How a Dream Likely Became Reality: An Initial Breakdown of Lionel Messi’s Unprecedented MLS Contract
For devoted soccer followers in the United States, this day always seemed to be, at best, an optimistic dream. And yet, in what will certainly go down as a monumental moment in the history of American soccer, this day has seemingly arrived. This past morning, Lionel Messi, arguably the greatest soccer player of the modern generation, has seemingly agreed a deal (though not yet official at the time of writing) to join MLS side Inter Miami after having left the employ of his previous club, Paris Saint-Germain (PSG).
Messi, the seven-time Ballon D’or winner and captain of 2022 FIFA World Cup-winning Argentina, has not been devoid of suitors since news of his impending departure from PSG became public. To begin, multiple reports suggested the possibility of Messi’s return to Barcelona, the club with whom he established his status as a global soccer icon and from whom he only departed because of previous financial constraints suffered by the Spanish club. If Messi were not convinced by his former club’s efforts to secure his signature for a second spell in La Liga, it appeared increasingly likely that his next destination would be in Saudi Arabia, as the Argentine midfielder is a Saudi ambassador for tourism and was being touted as the centerpiece to the continued evolution of the domestic league in Saudi Arabia, a league which has now recruited the likes of N’Golo Kante, Karim Benzema, and Cristiano Ronaldo, Messi’s longtime rival for the throne of soccer’s greatest player within the modern era. Within the last month, it was even reported that Saudi Arabian side Al-Hilal had offered Messi a contract worth approximately $400 million per year, and the league at large offered him a contract worth over €1 billion.
Nevertheless, these rumors were ultimately supplanted by Messi’s decision to sign with MLS outfit Inter Miami. While the exact details of Messi’s contract have not yet been released, various aspects of the compensation Messi will receive have in fact been released. In light of these aspects, an understanding of the previous difficulties faced by Inter Miami in complying with league salary policies, along with the operative structure under which MLS operates, makes the realities of this prospective agreement all the more astounding.
Most interestingly, Messi’s compensation package will not come entirely from Inter Miami. Rather, Apple, who recently obtained the broadcast rights to MLS matches for the next ten years, has offered Messi a share of its revenue from the MLS Season Pass subscriptions purchased by the viewers who wish to watch him play. Additionally, Adidas, the athletic brand for which Messi is a sponsor, has offered Messi an arrangement for a profit-sharing agreement, whereby Messi would receive a share of the increase in profits from Messi’s prospective move to Inter Miami. The fact that Apple and Adidas have assisted Inter Miami in offering additional compensation would be a crucially important factor in the success of this deal should it be made official. Frankly, given Inter Miami’s previous run-in with the MLS over financial breaches, the deal would likely be quite difficult without them. Around one year ago, the MLS announced sanctions against Inter Miami for violations of MLS’s salary budget and roster guidelines. According to the MLS, Inter Miami miscategorized former players Blaise Matuidi and Andrés Reyes by not labeling them as Designated Players, and they also underreported salary budget amounts from the contracts of three other players.
These sanctions derived from a breach of the salary budget rules established by the MLS to cap each club’s spending on their roster at a uniform amount. If an MLS club has outspent its Salary Budget Charge, it must use either General Allocation Money (GAM) (money used to “buy down” a player’s salary so that the entire salary does not go toward the Salary Budget Charge) or Discretionary Targeted Allocation Money (TAM) (money that does not have to be used during the year but is available for a club to use toward building their roster) if they want to increase the amount they can spend on the roster.
Additionally, it is important to note the operative structure under which MLS operates to understand why the league has so much power in regulating player transfers. In order to avoid lawsuits claiming antitrust violations, MLS was created as a single-entity system, in which all member clubs are classified not as individual organizations but as wholly-owned subsidiaries of the parent organization (the league). In that vein, while a club may be able to negotiate with a player for his signature, it is MLS, not the club, who signs the player to an employment contract and registers them with the league. In light of this background, Apple and Adidas’s involvement in this prospective deal is that much more beneficial from Inter Miami’s perspective, as it will very likely help to buy down Messi’s overall salary to comply with Salary Budget requirements. If these additional sources of compensation were not present in the deal, then perhaps Inter Miami would have a more difficult time in convincing MLS to approve this potentially historic agreement.
Whether or not this deal becomes official has yet to be announced. Nevertheless, it appears increasingly likely by the minute, and should it be officially announced, it will be a contractual masterstroke from all parties involved. Involving third-party sources of compensation that will be triggered merely by Messi’s presence in the league is a brilliant way for Miami to counteract the hurdle of MLS Salary Budget rules, and it may just be the spark that the team itself desperately needs, as they currently sit in the bottom four of the Eastern Conference. Regardless, the prospect of arguably the greatest player of the modern generation continuing his career in the United States is so incredibly exciting, and with the World Cup coming to American soil in three years, it could not come at a better time.
Bryce Goodwyn is a rising 2L at Regent University School of Law. He is a member of the Honors Program, and he also formed part of the recently established National Sports Legal and Business Society as the East Region Chair. He can be found on Twitter @BryceGoodwyn and on LinkedIn as Bryce Goodwyn.