Allocation Money is money that is available to a club in addition to its Salary Budget, as either (i) General Allocation Money; or (ii) Targeted Allocation Money (guidelines for each set below).
General Allocation Money
Each club receives an annual allotment of General Allocation Money. In 2019, that allotment is $200,000 per club.
A club may also receive General Allocation Money (“GAM”) in the following cases:
- Failure to qualify for the MLS Cup Playoffs ($200,000 per club)
- The transfer of a club’s player to non-MLS club outside MLS
- Qualification for the CONCACAF Champions League ($140,000 per club)
- Expansion Clubs (see below)
- Expansion Dilution (see below)
- Designated Player charge distribution
In any year that the League adds one or more expansion clubs, (i) all clubs will receive an equal amount of General Allocation Money and (ii) any club that loses a player in the Expansion Draft will receive additional General Allocation Money. New expansion clubs receive a separate amount of General Allocation Money for their inaugural season.
General Allocation Money can be traded by clubs.
Buy-Down
Allocation Money can be used to “buy-down” a player’s Salary Budget Charge as part of managing a club’s roster, including buying a Salary Budget Charge below the League maximum of $530,000. For example, a club may “buy down” a player earning $500,000 to a Salary Budget Charge of $300,000 by using $200,000 of General Allocation Money.
General Allocation Money can also be applied in the following circumstances:
- To sign players new to MLS (that is, a player who did not play in MLS during the previous season).
- To re-sign an existing MLS player.
- To off-set acquisition costs (loan and transfer fees).
- In connection with the extension of a player’s contract for the second year provided the player was new to MLS in the immediately prior year.
- To reduce the Salary Budget Charge of a Designated Player to a limit of $150,000.
Use against a Salary Budget Charge
A club cannot use General Allocation Money to reduce more than 50 percent of a player’s Salary Budget Charge. This restriction does not apply where General Allocation Money is being used on a loan or transfer fee. A club may reduce 100 percent of a loan or transfer fee.
Targeted Allocation Money
“TAM” as it is commonly referred to by insiders, was introduced following the Collective Bargaining Agreement signed in 2015 between MLS and the MLS Players Association.
Targeted Allocation Money has been distributed to MLS clubs in accordance with the below.
Mandatory Targeted Allocation Money Invested by Year
- 2015: $500,000 per club
- 2016: $800,000 per club
- 2017: $1.2 million per club
- 2018: $1.2 million per club
- 2019: $1.2 million per club
Expansion clubs joining the League in 2019 will receive a prorated amount of the initial 2015 investment (i.e., $100,000 per year through 2019). In 2019, FC Cincinnati will receive $200,000 of the initial allotment.
Discretionary Targeted Allocation Money Available Per Year
- 2018: $2.8 million per club
- 2019: $2.8 million per club
MLS clubs have the flexibility to spend up to an additional $2.8 million of Targeted Allocation Money, on a discretionary basis funded by the club, per year since 2018.
Targeted Allocation Money may be used in four ways:
- Clubs may use the funds to sign a new player provided his salary and acquisition costs are more than the Maximum Salary Budget Charge.
- Clubs may re-sign an existing player provided he is earning more than the Maximum Salary Budget Charge.
- Clubs may use all or a portion of the available Targeted Allocation Money to convert a Designated Player to a non-Designated Player by buying down his Salary Budget Charge at or below the Maximum Salary Budget Charge. If Targeted Allocation Money is used to free up a Designated Player slot, the club must simultaneously sign a new Designated Player at an investment equal to, or greater than, the player he is replacing.
- A club retains the flexibility to convert a player bought down with Targeted Allocation Money into a Designated Player if that club has a free Designated Player slot.
- Clubs may use up to $200,000 of currently approved Targeted Allocation Money (amounts through 2019) to sign new Homegrown Players to their first MLS contract. It cannot be used on Homegrown Players previously signed to MLS.
A club may trade its Mandatory Targeted Allocation Money to another club.
Salary Parameters
A player must earn more than 2019 Maximum Salary Budget Charge ($530,000) to qualify for Targeted Allocation Money. The compensation ceiling for such eligible players is set at $1,530,000 per year.
A player cannot have his Salary Budget Charge bought down below $150,000 using Targeted Allocation Money.
Targeted Allocation Money and General Allocation Money may not be used in combination when signing or re-signing a player. One of either Targeted Allocation Money or General Allocation Money may be used on a player in a single season, not both.
Targeted Allocation Money expires after four full Transfer Windows.
NOTE: To protect the interests of MLS and its clubs during discussions with prospective players or clubs in other leagues, amounts of Allocation Money held by each club will not be shared publicly. Only in the case of a trade will the amount of Targeted Allocation Money involved be made public.
| Club Salary Budget | $4,240,000 |
| Maximum Salary Budget Charge | $530,000 |
| Senior Minimum Salary | $70,250 |
| Reserve Minimum Salary | $56,250 |
| Designated Player Salary Budget Charge | $530,000 |
| Second Designated Player Salary Budget Charge | $530,000 |
| Third Designated Player Salary Budget Charge | 530,000 |
| Young Designated Player Budget Charge (20 years old or younger during the League Year) | $150,000 |
| Young Designated Player Budget Charge (21-23 years old during the League Year) | $200,000 |
| Mid-Season Designated Player Salary Budget Charge | $265,000 |
| Mid-Season Young Designated Player Salary Budget Charge | $150,000 |
Targeted Allocation Money FAQs:
Link to Roster Regulations Guide on this site: 2018 MLS rules and regulations of rosters