General Allocation Money (GAM) is money that is available to a club in addition to its salary budget. Each MLS club receives an annual allotment of GAM. In 2016, that allotment was $150,000.
Clubs also receive additional GAM in the following cases:
- Failure to qualify for the MLS Cup Playoffs
- Transfer of a club’s player to another club outside of MLS
- Qualification for the CONCACAF Champions League
Additionally, MLS will also provide all clubs that do not have a third Designated Player an equal amount of GAM from the funds collected by MLS for the purchase of the third DP spots. All teams receive extra amounts of GAM in any year that the league expands, and all teams are compensated if they lose a player in the Expansion Draft. New expansion clubs receive a separate amount of GAM for their inaugural season.
Like Targeted Allocation Money (TAM), GAM can be used to “buy down” a player’s salary cap hit, including buying a salary charge below the Designated Player threshold of $480,625. For example, a team can “buy down” a player earning $500,000 to a budget charge of $300,000 using $200,000 of GAM. GAM and TAM may not be used in combination when signing or re-signing a player, or when buying down the budget charge of a Designated Player.
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 offset 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.
Additionally, a club cannot use GAM to reduce more than 50 percent of a player’s salary cap hit. This restriction does not apply where GAM is being used on a loan or transfer fee. A club may reduce 100 percent of a loan or transfer fee.