A Ros(t)e(r) Rule By Any Other Name

Grayson

For those of us who have been following MLS since its inception (2019, or thereabouts), maybe no joke has gotten more stale than someone referring to “GAM, TAM, BAM, Thank you MAM” or making some other snide, unoriginal remark about the MLS roster rules. Yes, they are unnecessarily complex, and that complexity can be alienating to new or casual fans. There is also a built-in lack of transparency that can make it difficult for “dedicated” (i.e., nerd) fans to track team roster budgets and available salary cap resources. Multiple websites, for example, have trade calculators for the NBA that help fans conjure up potential deals while including restrictions to ensure that those hypothetical transactions are at least cap compliant – this is impossible in MLS, because a player’s actual Salary Budget Charge (explained below) is not public, and neither is the amount of “cap space” (used as a catch-all term here) available to each team.

But think about it like this. A classic trope in film and television is the quiet weirdo who, when you get to know them, is actually more fascinating and enchanting than anyone had assumed. In fan fiction, this character might be called a Mary Sue. Or think of this monologue from Paul Giamatti in the film Sideways, about his obsession with Pinot. “Only somebody who really takes the time to understand Pinot’s potential can then coax it into its fullest expression. Then, I mean, oh its flavors, they’re just the most haunting and brilliant and thrilling and subtle[.]” This idea, of making a worthy investment in something difficult to discover, is the basis for some of the most enduring love stories of our time.

In this piece, I’m going to help you get to know some of those tricky MLS roster rules and then, hopefully, fall in love with them.

Or if not love them, maybe just friends with benefits?

(Before we dig in, just one quick caveat. This is an intro-level discussion, so some very specific intricacies might be papered over or simplified. The goal here is to make someone conversational in the language, but not a poet.)

So, what’s the salary cap?

Oh boy, we’re already getting a little tricky. The simple answer here is that, for the 2024 season, the “Team Salary Budget” (this is the term MLS uses for salary cap) is $5,470,000. This means that the combined “Salary Budget Charge” (a term MLS uses for, essentially, “cap hit”) for each rostered player cannot exceed $5,470,000. The “Maximum Salary Budget Charge” (not exactly “max salary,” but analogous) for an individual player in 2024 is $683,750. (Only the “senior roster” players count toward the Salary Budget. More on that below.)

A player’s Salary Budget Charge is calculated not just by base salary, but also by including all compensation guaranteed to the player (including housing or car allowances and things like marketing bonuses) and any acquisition costs (a loan or transfer fee). MLS determines the total value of all of these items over the guaranteed term of the player’s contract, and then divides that by the guaranteed years to come to an annualized number. For example, a player on a three-year contract making $500,000 a year, with no other relevant compensation, who was acquired for $1.5 million would have an annual Salary Budget Charge of $1 million.

The obvious question here is, how can this player both have a Salary Budget Charge above the Maximum Salary Budget Charge and take up nearly 20 percent of the total Team Salary Budget?

The answer is that these numbers are only starting points. Teams have some ability to exceed them, but that requires the use of one or more of MLS “roster mechanisms” (a catch-all term for all of the things people find annoying but, when you get to know them, are actually quite nice and cool and interesting).

OK, what are all the roster mechanisms?

Well, let’s take things a bit slow and start with, what I think, is the simplest and best-known of the MLS roster mechanisms, the Designated Player.

With the Designated Player (“DP”), MLS teams have the ability to designate up to three players whose salaries, transfer fees, and other compensation are entirely unrestricted, and those players will hit the Salary Budget at only the Maximum Salary Budget Charge of $683,750.

For FC Cincinnati, these players are Luciano Acosta, Obinna Nwobodo, and Aaron Boupendza. Boupendza’s transfer fee alone, for example, exceeds the FC’s entire Team Salary Budget, but his Salary Budget Charge is only $683,750. Note that the Salary Budget Charge for qualifying for DP status is judged against the initial guaranteed term of the player’s contract, even if the player then signs a second deal or has an option picked up. After that initial guaranteed term, the player’s transfer fee is no longer included, so it is possible for some players to no longer need to be DPs after their first contract or at the onset of their option years.

