trade clause likely looks something like this:
MLS shall not trade [or reassign] Player to a club without the Player’s express informed written consent.
There are two key pieces that we need to focus on for our purposes: “trade” and “reassign.” Both involve MLS requiring a player to move to a new club, while still under contract. I’m not completely sure if the “reassign” language is in there, but such language would protect a player with a no-trade clause from being waived while still under contract and moved to a new team against their wishes. As the reports are hanging their hat on the fact that the players can’t go through waivers with the no-trade clause, I think it’s safe to assume it’s in there.
One-Time Offseason Buyouts:
MLS clubs can buy out as many players as they can so long as they still stay compliant with the Salary Cap. However, for one of those buy-outs, the league allows clubs to do so without the cost of the buy-out hitting the cap.
Put simply, it’s like a reverse Designated Player.
These off-season buyouts aren’t necessarily literal buy-outs either. In one notable situation, Inter Miami exercised their “buy-out” on Matias Pellegrini, although he was still under contract with MLS, and just sent on loan to their USL affiliate until they could loan him to Estudiantes in Argentina. MLS refered to these buy-outs as a “budgetary mechanism,” which means they would likely allow a team to “tag” a player as a buy out, remove them from their roster, but still keep them under MLS contract.
Jozy’s Situation:
According to reports, TFC bought out Jozy’s contract, agreeing to pay him $4.5M. The Revs then Signed him to a 3-year, max TAM (so $1M+MLS max salary, which is $612,500 in 2022). That deal essentially adds an extra guaranteed year to Jozy’s MLS employment.
That information tells us two things:
The new Rev’s deal means Jozy and TFC/MLS agreed to a mutual termination of his previous Designated Player agreement; and
He was out of contract before signing with the Revs.
How do we know this? He’s not just deciding to be reassigned to the Revs with both teams splitting the player’s costs (as can happen with waived players, and trades), as he signed that new max TAM deal with the Revs that adds a guaranteed year to his employment. Likewise we know that he didn’t move to the revs on the old agreement, and then sign the new deal, as any new MLS employment contract would overried the terms of the old deal, and TFC would thus not have to buy him out of his old deal.
So, if TFC is paying Jozy $4.5M, AND the Revs signed him to a new max TAM deal with an extra guaranteed year, he had agree to a mutual termination of his deal BEFORE he signed with the Revs. There’s just no other way to do the deal.
Why is the deal being bought out before signing with New England important? Because, if the contract is mutually terminated, the no trade clause is no longer in force. If the no-trade clause is no longer in force, it can’t be the reason why he didn’t go through waivers.
But even if the no trade clause was somehow still in force, it still doesn’t apply to Jozy’s situation. As we discussed (seemingly ages ago), being waived as an out-of-contract player isn’t an assignment of the player: it’s establishing signing priority to a specific club that wants it. Jozy is not forced to sign with that club, he’s even allowed attempt to negotiate with any MLS clubs he wants. All the signing priority does is require all the clubs that don’t have said priority NOT engage in negotiations with him.
That is fundamentally different than assigning a player still under contract to a new club against his wishes. It would be hard to argue that giving a club signing priority breaches the terms of a no-trade clause that includes some sort assignment language.
How Could Work:
While the termination of the contract would render the no-trade clause (as well as the other terms of the agreement) non-binding, the parties (MLS and Jozy) could agree in the mutual termination agreement that the no-trade clause survives, or that MLS would not to assign his signing priority without his consent. It seems difficult to understand why MLS would concede such a point in the mutual termination, given how zealously it fights against free agency, but it is a viable option, so it’s worth mentioning.
FIFA Applicability
As all things with MLS, we should take a small detour into how FIFA rules apply.
FIFA Art. 18(3) makes clear that players are free to contract with any club they choose once their contract has ended or (as in this case) terminated:
A professional shall . . . be free to conclude a contract with another club if his contract with his present club has expired or is due to expire within six months. Any breach of this provision shall be subject to appropriate sanctions.
(emphasis added).
Primarily, the FIFA RSTP applies to international transfers of players. However, FIFA RSTP art. 1(3)(a) also states that Article 18 of the RSTP must be adopted “without modification” in National Associations’ regulations and therefore apply to domestic transfers. Per the FIFA Commentary to the RSTP (the “Commentary”) such mandatory status is important “to ensure that rules relating to the status of players and the general conditions that must be met for them to be registered and become eligible to play for a specific club are harmonized at global level.”
