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MLS announces new Targeted Allocation Money rule

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For months, rumors of a new roster rule have come in the wake of the MLS’ new Collective Bargaining Agreement. On Wednesday, that rule was finally revealed.

Major League Soccer announced a new rule Wednesday that could provide clubs with the opportunity to add even more investment to the league’s rosters.

The extra funds, called Targeted Allocation Money, will allow clubs to add that extra high-earning player by allocating $100,000 per year for five years in additional spending money on new players this season outside of the normal salary budget.

Currently, MLS clubs are limited to three Designated Players per team, but the additional targeted allocation money will increase teams’ flexibility by allowing them to buy down contracts of existing Designated Players.

The new rule could especially work in favor of a club such as LA Galaxy to buy down Omar Gonzalez’s cap hit to drop below the Designated Player threshold, thus allowing them to add another big contract—such as Mexican international star Giovani dos Santos, who, according to reports, is in advanced discussions to sign with Los Angeles.

The rule makes it so each MLS club will receive $100,000 per year over the next five seasons ($500,000 total) in additional funds from the league to invest in their roster outside the existing player salary budget.

The targeted allocation money can be used to sign new or re-sign existing players much like the already-established general allocation money. The additional funds may also be traded.

Unlike the general allocation money, however, the targeted allocation money may only be used to sign or re-sign players who earn more than the maximum salary budget charge but are not Designated Players, the league said.

“For 2015, the maximum salary budget charge amount is $436,250,” the league said in a statement. “Importantly, unlike Designated Players for which a club is responsible for any payments above the maximum salary budget charge, all clubs will be provided the same amount of targeted allocation money through the League budget. As a result, all clubs will have the same opportunity to benefit from these new funds.”

The funds can be used in a single season on up to three players at a time, the league said. However, if targeted allocation money is used to free up an additional DP slot, the club must simultaneously add a new DP or equal to or higher investment.

As the league continues to grow its star-power and expand, clubs are not required to use their full $100,000 each season, but they are required to use the remaining amount during the following year.

The Targeted Allocation Money rule comes as part of  the Collective Bargaining Agreement concluded prior to the start of the 2015 season and will become available to the clubs immediately, concurrent with the opening of the transfer window on July 8.


  1. I know this is clear as mud..
    And I know most think it’s just to benefit 1 team…

    But as TT explained it, this was in the bargaining agreement done before the season, but was just announced.
    He also said that if the team’s don’t use it they have to give it back.
    So for teams that don’t want to spend it, they only hurt themselves without it costing them money
    For teams that attract DPs only because they’re in a big market like LA, NY, etc, it helps them, which in turn helps the name exposure.
    For those of you who never experienced the original NASL… big names put butts in seats. Unlike the NASL, they’re managing the money…not writing blank checks.

    Who would have ever thought that MLS could say, “Here’s whose playing in our league in the same year: Lampard, Gerrard, Villa, Kaka, Keane, Pirlo, etc- plus the spine of the usmnt, Bradley, Dempsey, Altidore, Jones, Omar etc – plus other dual nationals like Mix whose here, and AJ who wants to etc”

  2. obviously great for LA given what they have in the works. as ESPNFC pointed out, this could be helpful for teams like SKC as well. move Besler and Zusi off DP contracts. plenty of other players in that range. including Gilberto who is on loan. his salary last year, $1,145,000.00. i’m not sure how his loan is currently set up, but TFC could easily pay that down and make him their Core Player once that loan is up.

  3. So, a team can use all five years of allocatin money to pay down a player salary by $500K for one year? How do they pay down that salary in subsequent years?

      • Perhaps I am misunderstanding, but if there is only $100K/year for five years, and it is all used in year-1, there is nothing left in years 2-5. In the case of Omar Gonzalez, the Galaxy could buy down his contract for one year to facilitate bringing in another DP, but then what? Hope to sell or release him after that year?

        If that is the case, there is little practical value for a team that has three DP’s with salaries well above the DP minimum. This rule seems to make most sense for teams with a DP in the sub-$600K range.

