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MLS increases investment in Targeted Allocation Money

More money is being tossed around for DPs and Homegrown players.

Tim Heitman-USA TODAY Sports

For some time, people have been wanting Major League Soccer to add more investment in terms of salaries for players or to increase the salary cap.

While the salary cap is not increasing the investment to allow higher priced players in going to improve. MLS today announced that nearly $37 million will be added to league-wide player compensation during the next two seasons, providing clubs the opportunity to sign more impact players in the middle of the roster and add young Homegrown talent.

Each MLS club will receive an additional $800,000 in Targeted Allocation Money for the 2016 season and an additional $800,000 for the 2017 season. TAM is used by clubs to add depth to their rosters by strategically investing in players that make more than the 2016 maximum budget charge of $457,500 (but who are not Designated Players). FC Dallas used this approach to help sign Ezequiel Cirigliano earlier this year.

The bigger number for FC Dallas could actually be in the increase investment in Homegrown players. An incremental $125,000 per season will be made available to each club to sign Homegrown Players. FC Dallas has made a massive investment over the years in HGPs with the likes of Jesse Gonzalez, Kellyn Acosta, Victor Ulloa and Moises Hernandez all earning large minutes with the club this season.

MLS also revealed additional guidelines for TAM that are worth pointing out:

  • TAM, like general allocation can be traded.
  • The additional TAM must be committed within four transfer windows. As such, the 2016 TAM funds must be applied prior to the conclusion of the 2017 Secondary Transfer Window and the 2017 TAM funds prior to the conclusion of the 2018 Secondary Transfer Window. The use of the initial $500,000 of Targeted Allocation Money, which expires in 2019, will still follow the guidelines and timeline set forth in the CBA.
  • Clubs may use a portion of or all of the available TAM to convert a Designated Player to a non-Designated Player by buying down his salary budget charge to at or below the maximum salary budget charge. If converted during the Secondary Transfer Window, the Designated Player may earn at maximum $1.5 million on a prorated basis. If TAM is used to free up a Designated Player slot, the club must simultaneously sign a new Designated Player at an investment equal to or greater than the player he is replacing.
  • Clubs retain the flexibility to convert players bought down with TAM into Designated Players if they have a free Designated Player slot.
  • TAM and general Allocation Money may not be used in combination when signing or re-signing a player, or when buying down the budget charge of a Designated Player. Either Targeted Allocation Money or general Allocation Money may be used on a player in a single season, not both.
  • A Player must earn more than $457,500 per year (2016 maximum budget charge) to qualify for TAM. The compensation ceiling for such players is set at $1,000,000 per year, unless amounts are applied midseason to an existing Designated Player adjustment to Targeted Allocation. The minimum budget charge for a player compensated with TAM is $150,000.

So that is a ton of information to digest going into a new year. Basically at the end of the day there will be more money to spend on players. The ability for a club like FCD to go out and get a DP-level player and not have them set as a DP is huge as the team builds for their 2016 season.

What do you make of this news? You think FC Dallas will find a smart way to use this new money? Will the investment in HGPs continue to be good for FCD?