How to Control Rising Costs With Performance Pay Model and Retain

Home Grown Talent in the MLS

Contents

1. Cost Analysis EPL

2. Cost Analysis MLS

3. Performance Review MLS

4. Defining Performance Model

5. Top MLS Targets for Europe

6. Model for International Players

7. Model for Home Grown Talent

EPL COST ANALYSIS HIGHLIGHTS • The Total Wage Bill for the EPL 16/17 season will be

£1.7b/$2.2b with the club Average at £98m/ $127m

• 4 Clubs have Wage bills in excess of £200m/ $260m with Man City the highest at £225m/ $290m

• 2 Clubs have Wage bills in excess of £100m/ $130m with Liverpool the highest at £165m/ $214m

• 9 clubs have Wage Bills in excess of £50m/ $65m with Everton the highest at £83m/ $108m

• 5 clubs have Wage Bills less that £50m/ $65m with Hull City the lowest at £25m/ $33m

• For the 16/17 Season clubs have increased their Wage bills by an average of 12% per club with the Champions Leicester City experiencing the highest increase at 37% from £48m/$62m to £66m/$86m

• The average player salary is now £3.2m/$4.1m with Paul Pogba at £15m/$19m and Marcus Rashford at £1m/$1.3m notable highest international and home grown comparative examples with Manchester United

• The value of a Premiership goal is £900k/ $1.2m worth 0.97 points and a Game Winning Goal is £1.2m/1.6m

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EPL WAGE BILL DATA (millions) Premier League Clubs Wage Bill For 2016-17 Season

NO# CLUB 2013-14  2014-15  2015-16  2016-17

1 Manchester City 216 205 193.8 225

2 Manchester United 187 215 203 220.8

3 Chelsea 190 192.7 215 218

4 Arsenal 166 180.4 192 200.5

5 Liverpool 140 144 152 165.6

6 Tottenham  112 100.4 110.5 121.5

7 Everton  66 69.3 74.7 83

8 West Ham United 60 63.9 69.5 79.8

9 Stoke City 55 60.6 72.3 75.9

10 Sunderland  55 69.5 71 68.3

11 Leicester City  30 36.6 48.2 66

12 West Bromwich  49 65.4 68.5 65

13 Southampton  47 55.2 59.5 63.6

14 Swansea City 55 48.1 51 59

15 Crystal Palace  30 45.7 54.3 55

16 Watford 30 30 29 41

17 Bournemouth 30 30 25 34

18 Middlesbrough 30 30 30 34

19 Burnley 30 29 30 33

20 Hull City 30 34 30 25

30** Estimated as not in EPL that year

MLS COST ANALYSIS HIGHLIGHTS • The Total Wage Bill for the MLS 15/16 season was

£128m with the club Average at $6.4m

• The average player salary was $226,000 7x less than the EPL average with the median salary at $92,000

• The highest wage for Kaka of $7.1m accounted for 5.5% of the total league wage bill for 2015.

• For 2017 NYCFC has the highest wage bill at $20.5m with 84% of the total bill spend on Designated players and with a 15% overall wage bill increase from 2015.

• The 2015 MLS Champions Portland Timbers Increased their wage bill by 10% to $6.1m for the 2015 season.

• The 2014 MLS Champions LA Galaxy Increased their wage bill by 25% to $13.1m for the 2014 season.

• The predicted ideal salary weighting based on performance would be Def 32% Mid 36% Fwd 32%

• The increasing team wage bill disparity, the blend of DP/Non DP performance coupled with spend/area results in a recommended wage bill for FCD for a 2017 championship winning team of $5.05m a 17.5% overall increase and Target DP effectiveness of 32%

