By Ben Nicholson
December 14 – The MLS has committed near an additional $37 million for clubs to spend on player salaries. In both the 2016 and 2017 seasons, $125,000 per season will be dedicated to clubs to use on signing Homegrown Players, and $800,000 per season will be made available to all MLS clubs in the form of Targeted Allocation Money (TAM).
The stated intention of the TAM is to aid the acquisition of high-quality, roster-deepening players without requiring owners to dip into their own pockets.
Todd Durbin, Executive Vice President of Player Relations and Competition, said:
“It’s our primary goal to improve our product quality. We have as our goal to be one of the best leagues in the world in 2022, and we’re going to evaluate on an ongoing basis and make adjustments as necessary.”
The MLS believes that the necessary adjustment is in creating a second class level of DPs (designated players). Durbin said: “If we really wanted to take the next step in terms of our development and growth, we had to find a way to drive resources into the center of our roster… what we’re really trying to do is drive up the average spend as it relates to the quality of players in that next layer of roster slots that we believe is going to have the greatest short-term impact on product quality.”
If the money is used to buy down a DP salary it must correspond with the creation of a new DP, whose salary is at least equal to the former DP. That way clubs are incentivised to find players that require salaries outside, but not drastically outside, the regular boundaries.
The TAM may be used to sign new or re-sign existing players, or may be traded between clubs. The MLS lay out the terms of the rule:
· Clubs may use a portion of or all of the available Targeted Allocation Money to convert a Designated Player to a non-Designated Player by buying down his salary budget charge to at or below the maximum salary budget charge. If converted during the Secondary Transfer Window, the Designated Player may earn at maximum $1.5 million on a prorated basis. 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.
· Clubs retain the flexibility to convert players bought down with Targeted Allocation Money into Designated Players if they have a free Designated Player slot.
· Targeted Allocation Money and general Allocation Money may not be used in combination when signing or re-signing a player, or when buying down the budget charge of a Designated Player. Either Targeted Allocation Money or general Allocation Money may be used on a player in a single season, not both.
· A Player must earn more than $457,500 per year (2016 maximum budget charge) to qualify for Targeted Allocation Money. The compensation ceiling for such players is set at $1,000,000 per year, unless amounts are applied midseason an existing Designated Player adjustment to Targeted Allocation. The minimum budget charge for a player compensated with Targeted Allocation Money is $150,000.”
The MLS stated that the money is to be used by clubs to “add depth to their rosters by strategically investing in players that make more than the 2016 maximum budget charge of $457,500 (but who are not Designated Players).”
This money serves additionally, and operates separately, to the $500,000 TAM funds created over the summer. Adding both TAM allocations to the 2015 salary cap of $3.49 million entails a potential salary capacity, without using private funds, of $4.79 million, though it is unlikely that a club would operate at this level.
The previous rule enabled LA Galaxy to circumvent the salary cap, by buying down Omar Gonzalez’ salary so that he was no longer a Designated Player (DP), in order to employ Giovani Dos Santos as the club’s third DP. The new allocation enables the club to continue his employment concurrent with retaining current DPs Steven Gerrard and Robbie Keane by having the ability to continue to buy down Gonzalez’ salary.
MLS Deputy Commissioner Mark Abbott alluded to this in commenting: “We saw immediate dividends this past season with the initial investment in Targeted Allocation Money, and our owners believe that additional spending – especially for players who will impact the middle of our rosters – will make MLS even more entertaining and compelling.”
In terms of the additional resources for youth development, Durbin stated: “Our academies are developing more first-team players every year, and the additional investment will provide more flexibility to our clubs to sign top young players.”
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