        A follow-up report providing clarification would be great!

  4. It’s sheer lunacy. All we know for sure is Colorado, New England, and Philadelphia will do nothing with this new rule.

  5. Anything that increases the amount of world class players in MLS is a net positive. More money for the lower-tier players needs to be next, but this still a good thing.

  6. Wow, the US government has spent over a hundred years making a complicated tax structure.

    MLS is trying to make IRS rules look simple by comparison and in only 20 years!.

  7. This might seem too simple, but the rules could be adjusted by having the 3 DPS not count at all against the cap and their salaries coming directly from the corresponding owner. That would allow money for the “hit against the salary cap” that comes from the DP to be spread out among the other players on the roster or could be used to get another player in the $250k-$400k area.
    I’m no rocket surgeon but it seems like there wouldn’t be any additional funds being spend, just spread around a little better.

    • There are so many easier ways to do this. Maybe they make their rules so convoluted and complicated so then they can break them by “re-interpreting” what they mean to suit their needs. I wish they would do away with all this b.s. and just increase the salary cap and add another d.p., which is basically what they are doing for some clubs.

  8. NYCFC is also going to use this next year to keep Diskerud under the DP threshold, as his salary is above the DP max but they bought it down this year with allocation.

  9. Hey, even if confusing, it is more money in the MLS system for better, more marketable players – all the better as MLS improves and gains more interest each year. MLS is the future of us soccer so any more investment is a good thing. More marketing appeal brings more dollars which will be put into US players, salaries and development eventually as time goes by – we are moving forward!

  10. This won’t just benefit LA…expect to see the rule applied as the OG example in the article shows. A team like TFC won’t be helped (at least not by the example route) because their DPs are all making too much to be in the same boat as LA-OG, but for the sake of argument let’s say that Mauro Diaz is on that same cusp, or Ignacio Pianatti, or Fabian Espindola…this rule seems like it will favor those without the “huge” DP signings, I imagine NYC to be in the same boat as TFC with their high-dollar signings. Teams like RSL may benefit from this more than anyone else, I can’t imagine that Beckerman or Plata is making too much above the cut-off, and it both are in the range of this rule then that’s two DP slots they just opened up.

    I think it’s easy to say that this is a “small fry” move, but let’s see it in practice for a season or two before we vilify MLS and The Don…not that I’m any huge fan of the league administration or the Commish…but at this point, aren’t small steps toward progress better than no steps?

    • Its a small fry moved compared to simply adding another DP slot, or do what I suggest, which is keep 3 DPs but don’t count any DP salary towards the cap. The issue this seems intended to fix is that teams are using DP slots on good players who price out of “regular” status but who aren’t marquee-types. This rule should help teams keep those mid-level players, but they’ll still have to contend with the salary cap implications of signing that new marquee DP. And its not a question of villifying anyone — it just seems like a very complicated system where a simpler one could have been used.

    • Yeah…this benefits teams that have 3 DPs with at least one near the threshold. Portland is a prime example. Both Valeri and Adi make less than $600K, so they can be paid down so that Portland can give Nagbe a modest DP contract or so they can go out and sign Messi for millions and millions of dollars each year. In theory they could do that.

  11. I don’t get it. Omar currently has a $436k hit to LAG’s cap. So, this allows them to buy that down to $336k? So they can pay another player $100k per year? Or can they use all five years of their allocation if they want to effectively eliminate Omar’s cap hit?

    Someone smarter than me please help.

    • Omar has the max cap hit, but he’s being paid much more than that, roughly $1m/year I believe. So they can use the allocation and new target allocation money to buy down his salary so it’s below the DP threshold. He’ll still get his $1m, but he won’t take up a DP slot. Galaxy can then sign another DP.

      Same goes for teams like OCSC, SKC, or any team that has some low paid DP’s, that aren’t far over the DP threshold. They can buy them down so that they have more open DP slots.

