One less well understood aspect of Major League Soccer’s convoluted transfer system, is discovery rights.
No other soccer league in the world has anything comparable, and it only exists within MLS because of the league’s single entity model. All clubs are technically owned by MLS, they are not independent entities operating in a free market.
Discovery rights were dreamed up as a way to increase fairness and reduce friction within that single entity.
They are essentially a system of ‘first dibs’ on players a club has identified as a possible transfer target, but they only apply to players that fit into specific categories. They are not the only transfer mechanism in use. So they won’t be a factor in all MLS transfers, but when a club wants to bring in someone from abroad, they can be very important indeed.
How The Process Works
All MLS clubs have their own discovery rights lists. However, the players on those lists are not made public. This is one reason it is not well understood – so much of the process goes on behind closed doors.
The details of which clubs have discovery rights on which players are all held centrally, so when a club wants to register their interest and claim discovery rights on someone, they have to file a Discovery Claim through the league itself. The league can approve or deny the claim, although it is usually approved unless another club already holds rights.
This means that no player can be on two lists at the same time.
Each Major League Soccer franchise is allowed to register up to 7 players on their discovery rights list, and they can add or remove players from it at any time. There is no limit to how many players on the list a club can sign, but they can’t sign players on anyone else’s lists.
However, if a team is interested in a player on someone else’s discovery rights list, they can buy the rights to that player from the club that holds them. This makes discovery rights a tradeable asset. It’s not much, usually around $50,000 – $100,000 in General Allocation Money (GAM) and/or SuperDraft picks, but still, the rights hold value.
That said, if a big player who would likely end up designated is not interested in the club that holds their rights, but is interested in another MLS club, the club that ‘discovered’ him cannot hold him hostage. For example, Philadelphia Union held the rights to Zlatan Ibrahimovic in 2016, but there was no way they could afford him. They were forced by the league to relinquish the rights so that LA Galaxy could sign him instead, because he was willing to play there and his presence would be good for the league.
Why Discovery Rights Exist
Discovery rights exist to avoid bidding wars and chaotic transfer battles between multiple clubs interested in the same player. In a single entity system, this would be akin to one part of the same entity battling with another, which defeats the object of centralised control.
Discovery rights are also another way to maintain parity and fairness within the league. Some clubs are richer than others, and this is one more way to avoid those with the most money simply buying their way to the best players, and therefore to success. This is a common theme within MLS and American sports more generally.
It also encourages early scouting by rewarding teams that identify top prospects first. It would be grossly unfair for a small team to put in all the hard work scouting a player, only for a big team to swoop in and blow them out of the water with a contract offer which the first team simply could not match. This system prevents that happening.
It works to keep wage inflation stable, too, while removing the ability for players and agents to play one club off against another.
In short, it keeps the league itself in charge of who comes in and out, and who plays where, overall. MLS retains control.
They Don’t Apply to All Players
Another reason discovery rights aren’t that well understood, is because they don’t apply to all player transfers. Specifically, discovery rights exist to cover players who don’t fit into any of the other allocation mechanisms.
This is why I say the transfer system is convoluted. Before discovery rights, you also have:
- Allocation Order: Applicable to U.S. Men’s National and some Youth Team players, or big-name internationals returning to MLS for a fee of over $500k. This one is about distributing the best players as evenly as possible.
- MLS Superdraft: This is how college players are signed, and again, it ensures smaller teams get an opportunity to sign the best up and coming talent.
- Homegrown Player Rights: Teams can ‘sign’ players to the first team who they have developed in their own academies.
Then of course there are players already plying their trade in MLS. These do not need discovery rights put on them because their MLS rights are held by the team they play for. Any club bidding for a current MLS player would also be purchasing their MLS rights be default.
So who does that leave?
Well, most international players. Any player from another league who has never played in MLS before or been drafted, would need a Discovery Claim filed for the right to discuss a contract. Free agents not on the allocation list would fit into this category, too. An ex-MLS player who left on a free transfer without the club retaining their rights would also need a claim filing, as would an American who left the US as a youth without being drafted, became a professional abroad, and now wants to play in MLS.
Essentially, it’s anyone who has never ‘existed’ inside MLS before, or who left without their rights being maintained.
Not the Same as Right of First Refusal or Retention Rights
I mentioned MLS rights above, and these are easy to get confused with Discovery Rights.
By MLS rights, I mean retention rights, which are officially called the Right of First Refusal (ROFR). When a player leaves MLS, a club can maintain their rights only if it made a bona fide contract offer that the player rejected. If that player ever wants to return to MLS, the original club holds the exclusive right to negotiate, or to trade those rights to another club.
In situations like this, if a different MLS team wants to sign the returning player, they must acquire the Right of First Refusal from the club that last held their MLS rights. They cannot simply file a Discovery Claim, because the player already played in MLS and is no longer eligible to be “discovered.” He has already existed inside the MLS system. Discovery rights apply only to players who are outside the MLS system and have never played in the league.
This happened when Diego Rossi left LAFC in 2021 for Fenerbahçe. When Columbus Crew wanted to bring him back to MLS, they not only had to pay Fenerbahçe a $5.63 million fee, a $1 million bonus fee, and a 15% sell-on clause, but they also had to give LAFC $200,000 in General Allocation Money to buy his MLS rights.
Discovery rights sound the same, and are in fact a way of obtaining the player’s MLS rights in the first place, but they serve a different purpose.