Major League Soccer announced today that the league will be investing an additional $37 million in player compensation over the next two years -- the league's largest expenditure on players since the Designated Player initiative. Each team will receive $2 million in off-budget money (money that doesn't count against the salary cap) which will include $800,000 of Targeted Allocation Money (TAM) and $125,000 on Homegrown Player signings for the 2016 and 2017 seasons.
"By injecting an additional $37 million into the system, our clubs will be able to strengthen the depth of their rosters by signing more high-quality players," MLS Deputy Commissioner Mark Abbott said in a league statement. "We saw immediate dividends this past season with the initial investment in Targeted Allocation Money, and our owners believe that additional spending -- especially for players who will impact the middle of our rosters -- will make MLS even more entertaining and compelling."
TAM can be used to buy down the cap hit of players above the maximum salary cap hit of $457,500. For Orlando City, that means buying down the contracts of their designated players (Kaká, Carlos Rivas, Bryan Rochez) to open DP spots for new, high profile players.
Last year, the Lions didn't use any TAM so the club now has a minimum of $900,000 to spend on top-end talent this coming season.
The $125,000 of Homegrown money will be useful for Orlando City, which has invested greatly in its academy over the past few years and is now starting to see the fruits of that labor. Earlier this off-season, the club signed goalkeeper Mason Stajduhar to a Homegrown contract and are expected soon to sign midfielder Raul Aguilera to a Homegrown deal.
"Our academies are developing more first-team players every year, and the additional investment will provide more flexibility to our clubs to sign top young players," Todd Durbin, Executive Vice President for Players and Competition, said in a statement. "We have seen former academy players like Gyasi Zardes, Bill Hamid and Wil Trapp become leaders on their clubs, and we expect many more academy players of their caliber to sign with MLS clubs in the coming years."
Here's a rundown of how this new injection of TAM can be utilized according to a release by the league:
- TAM can be used to sign new players or re-sign current players that earn between $457,500 and $1 million;
- TAM can be used to buy down a player contract to free up a Designated Player slot. If that happens, the club must simultaneously sign a new Designated Player at an investment equal or greater to than the player he is replacing;
- Teams are not permitted to combine TAM and general allocation money on a player. Either TAM or general allocation money may be used on a player in a single season, not both;
- TAM money can be traded by clubs;
- The minimum budget charge for a player signing that uses TAM funds is $150,000; Any part of the $800,000 in TAM funds that go unused in 2016 will carry over to 2017;
- Teams are allowed to commit, but not use or disburse, 2017 TAM funds toward a 2016 player contract;
- Any of the $1.6 million in TAM funds per team that go unused by the end of the 2017 summer transfer window will revert back to the league.