Andy Larsen: Is Real Salt Lake paying enough for its players to stay championship competitive in MLS?

RSL sits at or near the bottom in some key valuation and spending categories.

(Rick Bowmer | AP) Real Salt Lake head coach Pablo Mastroeni reacts during the second half of an MLS soccer match against the Portland Timbers Sunday, Oct. 9, 2022, in Sandy.

Ten years ago, Real Salt Lake were true championship contenders in Major League Soccer.

The team lost in the 2013 MLS Cup Final to Sporting Kansas City, a game that required multiple lucky bounces for Kansas City to pull out the victory. RSL also finished second in points, goals scored, and goal differential in the Western Conference. That was also coach Jason Kreis’s final season; general manager Garth Lagerwey would leave the next year.

It’s hard to argue they’ve been contenders since. Sure, in 2019, they finished third in the Western Conference. ... But they had just a plus-5 goal differential and lost in the second round. In 2021, RSL made the Western Conference Finals from the conference’s bottom playoff seed, even winning a game where they didn’t take a single shot. This season, well, they languish in 11th in the West as we near the season’s halfway point.

Why isn’t RSL what it used to be?

I think it comes down to money — namely, the value of RSL’s players. Let me show you what I’m talking about.

RSL player value

Major League Soccer is unique among American sports. While some familiar holdovers like a collegiate draft and free agency do still exist in MLS, for the most part, players are bought and sold on the international transfer market. Teams must usually pay a fee to acquire a player from player from another team; then, the new team and the player agree on contract terms.

Of course, how much each player is worth is a matter of negotiation. But just like in more familiar American sports, you can make informed guesses on the approximate value of each player in the open market. A player’s value is mostly based on his current and anticipated future on-field production; young players are generally more valuable than older players too. Attacking players tend to be worth more than defenders. And of course, the top players who sell jerseys and drive ticket sales are most valuable, too.

The website Transfermarkt tries to estimate a player’s transfer value based on those characteristics. Values on the site are estimated twice per year, and in general, are determined by a consortium of Transfermarkt staff and volunteers. It’s certainly not a perfect process, but as estimates go, it’s probably the best we have.

And unfortunately, RSL’s numbers do not perform well compared to the rest of MLS.

In fact, Transfermarkt estimates that the RSL’s players are worth less in the international market than any other MLS team’s. That’s a very bad sign. It points to their players being less valuable on the pitch currently and the belief that they’ll likely be less valuable on the pitch moving forward.

This, to me, is the biggest problem RSL faces. Many fans have pointed toward Pablo Mastroeni’s managerial skills as deserving the blame. While I think it’s fair to have some concerns there, any manager would struggle when faced with directing less valuable talent.

Breaking down the spending

So why aren’t RSL’s players worth as much as other teams’?

To consider this, it’s worth talking about Major League Soccer’s salary structure. Technically, the MLS salary cap sits at $5.2 million. But so many exceptions exist to push teams above that number that every team pays at least twice that in salaries. Teams don’t have to count most of the cost of three top-paid players (called Designated Players), nor do they count the bottom roster spots 21-30 against the budget. Teams also have varying amounts of Guaranteed Allocation Money (GAM) and Targeted Allocation Money (TAM) to distribute to their rosters that go above and beyond that “salary cap” number.

Here’s the full list of guaranteed salaries per team, according to numbers released last week by the MLS Players Union.

RSL sits fifth from the bottom in salaries paid out. Why? Because of how they’re using those salary cap exceptions. First, through the Designated Player rule, they’re paying much less in salaries to those top three players than most teams.

As you can see, spending a ton on your three best players does not guarantee success: Toronto and the L.A. Galaxy are actually at the bottom of their respective conference standings. But spending next to nothing on your Designated Players’ salaries isn’t brilliant either: Montreal and the Colorado Rapids are at the bottom of their conferences too. RSL, again, is near the bottom.

Salaries aren’t the only way to spend on your roster, though. Thanks to soccer’s transfer market structure, transfer fees are a significant part of a team’s budget. Sometimes, it’s the most significant part.

Here’s Transfermarkt’s reporting on the transfer fees spent across MLS in the last three transfer windows in the last 18 months — in other words, the transfer windows since the David Blitzer and Ryan Smith group bought RSL.

