On Monday, Angel City FC posted a statement via social media regarding the three-point standings deduction and other disciplinary sanctions imposed by the league in response to the club violating the salary cap and other league rules.
Angel City’s statement includes two major notables:
- First, it appeared that childcare benefits were the (or at least one of the) “undisclosed benefits” which caused Angel City to exceed the salary cap.
- Second, Angel City “formally requested a reconsideration of the three-point deduction” by the NWSL. However, the league “confirmed that, based on the totality of their findings, the sanctions stand as is.”
Additionally, Angel City claims to have had the understanding that “childcare payments [did] not count against the salary cap”, which is hard to square with the text of the NWSL Competition Manual.
Regarding the first notable, on Friday, a The 19th article revealed that only one of the undisclosed supplemental agreements covered childcare payments:
A league source told The 19th that child care payments were only part of the reason Angel City was over the cap and got sanctioned. Only one of the five side letters addressed additional child care payments; the rest of that side letter and the other four letters were for additional amounts covering other terms.
Previously:
- Angel City FC fined $200,000 and docked 3 points for violating salary cap and other league rules
- Angel City salary cap investigation began after former ACFC player discussed supplemental agreement with their new club
Note: The 2023 Competition Manual (PDF) is the latest version online, but according to this The Athletic article, the relevant text concerning childcare expenses and benefits in the 2024 version is the same.
Angel City FC’s statement
The statement was posted on Monday, October 14th, as a pair of graphics on both Instagram and x.com. The following is the extracted text in full:
STATEMENT FROM ANGEL CITY FC
Since the NWSL imposed disciplinary sanctions on ACFC on October 3rd, we have thoroughly reviewed the findings to better understand the League’s decision and determine next steps. While we respect the League’s authority to enforce its rules, we have expressed our disappointment about the competitive sanctions, specifically the three-point deduction.
We acknowledge our mistakes and take full accountability. We are implementing new policies to ensure compliance going forward. Our commitment to acting with integrity across all operations is essential to our goal of advancing equity and maintaining the trust of the entire ACFC community.
We disagreed with one aspect of the League’s conclusions. Our understanding, based on the League’s Salary Cap Rules, was that childcare payments do not count against the salary cap. We believe that ACFC did not exceed the salary cap and formally requested a reconsideration of the three-point deduction. The League has confirmed that, based on the totality of their findings, the sanctions stand as is.
We will continue to work towards more equitable solutions to support our players’ childcare needs. Childcare support is fundamental in advancing the professionalization of women’s sports and ensuring that our players feel valued and supported as both professionals and parents.
We are grateful for the continued support of our players and staff as they compete for a spot in the playoffs and as we navigate this complex set of issues.
The Childcare Question
As confirmed by Chabeli Carrazana in her The 19th article, the “childcare payments” mentioned in Angel City’s statement were just one of the “excess benefits” that were not reported to the league. From the league’s original press release on the matter:
- During calendar year 2023, ACFC entered into five side letters directly with players that effected multi-year agreements and were not disclosed to the league. These agreements included a combination of compensation and benefits that were reflected in the Standard Player Agreement and excess benefits that were neither reported to the league nor included in the Standard Player Agreement.
- Due to these undisclosed benefits, ACFC exceeded the salary cap by approximately $50,000 for four weeks during the 2024 season.
It helps to read the manual
In their statement, Angel City claims that it was their understanding that “childcare payments do not count against the salary cap”.
The 2023 NWSL Competition Manual (PDF) does not use the term “childcare”. Instead, it uses “dependent care”.
Under the rules laid out in the Competition Manual, only some “dependent care expenses” are exempt from the salary cap. The general rule is that “[p]arental and dependent care expenses up to the IRS maximum” — which was $5,000 for 2023 — “do not count against a Player’s Salary Cap charge”. Anything beyond that would be considered “excess Permitted Team Assistance costs”.
4.2. CALCULATION OF A PLAYER’S SALARY CAP CHARGE
Salary Cap charges are attributed to Players by the League by adding the Player’s base salary to any additional compensation per the schedule payable to the Player as listed in the Player’s SPA, which includes performance bonus(es), roster bonus(es), agent fees, and excess benefits and/or excess Permitted Team Assistance costs.4.2.1. TEAM ASSISTANCE EXCEPTIONS TO PLAYER’S SALARY CAP CHARGE
The following required expenses and payments do not count against a Player’s Salary Cap charge:
- Severance and COBRA payments after a Player is Waived;
- Payment for Additional Work up to $15,000;
- Travel and transportation reimbursements as set forth in the CBA;
- Parental and dependent care expenses up to the IRS maximum;
- Housing, automobile, and relocation within limits prescribed; and
- Trialist expenses, up to the amount prescribed.
