Understanding MLS part 1 of 4: Allocation Money
one of the things that is baffling to me, and many of you, is the inner rules of MLS. we know why these rules and systems are being used as they are doing all they can to not go the way of NASL. well ok, it isn’t just for that, but you can look at most of the complex inner workings of how this business was set up underneath the ”let’s not do another NASL” umbrella.
but i am not too proud to say that they are F’ing confusing and i know that i am not alone in this opinion. many of them are unlike any other sport, many of them aren’t published (or at least not up to date) and i can say with confidence, that most fans cannot explain them to another fan. for a while, i hung my head down in shame, not able to look another fan in the eye…. what if he asked me what i though of our use of our allocation money in order to secure montero??? what would i say? but then, about a month ago, i sat in a room with Joe Roth and Drew Carey and they too were asking for clarification from Adrian… so, if the owners don’t always know, well, you and i can be forgiven as well.
so let’s take a look at 4 of the most talked about rules and try to break them down… .
oh, and you are in luck, i am not going to be the one explaining.
last week, i was on the goal seattle board, and for the first time, i read a clear, concise and easy to understand description of all the rules around allocation money. it was so easily digestible, that again, i felt silly for not knowing all of it, but then again, maybe this was the first time in the history of the earth that it had been written in such a simple way. anyway, i reached out to the poster of such fine words and asked him if he would write up a few posts for us. he said sure, and hopefully it is as useful and informative to you, as it was for me. btw, he asked us to call him Gilby and he even uses capital letters… so those of you that hate my punctuation, or lack there of, enjoy.
- Part 2 – The new collective bargaining agreement
- Part 3 – How MLS negotiates and signs contracts
- Part 4 – The new home grown player rule
and without further wait…
Part 1 Allocation Money the Abridge version.
By Gilby
In the world of MLS Jargon one word causes more confusion than any other; Allocation. It doesn’t help that MLS uses the word to refer to two separate an unrelated roster rules. The first is the Allocation list which determines the order in which MLS teams can pick returning U.S. National team players. The Second which I’m going to go over today is Allocation Money.
What is Allocation Money?
Allocation Monies are funds that teams can use to exceed the set cap of 2.55 million or to exceed the individual salary maximum. They are provided by the league and paid by the league. Teams can use the allocation funds on one of three ways:
- They can use those funds to pay a onetime transfer fee to acquire a player.
- They can be used to buy down a player’s salary either partially or to pay their whole salary.
- They can be used to buy down a designated players cap hit reducing their impact on the overall salary cap.
There are some caveats Allocation Money cannot be used to reduce the cap hit of an existing contract and in most cases you cannot use Allocation Money to resign an existing player unless approved by the league.
How does a team get Allocation Money?
When you look up the official regulation about how Allocation Money is the dispersed this is what you get:
A club receives allocation money for (1) poor performance during the preceding MLS regular season; (2) the transfer of a player to a club outside of MLS for value; (3) roster purposes due to expansion status; and/or (4) exceptional circumstances as approved by the Competition Committee.
So you can receive allocation dollars if you are a. Bad b. sell a player to a foreign league c. are an expansion franchise or d. any reason the MLS sees fit. The other problem here is that although we know Allocation Money exists MLS does not publish when Allocation Money is granted or how much it is. The only specific amount that is published revolves around the Allocation Funds a team can receive by selling a player. In this case the team typically receives 2/3rd of that fee and up to $650,000 can be used as Allocation Money.
Why is Allocation Money important?
Allocation Money has a number of advantages in addition to being able sign a player over and beyond the cap and salary maximums. Allocation Money can be traded , last year Seattle reportedly gave up a 100k in Allocation Money to acquire Tyrone Marshall. It can also be used to buy down the impact and cost of a Designated Player. In the past a Designated Player would take up $415,000 in cap space almost 20% of a team’s total cap. The new rule has lowered that number to $335,000 and now allows teams to use Allocation Money to buy down that cap hit to $150,000. What this all means is that if you can acquire enough Allocation money you can basically have three Designated Players while taking up same cap space as one player last year.