To be sure, RSL has made two significant money transfers in that time period. The club spent nearly $2.5 million to bring Jefferson Savarino back in the 2022 season, and then spent a club-record $3.75 million on 20-year-old Andres Gomez this winter. The two are definitely among RSL’s best players. But it still pales in comparison to what some of the larger teams have paid for players over that same time.

What’s interesting about the transfer market generally is that teams can sell these players for big payouts, too: the Chicago Fire are up there in transfer expenditures in the graph above, but they bought Colombian forward Jhon Duran for under $2 million and then sold him for $22 million to Aston Villa in England. That’s a good piece of business.

RSL hasn’t been that selling club. In fact, according to Transfermarkt, they’ve only been able to garner about $780,000 in transfer sales over the last three transfer windows. In the club’s history, RSL hasn’t gotten transfer sell fees that reach $22 million in sum.

Some of these bets have been attempted, but they haven’t worked out. Some were also scuffled by former owner Dell Loy Hansen, according to former RSL scout Andy Williams. One such example was Polish forward Krzysztof Piątek, who signed with Genoa for a price of 4.5 million euros in 2018 after RSL turned him down. One fantastic season later, he was sold to AC Milan for 35 million euros.

On one hand, you sort of understand ownership’s reluctance to spend on either salaries or transfer fees with the large or even median clubs in MLS, given the lack of success RSL has found in being able to sell those players for significant returns. On the other hand, ownership gets to decide who’s making those decisions — and if they don’t trust current management, that should be fixed. You have to spend money to make money, as the saying goes.

Now, to current management’s credit: They’ve made some good smaller bets. But it’s just not enough to move the needle outside of mediocre on-field performance in the current MLS. Remember: Their players overall — not just the big-money Designated Players alone — are currently viewed as less valuable than every other team in MLS’s players.

Comparing known income and expenditures

In my opinion, RSL’s biggest problem is not so much that they’re doing things differently than they did in 2013, but that the rest of MLS has become much larger and more ambitious in the decade since. Of the league’s top-100 highest-ever transfer fees, only two came before that 2013 season.

That’s because teams, frankly, are worth more money and making more money than they did 10 years ago. In 2013, RSL was worth about $85 million, according to Forbes. The Blitzer group bought the club before the 2022 season for “nearly $400 million.”

Why are the teams worth more? In part, because those dollars are rolling in at a higher level than before. RSL’s balance sheet this year reportedly includes:

• Funds from Apple TV’s 10-year, $2.5 billion agreement with MLS, which gives each team an estimated $7.5 million in annual revenue.

• Funds from the recent stadium naming rights agreement with America First Credit Union, a 15-year, $100 million deal that reportedly gives RSL $6 million per season.

• Funds from the LifeVantage jersey sponsorship, which was worth $30 million over the course of 10 years when signed in 2014, or about $3 million per season.

• Funds from RSL season ticket holders. I’m told there are about 11,500 season ticket holders, and the club sells season tickets for anywhere from $182 to $3,120. At a conservative $300 per ticket, RSL’s making about $3.5 million on those sales.

Right there, that’s $20 million this season. The club’s spent $4 million on transfers so far in 2023 and is currently on track to spend $12.1 million on salaries for a total of $16.1 million — in other words, RSL’s budget spent for this season is more than taken care of by those four income sources alone. And we haven’t gotten into the millions they make from other ticket purchases, other corporate sponsorships, merchandise sales, concessions, and so on, which we know less about.

To be fair, we also haven’t considered other expenses. Still, you can see why MLS teams are spending more than ever these days with bedrock revenue sources like the bullet points above.

In order for RSL to catch up to the true championship contenders on the field, they simply need to start by spending more than they currently are. To be sure, this won’t be a panacea — MLS history is littered with teams who thought money spent would be enough, only to find it wasn’t. But languishing at or near the bottom in all aspects of player expenditure and value simply won’t allow RSL to be championship competitive in the new ambitious MLS.

With what appears to be a new surplus in revenue, there appears to be opportunity to do exactly that. The league’s next transfer window is now less than six weeks away.

It’s time to bring more real talent to Real Salt Lake.