MLS Wage Bill Data

Function LA Galaxy Sporting Kansas FC Dallas Portland Timbers New York City FC

Total Salary 2013 $9,800,000 $3,500,000 $4,760,000 $3,580,000

Total Salary 2014 $13,100,000 $3,800,000 $4,540,000 $5,500,000

Total Salary 2015 $19,500,000 $5,700,000 $4,280,000 $6,100,000 $17,510,000

Total Salary 2016 $17,900,000 $6,900,000 $4,300,000 $6,780,000 $20,570,000

Non- DP Salary 2016 $4,200,000 $5,200,000 $2,800,000 $4,200,000 $3,300,000

DP Salary 2016 $13,700,000 $1,700,000 $1,500,000 $2,580,000 $17,270,000

% Non-DP Salary 23.5% 75.4% 65.1% 61.9% 16.0%

% DP Salary 76.5% 24.6% 34.9% 38.1% 84.0%

Total Goals* 53 39 47 46 57

Goals Scored Non-DP 26 37 42 29 23

Goals Scored DP 27 2 5 17 34

Goals % Non-DP 49.1% 94.9% 89.4% 63.0% 40.4%

Goals % DP 50.9% 5.1% 10.6% 37.0% 59.6%

Total Assists* 59 43 38 32 59

Assists Non-DP 34 34 26 20 44

Assist DP 25 9 12 12 15

Assist % Non-DP 57.6% 79.1% 68.4% 62.5% 74.6%

Assist % DP 42.4% 20.9% 31.6% 37.5% 25.4%

Non-DP Effective 50.8% 91.7% 85.2% 62.9% 47.2%

DP Effective 49.2% 8.3% 14.8% 37.1% 52.8%

* MLS stats as of October 1st

MLS PERFORMANCE HIGHLIGHTS • Sebastian Giovinco is the current top performer in the MLS

with a comparative performance total of 86%

• Jordan Morris is the best performance value player in the MLS with a comparative VFM total of 74%.

• The comparative average cost per goal scored is $96k.

• The comparative average cost per assist made is $329k

• The comparative average cost per point won is $171k

• The comparative average cost per goal/assist is $213k

• Michael Barrios is the best value cost/goal at $7.8k.

• Jack Harrison is the best value cost/assist at $25k.

• Jordan Morris is the best value cost/ point won at $9.9k.

• Michael Barrios is the best overall cost/ value at $21.3k

• Based on performance related the Top 5 MLS player recommended salary increases would be the following:

• 1. Jordan Morris + $568k

• 2. Bradley Wright-Phillips + $183k

• 3. Michael Barrios + $171k

• 4. Diego Valeri + $141k

• 5. Cyle Larin + $105k

MLS PERFORMANCE ANALYSIS

NO Player Club Salary GP Goals Assists GV AV Pfm Total GP Boost Cost Factor Cost Level Earned VFM

