Does MLS know what it's doing with money?

The answer, according to Andrew Hush, is "no".
http://soccernet.espn.go.com/columns/story?id=524551&root=mls&cc=5901

He notes a few of the most ridiculous salaries (e.g. Nik Besagno's salary) and notes "Is it possible to reliably put such varying price tags on unproven players? According to the figures, plus what we have seen with our own eyes, no."

Well Andrew, I think the answer actually depends on what you mean by "reliable". His belief seems to be that MLS overpays based on "potential" (e.g. Project 40/Gen Addidas players) but that "the question of how much money an individual can make from a career in the league is pretty much answered as soon as he puts pen to paper on his first contract." So, the league isn't rewarding those who prove how well they play on the field.

I think Hush is a little guilty of arguing by anecdote, selecting some of the worst offenders (and he's done yeoman's work in sorting through those). So, I decided to look at Nik Besagno's draft and see if, in fact, MLS got it completely wrong in determining what to pay its players.

In the 2005 draft, there were 17 players that were put on developmental roster spots, earning a salary of $16,500 or less. They've had MLS careers of 1307 minutes, each. However, 11 of them (65%) are no longer in the league. The 6 who remain earn an average of $44,000 (only one is still a developmental player-- Amir Lowery).

There were 22 senior roster players out of the 2005 draft who played in 2005 (Tony Lochhead of New England would eventually play in 2006). They've had MLS careers averaging 2803 minutes. 9 (41%) are no longer in the league. Those that remain in the league have an average salary of $88,000.

We can break down the senior roster players into two categories: "high" salary (i.e. more than $40,000) and "medium salary (i.e. between $33,000 and $40,000) players. There were 9 high salary players, who have gone on to have careers averaging 3,111 minutes. 2 (22%) are no longer in the league. In contrast, the 13 medium salary players averaged 2590 minutes and 6 (46%) no longer ply their trade in MLS.

At first glance, it appears that MLS was, in fact, wise to pay the developmental players little and the senior roster players more. What's striking is that, even among the senior roster players, you've still got a very high rate of failure: MLS teams pick guys that don't stick in the league over 40% of the time. This could be impacted by guys that decide to play overseas (Will John, for example), but that's not a huge factor.

So, when Hush asks if there's a reliable way to put price tags on paper, I again go back to the question: what do you mean by reliable, especially when even the "good" players fail 40% of the time? Talent identification is a tough game, but it looks like, overall, the salaries paid do recognize who contributes on the field. Of course, that leaves completely open the question of whether MLS couldn't be doing a better job here.

But what about Hush's assertion that players' salaries are essentially set for life when they sign their first contract?

I'd consider 3000 minutes to be a pretty decent career for a fourth year MLS player, so I looked at each group of players to see if the 2005 developmental players who went on to log 3000 or more minutes were making substantially less in 2008 than their 2005 senior roster counterparts. Here's what I found:

Average 2008 Salary of 2005 High Earner who Played 3000 Minutes: $92,000
Average 2008 Salary of 2005 High Earner who Did Not Play 3000 Minutes: $110,000

Average 2008 Salary of 2005 Medium Earner who Played 3000 Minutes: $65,000
Average 2008 Salary of 2005 Medium Earner who Did Not Play 3000 Minutes: $55,000.

Average 2008 Salary of 2005 Developmental Player who Played 3000 Minutes: $74,000
Average 2008 Salary of 2005 Developmental Player who Did Not Play 3000 Minutes: $29,000.

A couple of things stick out: the 2005 high earners who have stuck around MLS but not had great careers are doing well-- this is largely the effect of Besagno and Kirk. But the other effect at work is that Besagno and Kirk are clearly still in the first contracts. To know if Hush is really right, we'd probably need to look at a few more years-- AND see what happens with Kirk and Besagno after their deals end this year. You want to tell them not to get too used to high life...