If one of the Designated Players counts as a Young Designated Player (“YDP”) (age 23 or below during the entire season), then his Salary Budget Charge will be even lower: $200,000 for players aged between 21-23, and $150,000 for players 20 or younger. Player age is determined by, essentially, what age that player will turn during the calendar year, so a player who turns 21 in October will be deemed 21 for the entire season, and a player who turns 24 in even November or December is ineligible to be a Young Designated Player entirely.

Technically, any player whose Salary Budget Charge is above the Maximum Salary Budget Charge can be a Designated Player, including the example above of a player whose annual Salary Budget Charge is $1 million. But, as explained below, that might not be the best use of the roster mechanisms.

There’s more mechanisms?

You best believe there’s more mechanisms. You’re in one.

Next, we’ll hit another mechanism that I think is pretty straightforward, the U22 Initiative. Similarly to Designated Players, MLS teams can sign a certain number of “U22 Players” for an unrestricted transfer fee that will not count against the Salary Budget. A catch, however, is that a U22 Player’s compensation cannot exceed the Maximum Salary Budget Charge (that approximately 680k number above). If that criteria is met, then the U22 Player will hit the Salary Budget at a low number: $200,000 for players aged 21-22, and $150,000 for players 20 or younger.

Every team can sign at least one U22 Player. Teams can sign up to three U22 Players if they have: (1) only two DPs, (2) at least one YDP, or (3) three DPs, with at least one of the DPs with a Salary Budget Charge of less than $1,683,750 (this is what’s called the “Max TAM” number, which will be explained below).

Currently, the FC has three senior DPs whose Budget Charges are above “Max TAM,” so it is limited to one U22 Player. Right now, that player is Marco Angulo. Other U22 Players the FC has had have included Alvaro Barreal, Isaac Atanga, and Gustavo Vallecilla (what we call in the business a “mixed bag”).

I know you said you’d explain Max TAM later but can you explain it now?

Nope.

Next, let’s talk about General Allocation Money, or “GAM.” GAM is money made available by MLS to each team. We know that, under the Collective Bargaining Agreement (“CBA”) with the players’ union, every team will get at least $2,585,000 in GAM in 2024. However, teams can get more GAM for certain reasons (missing the playoffs, qualifying for Champions League, losing a player in one of various offseason drafts, being an expansion team, etc.), and teams also can trade GAM between each other.

The league does not disclose exactly how much GAM each team has. Although the CBA describes circumstances when additional GAM will be made available, the league retains a lot of discretion in deciding the actual amounts. And while MLS trades are typically reported publicly, there is no trade tracker anywhere that shows how much GAM has been traded and between which teams, so finding that information requires a lot of legwork.

Teams can also get more GAM by selling players outside of the league. There is a sliding scale, but essentially a team can convert up to $1,157,625 of the net transfer fee (meaning after the team recoups fees paid to acquire the player) of a non-DP to GAM. In the past, no amount of the sale of a DP could be converted to GAM, but a new rule for 2024 allows teams to receive GAM for selling a DP whose Budget Charge is below Max TAM. This means that teams that sign cheaper DPs can get more GAM from sales than teams that make more ambitious signings.

Teams can use General Allocation Money to reduce a player’s Salary Budget Charge, which essentially buys more salary cap space. GAM can also be used to “buy down” a player’s Salary Budget below the Maximum Salary Budget. For example, for the player above with the $1,000,000 Salary Budget Charge, his team can use $500,000 in GAM to reduce his Budget Charge to $500,000, which is below the Maximum Budget Charge.

“Buying down” a player is also a way to avoid using a DP roster spot on that player. An MLS team, for example, might prefer to “buy down” a player with allocation money and then use the DP spot on a more expensive (and hopefully better) player. For the FC, a player like Yuya Kubo is technically eligible to be named a DP, but by buying him down the FC can have all of Obi, Lucho, and Boupendza on the roster. Obviously, a team’s ability to “buy down” a player is limited to that team’s available allocation money.

