MLS Announces Targeted Allocation Money Rule

This offseason, after a contentious labor dispute that nearly resulted in a lockout or a strike, MLS committed to increasing transparency within roster mechanisms and operations. This resulted in a streamlining of the allocation process as well as the elimination of the weighted lottery and blind draws.

Now, MLS has announced another new caveat to roster construction: Targeted Allocation Money (TAM). They've laid out the entire rule on the rules and regulations site.

It would appear that MLS' new strategy is to be literally transparent; let everyone see what's going on, because no one will have any idea what it means.

TAM will be granted to each team in addition to regular old allocation money, in a five-year allotment of $500,000. The caveat to TAM, however, is that it may only be used sign new players or re-existing players who make salaries above the maximum salary budget charge, which in 2015 is $436,250. In other words, this money is used to buy down contracts to keep them from taking up a Designated Player slot.

The concept is straightforward, but the mechanics are tricky. Each team is awarded $500,000 over a five-year period, at a rate of $100,000 per year. However, they can accelerate as much of that $500k forward as they'd like and use it all at once one year, or in chunks smaller or bigger than $100k over a period of years. The only requirement is that they use a year's worth of TAM ($100k) by the end of the following season, be it on a player or in trade.

So over the course of five years, each team must have used or traded a minimum of $500k in TAM, at a minimum of $100k per year until they run out.

Also, clubs who use this money to bring an existing DP down below the DP threshold and remove the tag must then turn around and sign a new DP of equal or greater investment immediately. That, and TAM cannot be combined with general allocation money on the same player in the same season.

It's going to be interesting to see how this shakes out for the league as a whole. Ostensibly, this is a way to keep your key veterans - players who are probably worth more than the max salary budget but maybe aren't worth losing the Designated Player slot - happy and within the organization. For the New England Revolution, this might include a Jose Goncalves, or even a Lee Nguyen if he ends up getting paid like he hopes.

The forced use provision, combined with the ability to trade TAM, has the potential to either force constructive and interesting roster activity for each team...or force all of the funds to be concentrated in the hands of the Haves of MLS, who can then use it to buy down expensive salaries and field progressively more-stacked teams.

Or maybe everyone is misinterpreting the rule. We won't know until teams start experimenting with it, and you can expect that to happen pretty soon.