Designated Player Rule (“Beckham Rule”) Explained

The Designated Player Rule, also known as the Beckham Rule or Beckham Exception, was adopted as part of the salary cap regulations of Major League Soccer for the 2007 season. The rule allows each MLS franchise to sign one player that would be considered outside of the teams' salary cap, allowing U.S. and Canadian teams to compete for star players in the international soccer market.

The salary cap is estimated to be around US$1.9 million in 2006 (and the amount will be raised for the 2007 season). Under the rule:

* For each designated player, $400,000 of his salary is charged to the salary cap, with any remaining salary toward the player being imposed on the individual owner.

* Prior to the 2007 season, there were four players whose salary exceeded $400,000. These players include Landon Donovan, Freddy Adu, Carlos Ruiz and Eddie Johnson. According to the rule, they will be grandfathered in for the 2007 season. The 2008 season requires that they be considered a designated player, or their contract be renegotiated.

* There will initially be one designated player slot available to each team in the league. A team can trade their designated player slot; teams are allowed a maximum of two slots.

* Only $325,000 of a team's second designated player will count against the salary cap.

The rule will apply for three years, until the end of the 2009 MLS season, when its future will be reviewed.

It is informally named after soccer star David Beckham, in anticipation of MLS teams signing lucrative deals with internationally recognized players of Beckham's caliber. As it turned out, Beckham was indeed the first player to be signed under this rule, signing a lucrative contract with the Los Angeles Galaxy for $50 million in direct salary and a possibility of over $250 million total for five years.