1 BWP NY $650,000 31 20 5 1.00 0.38 81.54 73.65 0.61 49.49 321693.79 49%

2 D VILLA NYC $5,610,000 30 19 3 0.95 0.23 73.42 68.53 0.18 13.46 755118.72 13%

3 SGIOVINCO TOR $5,600,000 26 16 13 0.80 1.00 86.00 92.62 0.24 20.32 1138001.61 20%

4 DOM DWYER SKC $500,000 30 15 3 0.75 0.23 59.42 55.46 0.35 21.04 105192.89 21%

5 OLA KOMARA CLB $425,000 22 15 2 0.75 0.15 57.12 72.69 0.40 22.76 96747.78 23%

6 FERNANDO ADI POR $640,000 30 15 2 0.75 0.15 57.12 53.31 0.48 27.55 176294.02 28%

7 GIO DOS SANTOS LA $2,500,000 26 14 12 0.70 0.92 76.69 82.59 0.15 11.52 288102.66 12%

8 IGNACIO PIATTI MTL $425,000 28 14 5 0.70 0.38 60.54 60.54 0.61 37.03 157382.74 37%

9 CYLE LARIN ORL $177,000 28 14 3 0.70 0.23 55.92 55.92 0.79 43.99 77857.66 44%

19 DIEGO VALERI POR $600,000 27 13 7 0.65 0.54 61.65 63.94 0.48 29.87 179208.84 30%

11 JORDAN MORRIS SEA $178,000 29 12 3 0.60 0.23 48.92 47.24 1.52 74.27 132193.85 74%

12 MICHAEL BARRIOS FCD $70,000 29 9 2 0.45 0.15 36.12 34.87 1.48 53.50 37453.28 54%

13 MAXI URRUTI FCD $250,000 27 8 4 0.40 0.31 37.23 41.37 0.31 11.65 29133.80 12%

14 GYAS ZARDES LA $472,500 19 6 5 0.30 0.38 32.54 51.38 0.27 8.95 42265.77 9%

15 MAURO DIAZ FCD $466,000 25 5 11 0.25 0.85 42.88 48.03 0.37 16.03 74682.57 16%

16 JACK HARRISON NYC $125,000 18 3 5 0.15 0.38 22.04 36.73 0.64 14.06 17575.51 14%

4D Performance Model

• 30% Weighting

• No X MLS COST AVE $133k

• 20% Weighting

• Total/30 X MLS COST AVE $25k

• 20% Weighting

• No X MLS COST AVE $130k

• 30% Weighting

• No/3 X by MLS COST AVE $97k

Goals Assists

GWG Points

Working Model for FC Dallas

Name Club Salary Goals Assists Tpoints GWG $ Goals $ Assists $ Tpoints $ GWG $TOTAL Salary Diff

MICHAEL BARRIOS FCD $70,000 9 2 1.77 2 $87,300 $52,000 $8,833 $79,800 $227,933 $157,933

MAXI URRUTI FCD $250,000 8 4 1.77 1 $77,600 $104,000 $8,833 $39,900 $230,333 -$19,667

KELLY ACOSTA FCD $220,000 2 5 1.77 2 $19,400 $130,000 $8,833 $79,800 $238,033 $18,033

MAURO DIAZ FCD $466,000 5 11 1.77 3 $48,500 $286,000 $8,833 $119,700 $463,033 -$2,967

*Once a working model is established then individual targets can then be set for the season with expectations based on agreed salary and performance value basis criteria

Top MLS Targets for Europe • MLS Targets were assessed utilizing the following criteria:

• MLS goals converted to EPL with factor 0.65.

• $1.2M Team value of EPL Goal.

• $300k additional boost for Game Winning Goal.

• The goal combination determining Team value.

• 20% increase on value for commercial revenues.

• $5.2m average EPL salary for wage differential.

• 5X Current salary for standard EPL player transfer value

• 30% transfer premium from MLS to EPL.

• Proposed Transfer fee based on Team Value – wage costs.

• Based on current performance the Top 5 MLS targets for Europe and proposed transfer fee/ wage differential would be the following:

• 1. Bradley Wright-Phillips $13m 8x

• 2. Jordan Morris $8.5m 30x

• 3. Ola Komara $8m 12x

• 4. Dom Dwyer $7.5m 11x

• 5. Fernando Ali $7.5m 8x

MLS Transfer Targets Analysis

Name EPL GOALS GOAL VALUE GW Boost Tot Value Comm Factor Ave Cost Differential Current Value MLS2EPL PM Target Diff Max Tfr

BWP 13 $15,600,000 $1,500,000 $17,100,000 $20,520,000 $5,280,000 $15,240,000 $3,250,000 $4,225,000 $11,015,000 $13m

D VILLA 12 $14,820,000 $900,000 $15,720,000 $18,864,000 $5,280,000 $13,584,000 $28,050,000 $36,465,000 -$22,881,000 $0

SGIOVINCO 10 $12,480,000 $1,200,000 $13,680,000 $16,416,000 $5,280,000 $11,136,000 $28,000,000 $36,400,000 -$25,264,000 $0

DOM DWYER 10 $11,700,000 $600,000 $12,300,000 $14,760,000 $5,280,000 $9,480,000 $2,500,000 $3,250,000 $6,230,000 $7.5m

OLA KOMARA 10 $11,700,000 $600,000 $12,300,000 $14,760,000 $5,280,000 $9,480,000 $2,125,000 $2,762,500 $6,717,500 $8m

FERNANDO ADI 10 $11,700,000 $1,200,000 $12,900,000 $15,480,000 $5,280,000 $10,200,000 $3,200,000 $4,160,000 $6,040,000 $7.5m

GIO SANTOS 9 $10,920,000 $600,000 $11,520,000 $13,824,000 $5,280,000 $8,544,000 $12,500,000 $16,250,000 -$7,706,000 $0

IGNACIO PIATTI 9 $10,920,000 $1,200,000 $12,120,000 $14,544,000 $5,280,000 $9,264,000 $2,125,000 $2,762,500 $6,501,500 $8m

