Wiebe: Trade transparency opens door for new era of evaluation, valuation

Claudio Reyna - New York City FC - Draft table

LOS ANGELES – MLS Commissioner Don Garber strode to the podium, adjusted the microphone and took one final look at the draft card in front of him. Two picks into the 2017 MLS SuperDraft, the Chicago Fire were on the clock.

“We have a trade to announce. How about that?” Garber informed the crowd on hand at the Los Angeles Convention Center, drawing the appropriate anticipatory gasps.

Behind the curtain in the media workroom, I didn’t flinch. Sure, it was bound to be a significant MLS move, but nothing out of the ordinary. It’d been the same song and dance a year earlier, when New York City FC sent the Fire the No. 4-overall pick and General Allocation Money (GAM) for No. 1 pick Jack Harrison.

Like 2016, I figured, NYCFC would get their man – in this case, Akron freshman Jonathan Lewis – and Chicago general manager Nelson Rodriguez would get some allocation money and maybe even a player or international roster spot to boot. That’s as specific as the deal would get, most left to wonder about the mystery amount of salary cap acronym Rodriguez now had to play with.

Only this time, there would be no vague references to an “undisclosed amount” of GAM or TAM (Targeted Allocation Money). For the first time in MLS history, a trade would come with a public price tag.

“The Chicago Fire have traded their third-overall pick in today’s draft to NYCFC in return for – and this is the first time we’ve announced the actual amounts,” Garber continued, “$250,000 in General Allocation Money.”

In the draft room, the reaction was muted, but the pebble of transparency sent ripples through Soccer Twitter and raised the eyebrows of the media and league and club staff hidden behind the curtain. Alexi Lalas, himself a former MLS general manager well-versed in the rules, vocabulary and vagaries of MLS roster building, called the reveal a “seminal moment” on the SuperDraft broadcast.

Speaking to reporters following the conclusion of the first round, Garber was more reserved. He joked he’d found out about the change when he was handed the draft card detailing the move. Ultimately, Garber said, the decision to reveal the exact amounts of GAM and TAM (Targeted Allocation Money) involved in trades was simply a “step in the right direction” on the road to increased MLS transparency.

In case you’re lost right now, allocation money can be used to sign and re-sign players, pay transfer or loan fees and reduce a player’s budget charge on the salary cap. It can be traded. It’s a hugely important tool in MLS roster building, and you can learn more about it here.

No matter where you stand – from owners to GMs to technical and sporting directors to coaches to players to media to fans – there’s no going back now after $725,000 in allocation money changed hands in a single day, the beginning of a new era in MLS trade evaluation, player valuation and general scuttlebutt.

“It’s the natural evolution of the league,” Rodriguez told me following a day in which the Fire GM picked up $250,000 in GAM for the No. 3 pick then sent $75,000 in TAM to Toronto FC for two second-round picks. “I think it’s a natural evolution of putting more accountability on people. I think it creates greater fan interest, and people are going to start to, over a short period of time, make evaluations – a lot of money, a little money, just the right amount of money.”

“When there was no transparency, it cut both ways,” he added. “You could hide behind something that may have been perceived as a bad deal, and there was no way to trumpet yourself as presumably making a good deal.”

The consensus among MLS decision-makers I spoke to on Friday was that the No. 3 pick for $250,000 in GAM, an outlay by NYCFC that got GMs talking, was a very good deal for the Fire, even more so now that Rodriguez turned that handsome haul into Dax McCarty by sending $400,000 in GAM split between 2017 and 2018 to the Red Bulls on Monday. Chicago used a single draft pick to address a glaring need – locker-room leadership and a Best XI-level partner for Juninho – ahead of a season in which there is huge pressure to return to the playoffs.

Which is not to say that the trade was bad for NYCFC. Talent doesn’t come cheap.

Claudio Reyna and Patrick Vieira paid royally for the right to draft Lewis – I sat at the Union and Orlando draft tables in 2014 and 2015 and trade offers rarely exceeded $100,000 and never approached $250,000 – but NYCFC arrived in Los Angeles with surplus GAM from the sale of Kwadwo Poku last year. They were willing to part with a significant chunk of it in order to acquire a 19-year-old youth international who won’t count against their cap, will be automatically protected in next year’s Expansion Draft and could generate a hefty profit on allocation money they invested should European interest materialize.

The $400,000 price tag gave us real, tangible insight into just how much both the Red Bulls and Fire valued McCarty. Answer: an awful lot. NYCFC, on the other hand, showed their hand when it comes to Lewis. Not only do they believe in his talent to the tune of $250,000, it’s clear they believe he also has sell-on potential. At this early date, it’s win-win for both NYCFC and the Fire while the jury is out for the Red Bulls while we wait to see how all that GAM is used.

That sort of public evaluation couldn’t exist (and largely hasn’t) without trade transparency. The guess work isn’t gone – we still don’t know the exact amounts of allocation each team has stashed away – but it’s now possible to appraise league transactions without a trove of insider information. Rodriguez, Reyna, Vieira and the Red Bulls front office can be held accountable down the line. As Garber said, that’s a step in the right direction.

Speaking on and off the record with technical staffers from 10 different teams on Friday, not one had a disparaging word to say about the change, contrary to what I expected to hear after light was shined into the dark nooks and crannies of their dealings. To a man, they were positive, but most of all MLS decision-makers were curious to see how making allocation amounts public might change their jobs.

Though clubs were previously able to get trade values through the grapevine, there’s no doubt the immediacy of learning the price for the No. 3 pick at the podium helped shape the SuperDraft market going forward.

Just one pick later, Garber announced another trade, as the Portland Timbers moved up in order to select highly touted forward Jeremy Ebobisse, sending the Houston Dynamo $100,000 in GAM, an international roster slot and the No. 10 selection for the fourth-overall pick.

So what was the No. 10 pick and an international roster spot worth considering the pick before went for $250,000 in GAM and NYCFC later flipped $75,000 in GAM to Seattle for the No. 16? The answer is somewhere between $75,000 and $150,000 – let's say $100,000 for the pick and somewhere around $50,000 for the roster spot, relative market values that would’ve been a mystery previously.

“The first transaction is what sets the price for the draft,” Timbers technical director Gavin Wilkinson told me. “With the third pick going for $250,000, was the fourth good value? There’s an argument to be made there. But if the third goes for $100,000 and I overpay for the fourth, you start to say, ‘Wow, didn’t do my job going up to the third.’”

“Different clubs value different players differently,” he added. “Transparency is extremely important for the league. It’s extremely important for the fans. For us, we’re able to value it: Was it a good transaction or was it not?”

That’s what LA Galaxy fans are asking themselves after club icon A.J. DeLaGarza was shipped to Houston for $125,000 in GAM and $50,000 in TAM later in the day. Same for Red Bulls supporters after their captain swapped clubs for more than double that amount over two years. Like Friday’s draft-pick swaps, those deals will help set the marketplace going forward and become benchmarks as future trades trickle in over the course of the year.

And although it’s still too soon to make a comprehensive judgement – that will come with time and a library of transactions to evaluate – it’s clear we’ve entered a new age of MLS trades, in which all parties have the tools to credibly say good, bad or all even from moment the news goes public.

“Information is information, and now it’s out there,” Galaxy GM Pete Vagenas said. “At the end of the day, when we’re making decisions and making deals, we don’t necessarily have anything to hide to begin with.”

“You’re either comfortable in what you do or you’re not,” Wilkinson said. “Hindsight is always a great thing.”