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Stejskal: How MLS teams are using discretionary Targeted Allocation Money

Major League Soccer clubs are spending their 2018 Targeted Allocation Money in a way that could give them even more TAM to play with in 2019, several sources explained to MLSsoccer.com early this week.

The league announced in December that, in addition to the $1.2 million of TAM given to each club in 2017, every team would be able to spend up to $2.8 million in discretionary TAM in 2018 and 2019.

As part of the announcement, MLS revealed that teams could pull forward and use in 2018 a portion or all of the $1.2 million in non-discretionary TAM designated for 2019. Conversely, because non-discretionary TAM doesn’t expire for four transfer windows, teams can also hold back on spending it this year and leave it for 2019, instead.

Sources said and a league spokesman confirmed on Friday that discretionary TAM doesn’t have as long of a shelf-life. The new money is a "use-it-or-lose-it" mechanism that expires after just two transfer windows. If discretionary TAM isn’t spent in the year for which it’s designated, it’s gone. There is no rollover.

Because of that, teams that are dipping into the pot are spending discretionary TAM before they use any of their non-discretionary funds. Theoretically, a team could spend all $2.8 million of their discretionary TAM and not use a cent of their remaining, non-discretionary TAM in 2018. They could then rollover the full $1.2 million in non-discretionary TAM to 2019, giving them up to $5.2 million in TAM – $2.4 in non-discretionary, $2.8 in discretionary – next season.

Choosing to spend discretionary TAM before using any non-discretionary TAM does have a drawback: Because discretionary TAM cannot be traded, sources said that teams are not allowed to receive anything in return when trading a player on whom they’re spending discretionary TAM. They can trade said players to other teams, but can’t get anything in return outside of the cap relief that comes from moving him off the roster. The league spokesman confirmed those details, as well.

In most cases, that’s not a problem. TAM players are, for the most part, among the most talented on their teams; clubs usually don’t want to move them.

But in situations where a trade might be beneficial -- for whatever reason -- teams face a stumbling block to moving players on whom they’re spending discretionary TAM. The sources indicated that they’d be reluctant to give up a relatively expensive player to another team just for cap relief, with reasons ranging from the competitive to the PR-oriented.

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