The Commentary further justifies this mandatory inclusion positing: “if different regulatory frameworks governing these matters applied at national level, a sporting advantage would exist for clubs affiliated to member associations with less stringent provisions over clubs affiliated to different member associations with stricter provisions.”
In sum, the Waiver process likely breaches FIFA art. 18(3).
However as raised by Steven Bank on twitter, there is a possibility that, as a single entity, MLS could be considered one “club” for the purposes of the RSTP.
The FIFA statutes define a club as
a member of an association (that is a member association of FIFA) or a member of a league recognized by a member association that enters at least one team in a competition.” MLS itself is (1) a member of the USSF, a FIFA member association, that (2) that enters at least one team in a competition.
MLS meets that definition, and therefore one could argue that a move from TFC to a new MLS club is not a move to “another” club, but a move within one club.
However, FIFA, the USSF, the CSA, and CONCACAF regularly recognize MLS teams as separate clubs: each club has a separate account in FIFA’s transfer matching system, and each MLS team gets a separate berth into the CCL, US Open Cup, and Canadian Championship. FIFA generally treats clubs who share owners as separate clubs for regulatory and transfer and registration purposes. This is especially true for international transfers, where clubs the same regulatory requirements to submit transfers for approval by the relevant federations and FIFA irrespective of whether they share ownership or when a holding company acts as the ultimate employer for the player for multiple clubs.
What Likely Happened:
Both TFC and New England have extremely powerful owners in Maple Leaf Sports and Entertainment and the Kraft Family, and extremely influential Manager/General Managers in Bob Bradley and Bruce Arena. Jozy himself also has a high level of bargaining power in the amount of years left on his contract and the fact that Toronto already signed a massive-money Designated Player in Lorenzo Insigne for whom they need to free up one of their three Designated Player before he can join.
It seems fairly clear that this was a “make it happen” sort of deal, where two powerful owners, and two powerful GMs needed to get a deal done, and the league office was tasked with trying to fit their rules around the transaction instead of the other way around. As well, given the position Jozy was in, it isn’t beyond the pale that he found the club he wanted to go to, and made the clubs work to get it done, and possibly had enough leverage to ask for the survival of the no-trade clause in the mutual termination agreement.
That doesn’t justify the result or the validity of the move, but given the situation, it seems likely those were the levers in play that lead to the decision. If any one of the teams, GMs or the player was different, it likely wouldn’t have had the same outcome.
The Free Agency Question
The MLS CBA establishes a number of restrictions on free agency where a player’s deal naturally comes to the end of its term. However, with how Jozy’s contract expired, and how MLS treated the move, the question becomes, does a no-trade clause now back-door unrestricted free agency for those players who are terminated or become waiver-eligible? Would free-agency salary restrictions apply to Jozy? If so, what happens when a player that isn’t free-agent eligible with a no-trade clause gets bought out?
Final Thoughts
To me it seems like MLS waived its magic wand, and just ignored its own rules to facilitate a deal that two owners really wanted. No-trade clause or not, under MLS’s rules, it seems clear that once Jozy’s contract was mutually terminated he should have gone through waivers, to see if anyone in the mansion still wanted him around.
Considering the pull from two powerful clubs, a player with a lot of leverage, and possibly the threat of getting the entire waiver process wiped out on a challenge to FIFA, it seems MLS was inclined to make an exception in this case.
The questions I’m left with are:
Why has MLS, a league whose entire structure essentially exists to limit free agency and free player movement cede a new avenue to potentially unrestricted “free agency” seemingly as a favor to two of its more influential owners facilitate a move an MLS/USMNT star at the back end of his career?
Why bail out clubs who signed a player on a deal at too high a salary for too long of a term, just to give the player more money when he goes to his next MLS team?
Isn’t the purpose of all these rules and single entity structure to specifically avoid this exact type of extra payment that Jozy is now receiving?
The purpose of having a written CBA, and promulgating Roster and Budget Guidelines, or any type of written internal governance is to create predictability and fairness. That allows clubs, players, advisors, and fans to know what to expect from a clearly-defined process.
Having murky rules, and opaque applications defeats that purpose. While having built-in flexibility for certain situations is a benefit for the league in many situations, this situation isn’t one.
Welcome to MLS, where the everything is made up and the rules (sometimes) don’t matter.
I cannot take credit for this analogy, my former officemate and current Philadelphia Union Assistant Sporting Director Matt Ratajczak told me about it when we worked together, and it’s perfect so no point in changing it.