CYLE LARIN 9 $10,920,000 $600,000 $11,520,000 $13,824,000 $5,280,000 $8,544,000 $885,000 $1,150,500 $7,393,500 $9m

DIEGO VALERI 8 $10,140,000 $1,200,000 $11,340,000 $13,608,000 $5,280,000 $8,328,000 $3,000,000 $3,900,000 $4,428,000 $5.5m

JORDAN MORRIS 8 $9,360,000 $1,800,000 $11,160,000 $13,392,000 $5,280,000 $8,112,000 $890,000 $1,157,000 $6,955,000 $8.5m

MICHAEL BARRIOS 6 $7,020,000 $600,000 $7,620,000 $9,144,000 $5,280,000 $3,864,000 $350,000 $455,000 $3,409,000 $3.5m

MAXI URRUTI 5 $6,240,000 $300,000 $6,540,000 $7,848,000 $5,280,000 $2,568,000 $1,250,000 $1,625,000 $943,000 $1.5m

GYAS ZARDES 4 $4,680,000 $600,000 $5,280,000 $6,336,000 $5,280,000 $1,056,000 $2,362,500 $3,071,250 -$2,015,250 $2m

MAURO DIAZ 3 $3,900,000 $900,000 $4,800,000 $5,760,000 $5,280,000 $480,000 $2,330,000 $3,029,000 -$2,549,000 $3m

JACK HARRISON 2 $2,340,000 $600,000 $2,940,000 $3,528,000 $5,280,000 -$1,752,000 $625,000 $812,500 -$2,564,500 $3m

Model for International Players

• To effective control the influx of international players into the MLS and counteract the agent/ player wage demands it is recommended to introduce a historical performance salary evaluation with a scaled model based on 8 key metrics:

• Comparative salaries between leagues and their revenues.

• Current Age relative to a typical playing career and performance.

• Historical Goals/ Games Ratio in the European top flight leagues.

• Historical scored Goals tally in the relevant league.

• Historical scored Goals tally in the Champions League.

• Historical scored Goals tally at the International level.

• Historical % of total games individual played to number of team games.

• Potential Commercial value/ injection of player to the MLS.

• Based on historical performance 5 of the World’s Best Players would have the following recommended comparative MLS salaries:

• 1. Christian Ronaldo $18.2m

• 2. Lionel Messi $8.2m

• 3. Wayne Rooney $6.6m

• 4. Thomas Muller $2.7m

• 5. Francesco Totti $2.1m

*The average result was at 27% of current salary level*

International Player Data Analysis

Multiplier EPL Wages Value Age Value Goal Ratio Value Goals EPL Value Goals CCL Value Goals Int Value Matches Value Star Power Value

5 5x ÷4.5 36 X.9 0.42 X1.1 100+ X1.1 50+ X1.1 50+ X1.1 100% X1.1 10 X1.2

4 4x ÷4.3 35 X.92 0.4 X1.08 100 X1.08 40 X1.08 40 X1.08 95% X1.08 9 X1.18

3 3x ÷4.2 34 X.94 0.39 X1.06 80 X1.06 30 X1.06 30 X1.06 90% X1.06 8 X1.16

2 2x ÷4.1 33 X.96 0.37 X1.04 60 X1.04 20 X1.04 20 X1.04 85% X1.04 7 X1.14

1 1.5x ÷4 32 X.98 0.35 X1.02 40 X1.02 10 X1.02 10 X1.02 80% X1.02 6 X1.12

0 $4m ÷3 31 X1 0.33 X1 20 X1 5 X1 5 X1 75% X1 5 X1.1

-1 $3m ÷3.1 30 X1.02 0.31 X.98 15 X.99 4 X.99 4 X.99 70% X.99 4 X1.08

-2 $2m ÷3.2 29 X1.04 0.29 X.96 10 X.98 3 X.98 3 X.98 65% X.98 3 X1.06

-3 $1m ÷3.3 28 X1.06 0.27 X.94 5 X.97 2 X.97 2 X.97 60% X.97 2 X1.04

-4 $500k ÷3.4 27 X1.08 0.25 X.92 2 X.96 1 X.96 1 X.96 55% X.96 1 X1.02

-5 $250k ÷3.5 26 X1.1 0.23 X.9 0 X.95 0 X.95 0 X.95 50% X.95 0 X.1

Factor Rooney Kane Totti Ronaldo Messi Ibrahimovic Muller

Wage $3,905,778 $1,566,667 $1,666,667 $10,000,000 $4,444,444 $3,288,889 $1,750,000

