MLS Announces New Roster Rule, Invests $10 million into Players Over Next 5 Years

Adding Designated Players in Major League Soccer just got a little more interesting.  Wednesday Major League Soccer (MLS) announced a new mechanism called Targeted Allocation Money (TAM) which, according to a league statement, will take effect immediately.

The underlying theme of the new rule is that it gives each team $100,000 each year for the next five years to buy down players contracts that make over the maximum budget charge of $436,250.  League Vice President, Todd Durbin, told Sports Illustrated,

There are three things that are all sort of working together. One is, you can go out and sign new players. Two is, you now have resources to keep important existing players that you might have lost overseas traditionally. And then, I think the third part about it … is that we’ve just injected $10 million into the system, and the money is tradable, so it’s going to start to flow in the background efficiently.

This new rule was vaguely outlined in the new Collective Bargaining Agreement between the league and players days before the start of the 2015 season.  The new CBA did not allow for free agency for the players, the biggest issue in negotiations.  However, the new CBA raised the minimum salary to $60,000 from the previous floor of $36,500.  The new CBA impacted a large portion of players in the league since most rosters are comprised of role players who do not make the 18-man match day roster and are therefore compensated lower.

TAM benefits only one or two players on each club.  According to an MLS press release, “TAM may only be used to sign or re-sign players who earn more than the maximum salary budget charge (but who are not Designated Players).”

There were rumors that a fourth Designated Player slot would be added.  This would allow clubs to spend as much money as they like on four star players without having their entire salary affect the club’s salary budget.  In essence, this rule could allow teams to buy down one of the contracts of their Designated Players so that they do not qualify as a DP, allowing them to bring in another DP player.

This new rule is announced along with the rumors that Mexican superstar Giovanni Dos Santos is interested in playing for the LA Galaxy.  However, the Galaxy currently have the maximum number of DPs and are currently unable to sign such a marquee player.  By using TAM the Galaxy could buy down the contract of a DP and sign Dos Santos.

MLS prides itself on responsible spending and league parity, two problems that some of the top leagues in Europe have been facing for the last decade.  This rule satisfies these principles by encouraging clubs to spend more but within their means while giving each club the same amount of money to retain talent or bring in another quality player.

TAM also comes at an appropriate time as international interest in MLS is at an all-time high.  More and more players from top leagues around the world are expressing their interest in playing in MLS.  TAM helps allow clubs to sign these players who might otherwise sign in another league that would offer more money.

The rule invites some criticism as well.  Those who follow the league closely already groan about the number of mechanisms that the league has created to ensure a steady and equal growth across the league.  Another roster rule such as this will further complicate player acquisitions for fans, especially because roster rules and player acquisitions has become a rapidly growing topic of interest among sports-goers.

The TAM aims to level the playing field for all teams and prevent the creation of “superclubs” since it gives each team an opportunity to spend (or trade) this money.  However, the rule will likely help the most desirable markets (like LA and Seattle) to sign four DP quality players while other clubs struggle to sign more than one or two DPs.

Ultimately the TAM does a better job at controlling and encouraging spending in a league that is still not profitable.  The alternative to mechanisms like TAM is to create a luxury tax for teams that want to greatly outspend their competition.  This would create financial instability in the league, the sort of instability that doomed the North American Soccer League in the 1980s.  This is just another step in the journey to continue growing the league and being able to attract, and retain, top talent.


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Reporting on the business side of the world's game.