MLS announced this past Friday that the 23 clubs will continue to receive $1.2 million in Targeted Allocation Money for the 2018 and 2019 seasons. More importantly, the league also announced that each team will have the flexibility to spend an additional $2.8 million in TAM, on a discretionary basis funded by the team, per year in both 2018 and 2019.
That last line will have massive affects on the way your team is constructed for the next couple of seasons.
As an explainer as to why this will be, you should first go and watch Paul Tenorio's periscope from Friday afternoon. Paul does an incredible job explaining all the different ways teams will be able to utilize all of the discretionary TAM.
Let’s talk TAM. I’m here to answer all your questions about the new MLS rules. https://t.co/Z8h5ClS7lx— Paul Tenorio (@PaulTenorio) December 8, 2017
The $4 million in total TAM will likely increase to $5.2 million in 2018, with most teams expected to push their $1.2 million in mandatory TAM from 2019 into 2018. It will also allow teams to have way more flexibility in terms of their ability to navigate their salary budgets. You should have the roster rules handy while reading the explainer below.
Having three Designated Players on your roster, with each carrying a budget charge of $480,626, takes up a 37.5 percent of a team's total space under the salary budget. That DP charge drops significantly if the player is under 23 years old -- but the point stands that DPs hinder teams from signing other quality players onto their senior rosters. That DP charge on the budget is especially troublesome if a player is not making much more than $480,626.
Now, that problem should go away. Teams will have the ability to buy down almost any player making less than $1.5 million. Instead of a player making $1,100,000 taking up $480,626 of the budget, there is more than enough money for a team to buy that player down to whatever figure they wanted to.
Taking a player who makes $1,100,000 and buying them down to a $150,000 budget charge frees up $330,626 in salary budget. That kind of money is more than enough to acquire another starting-caliber player. With the ability to use up to $5.2 million in TAM next season, we could see teams acquire four or five of these types of players.
Teams can of course still to choose to use all three DP spots, but it wouldn't be shocking to see many teams choose to not do so in 2018 and 2019. With the budget space DPs take up, teams can acquire players in the $500,000 to $1,500,000 range and buy them down using all that TAM. Instead of having five players making more than the DP budget charge on their rosters, you may see eight or nine players like this going forward.
It will be up to the owners and GMs of every team to figure out the best course of action with this extra money.
“What it is about is having diversity of strategy,” Commissioner Don Garber said during the State of the League address on Friday afternoon. “Something I’ve said before and something I’ve known for a long time is the biggest accomplishment that this league has really achieved is the expansion of our ownership group, not just in numbers of owners, but in the diversity of owners…. And each bring different strategy in terms of how they want to spend their money.
“As MLS was managing most of that strategic end of the business, thanks to all of you becoming more transparent and pushing down a lot of the discretion in terms of how teams spend money, now a team has more of a choice (of how to spend).”