The former Red Bulls captain is the third major addition made by Chicago in the last month after the December acquisitions of Hungarian international forward and Designated Player Nemanja Nikolic from Polish club Legia Warsaw and former LA Galaxy center midfielder Juninho on loan from Tijuana.
The move is a coup for the Fire, as McCarty will bring some much-needed leadership and a good deal of talent to Chicago, which has missed the playoffs in six of the last seven years and finished dead last in MLS in 2015 and 2016.
Of course, the 29-year-old didn’t come cheaply. According to numbers that I’ve been able to track down from various executives at several MLS clubs (the amount of allocation money exchanged in trades only began being publicly released at the SuperDraft last Friday), the $400,000 in GAM sent by Chicago to New York is the second largest amount of GAM exchanged in MLS history, trailing only the deal that sent Eddie Johnson from Seattle to D.C. in 2013, which sources tell me saw the Sounders net in the neighborhood of $650,000 in GAM.
“I don’t know the specifics of the Kei Kamara deal – that had been rumored as having a lot of allocation money involved – but I never received nor previously made an offer in that range,” Fire GM Nelson Rodriguez, who worked in the league for many years prior to taking over in Chicago late in 2015, told me on Wednesday afternoon.
It was reported that Columbus acquired $500,000 in allocation money in the deal that sent Kamara to New England last May, but that trade, per sources, was light on the GAM and heavy on its cousin, Targeted Allocation Money, better known as TAM.
That’s an important distinction, as GAM is generally far more valuable to MLS teams than TAM. The reason for that is a rather simple matter of supply and demand. We’ll start with supply: Teams were issued $1.2 million in TAM for 2017. The amount of GAM, though it varies by the club and depends on previous year’s performance and a variety of other factors, is usually much less than that, with the 2017 starting point for all clubs set at $200,000, according to the league’s collective bargaining agreement.
But GAM isn’t more valuable simply because it’s scarcer than TAM – it’s also in higher demand because it has more uses. TAM can only be used on a small set of players that make more than the max salary, $457,500 per year in 2016. It’s valuable in that it allows clubs to buy players under the Designated Player threshold and add another DP, but it’s also limited in terms of which players it can be used on.
Meanwhile, teams can use GAM on essentially their entire roster, applying it to offset salaries and transfer and loan fees that would’ve otherwise hit the salary cap. For teams that have their DP situation in order, it’s a far, far more valuable tool than TAM, which isn’t used in its entirety by every team, every year.
That’s a bit immaterial to the matter of the McCarty move, however, which I think made sense for both Chicago and New York. Thanks to a slew of trades made over the past 18 months, Chicago had plenty of GAM available for trade purposes. Per sources, the Fire acquired $250,000 from NYCFC for Jack Harrison last January before the league announced they’d received another $250,000 from NYCFC for the No. 3 pick at the draft last week, not to mention netting undisclosed GAM for Joevin Jones, Harry Shipp and the top picks in the 2015 Re-Entry Draft and Allocation Order. At some point, they had to use that money to acquire impact players. They got that in McCarty, who Rodriguez said they’d been targeting for at least the last six months.
“Acquiring players is difficult, finding players whose performance is quantifiable in MLS is even harder,” Rodriguez said. “From the beginning of our offseason, Dax was the No. 1 guy we wanted to try to get. Recognizing his stature and importance to the New York Red Bulls and anticipating there might be many others who might pursue his services, we knew that it would require a serious offer and we knew that Red Bull was unlikely to make a move unless it made sense for them. In the end, if someone believes we overpaid, so be it. For us, he fills so much of what we need that it just makes sense.”
New York is taking a bit more of a risk. This was a downright Belichickian move by the Red Bulls, who are no doubt thinking that they’d rather send McCarty away a year too soon rather than hold onto him a year too long.
While they lost their captain, a beloved fan favorite and integral part of their team, New York – who will likely slot Sean Davis into McCarty's spot in the midfield – did gain a ton of cap flexibility. McCarty, who Rodriguez said has a guaranteed contract for 2017 and club options on his deal in 2018 and 2019, made $500,000 last year, according to the MLS Players’ Union. He was never listed as a DP, meaning New York used at least $42,500 in TAM – and potentially more, if they wanted to lower his cap hit further – to buy him down under the DP threshold.
Chicago and New York structured their trade so that the Red Bulls will receive $200,000 in GAM in both of the next two years. Essentially, that means this trade likely gave New York $700,000 to work with in each of 2017 and 2018 – the sum of the maximum 2016 budget charge, the TAM New York previously used to keep McCarty from being labeled a DP and $200,000 in GAM per year from the Fire. If McCarty was due any raises or bonuses in 2017 or 2018, that figure would rise. In a league with a soft cap that was just over $3.6 million in 2016, that’s a big deal.
As for the Fire, Rodriguez said that they still have room to add a DP if they use TAM to buy down the DP deal of Juninho or David Accam, but that they’ll be “deliberate” in making their next big addition, which may not come this winter.
Now, their attention will turn toward helping McCarty adjust to his new city and new club. The midfielder has had quite the week, getting married last Saturday in Florida before traveling to Southern California on Sunday to participate in his first US national team camp in years. Rodriguez and Fire head coach Veljko Paunovic traveled to LA to meet with McCarty, with a sit down between the three scheduled for Wednesday night.
“He’s guaranteed for this year, there are options for the next two years,” Rodriguez said when I asked if he anticipated negotiating a new deal for McCarty. “I think right now the most important thing is to help Dax get through this emotional moment, support him in his quest to make the US national team. I think there’s a time and place for everything. Right now, I think the priority should be for Dax should be on the national team, making sure his family gets settled comfortably in Chicago and we can discuss everything in due course.”