      • If you were attempting to answer the question you did a bad job. How do they buy down $436k using only $100k per year in such a way that they could add another $436k cap hit?

        And why is it only low-paid DPs? Whether you’re a $1M DP or a $7M DP, you only have a $436k cap charge. Why couldn’t they just write down Robbie or Stevie’s $436k cap hit?

      • Because Robbie’s salary minus 500k is still a ton of money, much more than the 436k that counts against the cap.

        In Omar’s case, the 500k pays down the remainder, so the 436k still counts against the cap, but he is no longer one of the three DP’s. This means LA can sign another DP, and it works for other teams with “lame” DP’s that only earn around a million a year.

        At least that’s how I think it works.

      • This is basically it, as I understand it.

        “Player A” makes $600,000 and is the cheapest of a teams three DPs. They want to sign “Player B” to the team for $5 million a year. So the team uses their Targeted Allocation Money to cover $100,000 of Player A’s salary (to bring the cap hit down to $500,000K) then trades a different team for THEIR Targeted Allocation Money to pay down Player A’s salary another $100,000. At that point Player A hits their cap for $400,000 and is no longer considered a DP so they can use their third DP spot on Player B.

        The problem with this as it applies to LA and Omar is that Omar makes $1.25 million so LA is going to have to use their TAM and trade for six other teams TAM in order to get his salary below the DP threshold. Maybe I’m understanding this wrong…or maybe Dos Santos is going to NY Red Bulls. 🙂

      • I think I see how this works. I’ve assumed the whole time that LAG have maxed out the cap. That’s probably not the case.

        With the new salary cap at $3.3M, I’m guessing they probably have $300k of cap room as we speak. All they need to do is buy down a couple hundred thousand from Gonzo’s hit to create the space for Dos Santos.

        Still not sure if you use funds to buy Gonzo down from over $1M to under $436k, or if you buy him down from $436k to some other number.

      • They should be able to use some of their other allocation money to write down Gonzo’s salary (MLS cup allocation, CCL allocation, making the playoffs, each regular season game win, etc.) Take all of that and the $500k TAM into account and they should be able to pull this off.

      • Winner winner chicken dinner!
        People are forgetting about the mysterious “other” allocation money.

  12. Doesn’t matter. This rule was supposed to get Chicarito in the league but he is asking too much. He ain’t coming.

  13. So basically teams with less-expensive DP players can use the money to convert them to non-DP status when they want to sign a more expensive DP. And if they don’t have enough TAM to do that, they can trade for it. There are probably many easier ways the elague could have done this, and it still reeks of baby steps. But it should theortectially help teams keep their less expensive DPs when they want to sign someone more expensive. In other words, Omar can stay in LA and LA can sign Dos Santos. Or presumably Orlando coould convert a young DP and sign Chicarito. Or Red Bulls could trade all of their TAM for better players.

    • I think Portland will benefit more than LA. LA pays Omar $1.25 million so it’s tough to pay his salary down. Portland has two of their three DPs making under $600K so they can easily use this to add a “4th DP”.

  14. Please show me the rule that the league created that only applies to the Galaxy. Instead of claiming the Galaxy get special treatment, you could say that the Galaxy’s aspirations to be a bigger, better club have driven many of the rule changes and salary increases that we see in the league now. yes, they are usually the first to benefit, but these tools are available to every team.

    Having said that, someone probably will point out many instances where the league has favored the Galaxy in ways that aren’t available to other teams. But I still stand by my statement that the Galaxy has driven much of the positive change in player acquisition and payment ever since the launch of the “Beckham rule.”

  15. All the rule changes for the Galaxy have helped the league, even if they have been sketchy. I remember when the league made a ton of rules against DC United back in the early days to keep them from being so good. It’s good that the Galaxy are pushing the league to spend more and get better players.

    • A lot of people complain about these rules, and while they are not ideal, they are helping the league grow. I’d love to see a list of the top 20 stars (with their ages) in the league for each of the last 20 seasons. Those lists would be pretty funny up until very recently. Still a very long way to go, but the growth is palpable.

