Examining whether teams in MLS must spend big to succeed

There is a narrative about Major League Soccer that describes an emerging financial arms race between its teams. The Designated Player Rule, instituted in 2007 with the arrival of David Beckham, has allowed teams additional flexibility to spend larger sums of money on key players. Every team in the league has taken advantage of this opportunity, and the rule itself has been expanded several times in recent years. Teams can currently have up to three such players on their roster, and a new category of expenditure – “Targeted Allocation Money” – was announced earlier this season. This tactic was used almost immediately by the Los Angeles Galaxy, with the end result being the acquisition of Giovani dos Santos.

Surveying this shifting landscape, columnist Steve Davis recently argued at World Soccer Talk that the teams in MLS will effectively split into two groups:

Now [MLS is] like all the other leagues of haves and have nots. We will now march predictably into every season essentially choosing among a handful of big brand clubs as the real title contenders. Everyone else will fight for the scraps.

Is this narrative of financial inequality accurate? I set out to investigate.

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