“Dependent Care” is primarily covered in a section under “3.1.6. Permitted Team Assistance” of the Competition Manual, which does use “benefits” to describe a subset of expenses that do not count against a team’s salary cap:
3.1.6.3. DEPENDENT CARE
All Players with Child(ren) will receive a dependent care stipend, up to the IRS annual maximum. Dependent care stipends must be documented in the Player’s SPA. The spending limits are per player, not per dependent.
A Team may also provide the following benefits for Players with minor children: (a) flights for the child(ren) to attend away matches, (b) flights for a childcare provider to attend away matches, (c) hotel for a childcare provider to attend away matches, and (d) exclusive use of a hotel room for the Player traveling with a child(ren). These benefits do not count against the Team’s Salary Cap but must be reported to NWSL for tax purposes.
The first subsection, numbered 3.1.6.3.1, under the main Dependent Care section plainly states that “Dependent Care stipends” beyond “the IRS annual maximum will count against the Team’s Salary Cap.”
3.1.6.3.1. APPLICATION OF DEPENDENT CARE STIPENDS TO TEAM SALARY CAP
Dependent care stipends up to the IRS annual maximum are summed and the cost split evenly amongst all Teams, collected through Player Remittance.
Dependent Care stipends up to the IRS annual maximum will not count against a Team’s Salary Cap provided it does not exceed the amount set forth in Section 3.1.6.3. Any amount in excess of the IRS annual maximum will count against the Team’s Salary Cap.
(Omitted from the above quotes are sections 3.1.6.3.2 and 3.1.6.3.3 which covers flexible spending accounts for dependent care services and medical expenses.)
In its statement, Angel City used the term “childcare payments”. The league’s likely position is that such payments would fall squarely under the definition of “dependent care stipends”.
Even if Angel City has a creative interpretation of “childcare payments”, the club’s implementation would still likely fall under the more general “[p]arental and dependent care expenses” phrase used in section 4.2.1, which was quoted above.
One possible salary cap loophole could involve a club directly providing daycare services via an employee of the club. However, that would fall under “childcare services”, which is not the phrase used by Angel City in their statement.
Omissions matter
Although the salary cap violation tends to be the lead headline in this saga, the most serious of the known violations was Angel City’s failure to properly disclose the five supplemental agreements to the league. Had the club done so, its apparent misunderstanding of the applicability of salary cap rules to childcare payments likely would have been rectified.
Section 3.1.5 of the 2023 Competition Manual explicitly states that a team “must disclose all compensation offered and/or paid to a Player” and specifically includes “any direct compensation paid to a Player” as the first listed example:
3.1.5. EXCLUSIVE COMPENSATION (Updated Feb 2023)
Per the SPA, Players shall not be entitled to receive any payments or other benefits from any Team or any Team Related Entity, whether directly or indirectly, except those provided in the SPA, or as otherwise expressly approved in writing by the NWSL.
Teams must disclose all compensation offered and/or paid to a Player or to a Player’s representative, including without limitation:
- Any direct compensation paid to a Player by the Team.
While “compensation” is not explicitly defined in the Competition Manual, the implicit definition of compensation in section 3.1.5 is “payments or other benefits” from a team.
The Sympathy Ploy
Angel City’s statement shifts from discussing “childcare payments” to the more general “childcare support” and presents the club as fighting for “more equitable solutions to support our players’ childcare needs” in order to make the players “feel valued and supported as both professionals and parents”.
That section of the statement works as a deflection and has helped to generate numerous comments in support of Angel City and/or against the league, including on social media (x.com quote posts of Angel City’s statement) and some on The Athletic’s article covering the club’s statement.
Angel City’s public relations move is even more egregious in light of Friday’s new details that only one of the five supplemental agreements involved childcare payments.
Although one could argue that providing extra undisclosed childcare payments is a good thing, the failure to properly disclose the supplemental agreements reduces the likelihood of long-term improvements in supporting players with children. Such secret agreements give the league less information that could be used to show the need for increased childcare support. Also, players with such agreement may be less incentivized to advocate for improved support due to the secret nature of the side letters.
According to The 19th article, under the NWSL Players Association new collective bargaining agreement, “players will get to choose a stipend for dependent care that is up to two times the IRS maximum, bringing it up to $10,000 a season, or they can have child care providers and children under 5 travel at the team’s expense for domestic NWSL-related work”.
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