Age $3,905,778 $1,723,333 $1,500,000 $10,000,000 $4,622,222 $3,025,778 $1,890,000

Ratio $4,296,356 $1,895,667 $1,620,000 $11,000,000 $5,084,444 $3,328,356 $2,003,400

EPL $4,725,991 $1,933,580 $1,782,000 $12,100,000 $5,592,889 $3,661,191 $2,123,604

CCL $5,009,551 $1,836,901 $1,817,640 $13,310,000 $6,152,178 $3,954,086 $2,251,020

INT $5,510,506 $1,836,901 $1,817,640 14,641,000 6,644,352 4,349,495 2,386,081

Matches $5,510,506 $1,947,115 $1,763,111 $15,226,640 $6,910,126 $4,349,495 $2,386,081

Commercial $6,612,607 $2,063,942 $2,045,209 18,271,968 8,292,151 4,958,424 2,720,133

Overall Factor 1.08 1.05 1.03 1.09 1.09 1.06 1.07

High $6,612,607 $2,063,942 $2,045,209 $18,271,968 $8,292,151 $4,958,424 $2,720,133

Fair $4,218,240 $1,649,476 $1,721,429 $10,914,286 $4,863,492 $3,495,619 $1,865,000

% Current 24.00% 35.10% 34.43% 24.25% 24.32% 23.62% 26.64%

Schweinsteiger

$3,219,048

$3,154,667

$2,839,200

$2,895,984

$2,953,904

$3,072,060

$2,979,898

$3,456,682

1.01

$3,456,682

$3,260,435

24.12%

HOMEGROWN PLAYER SNAPSHOT

• Since the introduction of MLS Homegrown contracts in the 2009 season the following activities have taken place:

• 76+ Homegrown Player have been signed to date

• 32 Have been signed in the last 2 years alone

• 19 MLS Clubs have signed local Homegrown Players

• 15 Signed by FC Dallas is the highest by any single club

• $91,000 is the Average salary across all active MLS Players

• $51,500 is the Average starting salary for initial contracts

• The Three highest home grown salaries and year of first contracts are as follows:

• 1. Gyasi Zardes (LA) $472,000 2013

• 2. Bill Hamid (DC) $370,000 2009

• 3. Kellyn Acosta (FCD) $240,000 2012

• There is currently no limit on the number of Home Grown Players a team can sign and also considerable salary cap advantages based on levels of compensation available.

• MLS clubs also receive a 75% premium on transfer fees of any homegrown players for the MLS to any foreign teams.

