Armchair Analyst: Stop calling it a "salary cap," it's a "salary budget"

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Last week my colleague Sam Stejskal wrote this column explaining, in part, the current state of the MLS salary structure. It's a good read, and I suggest you give it a click for the whole rundown, but I want to focus on a few bullet points that explain why what we (and by "we" I mean MLS-following folks from around the country, continent and world) refer to as the "salary cap" is actually better explained as a "salary budget."

Here's the official release from MLS HQ. Below are the three main points from Sam's column that I want to expand upon a little bit:

  • The "salary cap" is $3.845 million in 2017, but that number only applies to roster spots 1-through-20 (of which at least 18 must be filled).
  • The "supplemental" roster is what we call slots 21-through-24, of which the minimum salary is $65,000 per year – money that does not hit the "salary cap." We're already into salary budget territory!
  • The "reserve roster" is for spots 25-through-30, and is only filled with players earning the reserve minimum of $53,000 per year, or Homegrown players earning more than that via the Homegrown subsidy.

(I really suggest you read all of Sam's article to understand why "reserve roster" doesn't really mean "reserves", when a Homegrown stops counting as a Homegrown, and a few other specifics that aren't necessarily germane to the info I'm about to present. Anyway, I'll continue...)

In addition to Sam's information above, we also know that each MLS team has been given $1.2 million of Targeted Allocation Money (TAM) for 2017 (Minnesota and Atlanta somewhat more than that, as they're expansion clubs), and $200,000 in General Allocation Money. And there's also anything leftover from the $1.3 million in TAM provided to each club in previous seasons (the $500,000 granted in 2015 that expires in 2019 and the $800,000 allotted in 2016 for use over four transfer windows).

Teams can also add to or subtract from those numbers via trades – insert gif of Nelson Rodriguez nodding – and there's also extra GAM acquired for missing the playoffs, for making the CCL, when you sell a player to a team outside of MLS, when you have a player taken in the expansion draft, etc., etc., etc. 

We're not going to worry about that last bit, though. We're going to instead focus on the most basic salary budget possible going forward, so for our purposes here it's the $1.2 million of TAM and $200k of GAM in 2017. "Let's calculate all the money each team is given as a base to use as per the rulebook in one calendar year" is the exercise here.

The Homegrown subsidy – which literally every non-Garth Lagerwey front office-type I've talked to calls "The Jordan Morris Money" – is listed in the 2017 roster rules at $125,000.

Now, not every team uses every available roster slot, but as you can see via our roster page here, most are filled up. You can also click through this handy dandy interactive graphic made by Steve Fenn, who you should go follow on Twitter:

The obvious truth is that the vast majority of teams use the vast majority of slots they're given, and most of the ones that are unfilled now will get filled in the next couple of months.

So if you're hypothetical Team X, and you want to carry a full, 30-man roster, but don't want to exceed the salary cap by a single penny (thus no DP spending), what is your total possible outlay? Don't say "It's $3.845 million because that's the salary cap", since it should be pretty clear by now that's just not the case.

Given what we know (and a little of what we suspect), here's what we're looking at for the total, non-DP salary budget for 2017:

  • Salary Cap: $3,845,000
  • Supplemental Roster: $65,000 x 4 = $260,000
  • Reserve Roster: $53,000 x 6 = $318,000
  • Homegrown subsidy: $125,000
  • TAM: $1,200,000
  • GAM: $200,000

Total baseline MLS salary budget per team, 2017: $5,948,000.

Most teams will go over that number, and a few will go under it. Regardless, it's much more accurate than saying "MLS teams have to build within a $3.845 million salary cap." GAM, TAM and the Homegrown initiative have changed MLS drastically over the last three seasons, and the way we talk about how rosters are built has to change with it.