  16. So, I guess Galaxy wanted to do something beyond what the rules permitted. Consequently, the usual MLS solution of changing the rules to suit them. The fact that they now announce it is what’s called “transparency”.

    • 100K for 5 years that can be used all at once = 500K. The idea is to buy out a DP player and free up a DP spot

      DP=team pays any amount above the salary cap.

      Will continue to lose good role players to Liga MX but not stars (Gio Dos Santos).

    • let me guess, Omar makes something like $436,250 + $500,000?

      LA Galaxy buys down Omar’s cap hit this year, then voila! core player rules instated in the offseason, allowing the signing of another DP with a total budget limit of $1 million, so LA can keep Omar next year too. So basically a fudging of the salary cap for this year to enable John of the Saints to join the Galaxy.

      Just call this one the “Omar” rule.

      MLS should be called GREAM – Galaxy Rules Everything Around Me, give them the money, dollar dollar bill y’all…

      • …actually Omar makes about $1.25 mil so this alone isn’t going to get LA down to the $435K they need to. They’d have to trade for almost half the Targeted Allocation Funds to lower him down.
        Or can regular old allocation also be used to pay down a DP?

      • Simple, LA uses Allocation and Targeted Allocation to buy Omar down.

        And then “the” MLS puts LA on double secret probation.

      • Almost, the new “Galaxy allocation rule 1″ allow the allocation money, about 100k per team, be aggregated over several years. This means that the LA Galaxy could aggregate.several years into one year. This would buy down OG’s salary to about 750k, other allocation money” another 100k, salary savings from departed Ishisaki another 200k, and you have the salary down to around 400-450k, and taking him off the DP list.

        Of course, the “second year” the Galaxy will have to come up with another 100k, to offset the 100k they “borrowed” under the first allocation.

        But I’m sure this will lead to the “Galaxy Allocation Rule #2” which will allow another 100k per team, etc, etc.

        And, of course, as the MLS paid for the transfer fee of Bradley and Dempsey, they’ll pay for Dos Santos approx $6-7 mil fee for the Galaxy.

      • There was a small article in the LA Times the other day announcing that Ishizaki is going back to Sweden. I’m assuming they will be getting money for him and will not have his salary on the books. Maybe they have found a way to use that toward getting Omar’s salary below the level required.

      • I don’t disagree, but tell me the this…. I look at the current list of DP’s, and I see many teams that could use the exact same strategy to free up an additional slot currently. Why don’t they? The Galaxy is not the only team who could benefit from this rule….

        At some point, there is a certain truth that is getting ignored…. many middle market teams do not want high-priced DP’s. Would RSL/SKC/COL take Dos Santos even if they were offered first dibs? Dubious.

        If anything, the smaller teams are the beneficiaries of all these over-structured rules. They are the reason that teams like RSL and SKC still win championships. Remove all the rules and go “cap free”, and you will really see the NY/LA/SEA of the world go nuts.

        If the league really wanted to make things easy on the Galaxy, they’d be removing rules, not adding them.

        That’s one perspective… not even sure I totally agree with what I just said, but the fact is there are other team owners in this league, and they are accepting, if not promoting these rules same as LAG. What gives?

      • It would just be easier if they called this the LA Rule, instead of the Targeted Allocation Money something, something….

      • Would this be LA Rule 1? LA Rule 1a? LA Rule 1b?

        We’d lose track of which LA rule we’re making up pretty quickly.

    • Hey, at least LA is pushing the boundaries. If it weren’t for their initiative to win championships, who knows where our league would be today. I am all for new rules that allow caps to be raised, and better players to enter our league.

      Also, LA is announcing that their academy is now an accredited high school – much like the set up in Philly.

    • Lol. Nonsense rules by MLS. Like always!!
      MLS controls all the teams! Wake up PPL!!
      Do you need Daddy tell you what to do?? Lol


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