Homegrown Player Data Year Name Country Club Salary 2016 YRS HG 2009 Hamid, Bill USA D.C. United $370,500 8 2013 Zardes, Gyasi USA Los Angeles Galaxy $472,500 4 2015 Doody, Patrick USA Chicago Fire $53,471 2 2015 Swanson, Ben USA Columbus Crew $90,417 2 2015 Herivaux, Zachary HAI New England Revolution $62,500 2 2015 Davis, Sean USA New York Red Bulls $107,500 2 2015 Turner, Tyler USA Orlando City $63,000 2 2015 Redding, Tommy USA Orlando City $102,500 2 2015 Kavita, Phanuel COD Real Salt Lake $51,500 2 2015 Mansaray, Victor USA Seattle Sounders FC $66,000 2 2015 Jones, Darwin USA Seattle Sounders FC $68,750 2 2015 Chapman, Jay CAN Toronto FC $93,500 2 2015 McKendry, Ben CAN Vancouver Whitecaps FC $52,500 2 2016 Calistri, Joey USA Chicago Fire $51,500 1 2016 Conner, Drew USA Chicago Fire $62,500 1 2016 Durkin, Chris USA D.C. United ** $51,500 1 2016 Guillen, Aaron MEX FC Dallas $51,500 1 2016 Pomykal, Paxton USA FC Dallas ** $51,500 1 2016 Lucatero, Christian USA Houston Dynamo $51,750 1 2016 Choinière, David CAN Montreal Impact** $51,500 1 2016 Adams, Tyler USA New York Red Bulls $81,042 1 2016 Muyl, Alex USA New York Red Bulls $66,500 1 2016 Etienne, Derrick HAI New York Red Bulls $56,500 1 2016 Allen, Brandon USA New York Red Bulls $62,500 1 2016 Stajduhar, Mason USA Orlando City $51,500 1 2016 Jones, Derrick GHA Philadelphia Union** $51,500 1 2016 Trusty, Auston USA Philadelphia Union** $51,500 1 2016 Acosta, Danilo USA Real Salt Lake $62,500 1 2016 Velazco, Ricardo USA Real Salt Lake** $51,500 1 2016 Morris, Jordan USA Seattle Sounders FC $190,500 1 2016 Sallói, Dániel HUN Sporting Kansas City $51,500 1 2016 Babouli, Molham CAN Toronto FC $51,500 1

2017 Carleton, Andrew USA Atlanta United FC** $51,500 1

** Estimated Salary** $91,022

Strengths

• Allows clubs to sign local talent rather than wait till college MLS draft

•Provides immediate career path for academy prospects within MLS clubs

•Promotes development of local USA players for long term careers

Opportunities •Create a strong ongoing performance development program that enhances player long term club loyalty

•Develop a 5 year vested performance rewards program to help ensure “breakthrough” player retention

•Establish a trusted local intermediary relationship in the clubs best interests

Threats •Low introductory roster wages make players vunerable to offers abroad

•Predatory international intermediaries look to sign players and lure them away from the club

•Lack of first team opportunities and ongoing performance development leads players to leave the club early

Weaknesses • US players have limited first team opportunities and also restricted internationally due to nationality

• Lack of solidarity mechanism provides no future player rewards

• Lower Domestic leagues have no compelling need for MLS players

S W

T O

SWOT ANALYSIS HOMEGROWN PLAYERS

4D HGP Performance Model

• Discipline

• Leadership

• Success

• Position

• Awareness

• Maneuvers

• Balance

• Strength

• Endurance

• Control

• Pass

• Move

Technique Physique

Attitude Tactics

TECHNICAL Enhance Skills with first team training daily and individual level regular asessment

PHYSICAL Consistent ly develop and benchmarking with Players Performance Cards

TACTICAL Aquire Experience through playing time on loans to other leagues

PSYCHOLOGICAL Increase Perception of value to club with personalized development program

*

PR

OG

RES

SIO

N

VA

LUE

** LOYALTY RETENTION

PROFESSIONAL PERSONAL

*During the 5 year development window of 17-22 Years of Age HGP can be constantly finetuned for development and readiness for MLS introduction.

**Players will increase their loyalty to MLS clubs with a clear development path and constant activities to improve their skills as a player.

LONG TERM DEVELOPMENT

Proposed Home Grown Player Reward and Representation Model

Contract Year

Player Age

PRO4 Key Performance Focus

Performance Bonus

Agreed Local Intermediary Fees

1 17 Physical 80%* 0%

2 18 Technical 80%* 1%

3 19 Tactical 90%* 1%

4 20 Psychological 90%* 2%

5 21 All 4 Areas 100% + ** 3%

**Vested Annual Performance Bonuses paid on Program Completion**

* Remaining % of 100% Balance retained annually for later payment *

Working Together

• Provide financial modeling projections for ongoing salary cap planning activities.

• Define performance metrics and financial compensation models to assist with Club Player Salary Compensation.

• Create and manage a financial evaluation model for “fair performance pricing” of all international Player targets .

• Build a customized specific Pro4 performance program for Home Grown Players continuous development.

• Develop a 5 year strategic reward and retention plan for Home Grown Players.

• Offer local USSF registered Intermediary services for long term Home Grown Player Management and Success.

We Can: