The move involves a fixed transfer fee and additional compensation to the Vancouver Whitecaps FC that could total more than $22 million if Davies hits certain incentives, the most ever received by a MLS club in the league's 23-year history.
"It's a landmark day for the club, for the city, for the league, North America in general," Whitecaps president Bob Lenarduzzi said. "It clearly breaks the old record of $10 million and I think it's justified as well."
"From the time that he joined us at 14-years-old, it has been a rapid rise and it appears as though the ceiling is endless at this stage and it's great that he's now going to be challenged at the next level."
Negotiations between Bayern and Vancouver had been ongoing for a few weeks, with a number of other major clubs around the world interested in signing the winger.
The Bundesliga champions were thought to be "a fantastic fit" by all parties, and Davies feels he's heading to the perfect place for the next stage of his development.
"It's an amazing opportunity," Davies said from his hotel room in Philadelphia, where he flew out for a medical and to meet his new teammates. "As a kid you dream about this moment all your life, being able to play for one of these big clubs. I'm happy that I'm living that dream.
"Bayern was a right fit because their plan for me, going throughout the year, was very eye opening for me. They really explained it properly and I feel that I can improve a lot at this club."
Davies will see out the MLS season in Vancouver, before heading to Germany in January, with no restrictions from Bayern placed on the amount of playing time he will now get. Fantastic news for the Whitecaps as they look to revive their playoff hopes, although its unclear if they’ll be able to use some of the transfer money received on strengthening the current squad in this window.
The Whitecaps have been vague in that regard as to exactly how the financial side of the deal will play out, unwilling to confirm what the amount of the fixed transfer fee is, how the bonuses are triggered, and exactly when the funds will be received and available for spending.
"Our agreement doesn't allow us to speak to the specific of the $22 million-plus opportunity," Whitecaps COO Rachel Lewis told reporters on Wednesday. "We can't talk to the specifics of the financials."
There’s also the chance the Whitecaps will not see any of the transfer money until November, once Davies turns 18 and the current MLS regular season is over. But whenever the funds do come through, fan expectations will now be raised and they will want to see an investment into the first team squad.
"Our plan is to wholeheartedly invest the money in the sporting side of our club, which is the youth development program we have, the grassroots programming, and the senior team,” Lenarduzzi said.
"Our situation right now is we're looking at this season and we're in a spot where we don't have any cap space available. So we're going to have to actually make some moves to bring some players in. We have players targeted that we'd like to bring in, but clearly our first priority is to move some on."
Exactly how much of the Whitecaps jackpot will be ploughed into the MLS team may be uncertain at this point in time, and although fans shouldn't expect any big splashes any time soon, Lenarduzzi believes the money will allow the club to thrive moving forward.
"We're excited about expanding on our current plan," Lenarduzzi added. "That kind of money coming in enables us to do that."