Have the Quakes met their 2021 spending expectations?

San Jose Earthquakes majority owner John Fisher poses with executives from Intermedia Cloud Communications and the Earthquakes at 2020’s event at Earthquakes Stadium announcing the new kit sponsor. Photo credit: ISI Photos/San Jose Earthquakes

After a flurry of signings this past month the Quakes roster has finally taken shape for the upcoming season. Jamon Moore and Colin Etnire have already presented a deep examination of the players, how they might fit into the existing system, and holes that still remain. 

We also need to take a step back and try to gauge, regardless of the players chosen, if ownership is investing financial resources that match the supporters’ expectations. This is a topic discussed not only among supporters but by the club’s most public faces. Despite San Jose increasing the team payroll around 30% since his arrival, head coach Matías Almeyda has continued pressuring owner Jeff Fisher to invest more in the club. Before agreeing to return this season Wondolowski stated his main question was “What (are) we going to do to become a contender every year?” (presumably referring to the team’s offseason plans for spending and player additions). Therefore, before we can solidify our expectation of the team’s on field performance, we must first tackle this crucial question:

What are fair spending expectations for the Quakes in 2021?

Expectations will naturally vary among San Jose supporters. Fans who demand the Bay Area, tech capital of the USA, become a league leading spender: I see you and acknowledge you. But the reality is the Quakes were a bottom table team who are only beginning to push higher into the middle of the table (in both points and spending).

With that in mind, I think it is fair to expect the Quakes to invest an amount in 2021 that matches the salaries of the players they let go or traded after the 2020 season. Put more simply, I expected the Quakes, at minimum, to maintain the current level of spending — at least until fans return and revenues are back to normal. Given the large player turnover after last season, this still leaves room for a significant retooling of the team.

How much money was freed up after the 2020 season?

2021 Quakes Financial Liquidity

The Quakes, through player releases and trades, opened up about $3.76 million of their payroll (nearly 40% of the team’s 2020 total payroll). In addition to the freed up salaries, the Quakes gained over $500K in General Allocation Money (GAM) from sending Lima and Hoesen to Austin. Let’s examine how this money has been redistributed during the offseason. *Note that until official salary data is released these are our best estimates.

I will always cherish my memory of watching Vako slice through Atlanta, but his release drops a big weight from the budget’s shoulders (about 15%!). Kashia and Hoesen were also sizable investments who never quite found their place in the Almeyda era. Depending on what the future holds, the Lima trade will either go down as a club’s failure to accommodate a young US Men’s National Team star, or a crafty bit of maneuvering by Fioranelli to maximize a decreasing and unhappy asset.

2021 Quakes Spending

Eduardo “La Chofis” Lopez	$650,000
Eric Remedi	$800,000
Benji Kikanovic	$63,547
Luciano Abecasis	$387,000
Tommy Williamson	$81,357
George Asomani	$63,547
Jackson Yueill ( salary raise)	$510,000
Total	$2,525,451

Let’s do a quick walk through of the above numbers. 

Chofis, arriving on loan, will likely have a salary near the other Guadalajara transfers (Alanis and Fierro). This would land him somewhere in the $600-$700K range. 

Remedi, transferred from Atlanta United for $300k in GAM with $200k in incentives, had a $300k salary when most recently reported. We will assume he performs well and triggers the whole package, for a total cost to the team of $800k.

For the draft picks, Asomani and WIlliamson, we will assign them the reserve and senior minimum salaries, respectively, although neither are currently signed to guaranteed contracts.

Abecasis’s compensation is more opaque with online estimates ranging from $275–500K. We chose to place him in the middle at $387K. Benji will also be assigned the reserve roster minimum.

Yueill now appears a lock on the US National Team and was recently named a top 10 MLS American player. He likely earned a substantial raise. Colin’s spreadsheet generously estimates it somewhere near the DP threshold so we will mark his new salary at $700K, a $510K increase. 

Is total spending decreasing in 2021?

Based on the above, the total spending on players this season will decrease by about $1.2 million, pending the summer transfer window. If this is maintained, by our estimates (which are only as accurate as our understanding of the roster and salaries without an MLSPA salary update) this would represent about a 12% cut in team payroll. It remains to be seen if this is part of a widespread reduction in team spending across the league brought on by the pandemic.

All we know for sure is that the new MLS Collective Bargaining Agreement (CBA) does not contain changes in the salary budget, GAM, or TAM. Therefore no new league rules specifically disincentivize the Quakes from matching their earlier spending total. 

Why have the Quakes decreased total spending on players in 2021?

Despite little change to the CBA the same can not be said for league profits during the pandemic. The MLS Commissioner is claiming the league lost nearly $1 billion in revenue last year due to lost ticket sales, lost gameday revenue, MLS is Back expenses, and other Covid-19 accommodations. That will average out to roughly $40 million a team and, even if the Quakes aren’t exactly maximizing on ticket sales, leaves a sizable bill for ownership to pay.

If fans are not allowed back by mid-summer, MLS is projecting a second $1 billion loss. Where allowed by the league, Fisher could choose to compensate for these losses by reducing player spending over the next several years, and, in effect, amortizing these losses.  

The financial outlook in San Jose is not all doom and gloom. Sportico recently reported the Earthquakes and PayPal are nearing a 10-year stadium sponsorship deal worth between $20-40 million. This could allow the club to recover some of these losses and finally begin living up to the reputation of being the club of Silicon Valley if not all of Northern California given the issues at the Sacramento Republic. But considering Fisher’s infamous reputation for restrictive team budgets, Quakes supporters should still brace for a possible payroll reduction brought on by the pandemic recession.

Another, more optimistic, possibility for the payroll decrease is that the organization never intended to spend the entirety of its resources during a single offseason. More time may be required to assess the team’s current priorities and/or find the ‘right’ deals. For what it’s worth, Fioranelli has gone on record that possibilities remain for additional signings during the mid-season if the situation requires it. That does offer some hope that the Quakes have not reached their spending capacity.

Matias Almeyda and Jesse Fioranelli enjoy the festivities at the Intermedia Cloud Communications sponsorship announcement event at Earthquakes Stadium in 2020. Photo credit: ISI Photos/San Jose Earthquakes

But, at this point, it’s understandable to feel a bit underwhelmed by the Quakes offseason. In an ideal world, the Almeyda era would be the story of a team in last place who incrementally climbed closer to the top of the table year-after-year and won a championship. A reasonable dependency for achieving this is a corresponding increase in yearly spending. After a 2019 season of clear improvement followed by a 2020 season of small incremental improvement, a reduction in team salary will not go unnoticed. If the team performs worse this year, the spending will have to be some part of the conversation. Likewise, if the Quakes surpass their results from 2019 and 2020, Fioranelli and Almeyda deserve credit for assembling a superior team on a tighter budget.

Conclusion

We can find some solace with a final observation: despite 2021 not being the most expensive roster ever assembled by the Quakes, it may still contain a more valuable starting rotation. Pricey players signed before the Almeyda era (Vako, Kashia, Hoesen) were clearly being phased out by the latter half of 2020. This past season Vako only played 39% of his possible match minutes. Even given some of the understandable absences due to international duty, that feels very low for a team’s most expensive player, without a major injury. If these new roster additions fit well, more money may still end up on the actual pitch during matches. 

For the first time since Almeyda’s arrival, not a single senior contract on the team predates him (the only exceptions are Fuentes and Akanyirige, two homegrown teenagers). A quarter of the roster even has experience with him from a different club! For better or worse, 2021 is going to be the beginning of pure bushido ball on a budget.