Orlando City recently acquired $400k in targeted allocation money (TAM) from the LA Galaxy in exchange the No. 2 allocation spot.
The level of play in MLS has improved tenfold in its 24-year run as North America’s premier soccer league. With 24 clubs in total (three in Canada) and another four set to debut by 2022, Major League Soccer is no longer a retirement league for Europe’s past elite.
While we’ve been fortunate enough to witness the likes of David Villa, Wayne Rooney, and Zlatan Ibrahimovic towards the tail ends of their careers; these three men, in particular, are still capable of heroic performances on a weekly basis.
Then there’s the exciting young talent that MLS has nurtured and allowed to take their game to the next level across the pond, notably in Germany’s Bundesliga.
Tyler Adams has excelled with RB Leipzig since his January transfer from the New York Red Bulls — and Alphonso Davies has shown intermittent magic with Bavarian giants Bayern Munich, since leaving Vancouver.
Naturally, there have been plenty of other homegrown stars to succeed in Europe; Clint Dempsey, Tim Howard, Michael Bradley, Landon Donovan —just to name a few. So why is it that MLS still conducts itself wildly different than the world’s most elite leagues?
I suppose the answer is because MLS has to. The league began play in 1996 with 10 clubs, housed in mostly empty NFL stadiums and lost millions of dollars ($250M in its first five years), forcing two clubs to close up shop by 2002. Chivas USA disbanded following the 2014 season.
What is TAM and how does it affect DP’s?
In an effort to remain a tangible business entity capable of turning a profit, MLS adopted unique offerings to control costs such as having players sign their contracts with the league itself; each club being allotted three Designated Players (DP) slots whose salaries can exceed the cap ($4.035M in 2018) and of course, Targeted Allocation Money.
Here’s where the finances of it all get a bit tricky. You see, a DPs salary only counts for $480,625 against the salary cap (for players above the age of 23), yet certain DPs such as David Beckham, Kaka, and Thierry Henry have earned 180 times above the league minimum.
Players between the ages 21-23 count for $200k against the cap, while DPs 20 and younger count for $150k.
The most recent data suggests that the average salary for MLS players stands at $373,094, which is lower than England’s second-tier EFL Championship.
Introduced in 2015, TAM can be used to buy down the salaries of high-profile players such as Zlatan, Carlos Vela, and Bastian Schweinsteiger.
Despite commanding millions per season, the DPs salary is essentially prorated. Call it a competitive advantage.
Each of the 24 MLS clubs received $1.2M in TAM prior to the start of the 2019 saeson, plus an additional $2.8M optional discretionary TAM.
Orlando City loves them some ‘TAM’
For a rebuilding team like Orlando City, that is still looking to make the playoffs for the first time since entering the league in 2015, acquiring TAM is a worthwhile strategy.
In February, OC signed 32-year-old four-time Premier League Champion Nani on a three year DP contract.
Though TAM must be used within four transfer windows following its acquisition, Orlando City merely needs to let the league know how they intend to use it but not actually utilize it according to league rules. Talk about a waste of resources!
Should Orlando City struggle to stay in the playoff race by the time the summer transfer window opens (July 9), expect that newly acquired TAM to be saved until 2020 to better the club.
For those wondering how much Orlando City or any other MLS club for that matter, have in available TAM, well, you’re out of luck. As Paul Tenorio of The Athletic explains, MLS refuses to disclose this information so that players and teams are not impacted by the allure of excess TAM.
“MLS does not disclose the amount of GAM or TAM held by any one team. It would be an incredibly useful tool that would completely change how we talk about MLS teams, offseason needs, in-league trades and roster building. It’s why discussions around MLB, NFL, NHL and NBA teams are far more advanced in this sphere. Just take a glance at the data available on sites like Spotrac for other professional leagues. MLS is far behind those leagues in sharing information.”
As for the allocation spot Orlando City relinquished, teams use allocation to select U.S. National Team players, superb U.S. Youth Team players, or former MLS players returning to the league from non-MLS clubs that once left for more than $500k. Talk about stipulations.