So that’s GAM, and I’m guessing TAM is a whole other thing?

Yes. “TAM” stands for Targeted Allocation Money, and this is part of what’s called a team’s “discretionary” money. “Discretionary” money comes from a team’s own pockets, rather than from MLS. This is the money that the teams use to acquire and pay DPs, U22s, and so-called TAM players. (I would also argue that a team’s spending on its coaching staff, GM, analytics team, and other staff roles should be considered in the discretionary spending, as those expenditures don’t hit the Salary Budget. A great coach or GM is like another “DP.”)

Although each team pays its own TAM, MLS still limits how much each team can spend. For 2024, the total TAM available per team is $2.4 million. Unlike GAM, TAM cannot be traded.

TAM is limited to use on players above the Maximum Salary Budget Charge. And TAM cannot be used on players whose Budget Charges are more than $1 million above the Maximum Salary Budget Charge – this is how we get that “Max TAM” number, by adding $1 million to the Maximum Salary Budget Charge. Any player whose Salary Budget Charge is above Max TAM has to be a DP or U22, with no exceptions.

In addition, under the CBA, GAM and TAM cannot be “commingled,” meaning that a team cannot use both GAM and TAM on the same player.

Is that it?

Not really. There’s a thing called a Special Discovery Player, which you don’t really hear about these days. If the roster rules in general are that quiet, nerdy person who turns out to be incredible once you get to know them, the Special Discovery Player is the stock nerd character who you genuinely want to keep away from you – think Liz Lemon in high school.

The Special Discovery Player rule is somewhat of a relic of the pre-TAM era, which is why it starts off with a mostly false statement: “In general, the total amount of the acquisition cost of a player is charged against the Salary Budget in the year in which it is paid.” But we already know, from how the Salary Budget Charge is calculated, that this isn’t true for most players for whom a transfer fee is paid! The Special Discovery Player rule then says that “a club can amortize the total amount of acquisition costs (up to $500,000) over the term of the player’s contract, including Option years, or over the term of the first and second contract[.]” Again, most players’ transfer fees are already “amortized” over the term of their contract by virtue of how the Salary Budget Charge is calculated in the first place (all guaranteed amounts payable plus acquisition costs divided by the guaranteed term of the contract).

The Wikipedia article about the 2014 MLS season indicates that the rule was standardized that year to allow teams to amortize a player’s transfer fee to avoid making him a designated player, which is interesting timing because TAM was added the next year.

The only way I can make heads or tails of this rule is that it applies in the rare instance where a team pays a transfer fee for a player who has a relatively low salary. An extremely scientific search on Twitter shows a lot of people being unable to explain the rule and it looks like no player has been publicly announced by a team as a “Special Discovery Player” signing since January 2017, Columbus Crew’s Mohammed Abu. Abu made $165,000 that year, so if we assume his transfer fee was the maximum of $500,000, he would have been above the 2017 Maximum Salary Budget Charge of about $480,000. As teams had a lot less allocation money in 2017, maybe there was more of a need for ways to avoid using it.

If you’ll indulge me, though, (and if you’re still reading this you’ve already shown you will) I do wonder how this rule applies in the case of Isaiah Foster. Foster is on a minimum salary, that would ordinarily allow him to be carried on the supplemental roster. But the FC had to pay a $150,000 transfer fee to Colorado Springs Switchbacks for his rights, which made him a senior roster player last year. If the FC took that entire transfer fee against its salary budget last season (as the Special Discovery Player rule seems to allow you to do), then Foster might not require a senior roster spot in 2024. But I am just musing here.

Wait, what do you mean supplemental roster and senior roster?

This one’s pretty easy to understand. Only senior roster players count against the Salary Budget. Teams have to carry at least 18 players on their senior roster but can have up to 20. There are also 10 supplemental roster spots, which are set aside for players making minimum salary (like Ian Murphy), draft picks signed to Generation Adidas contracts (like Joey Akpunonu), and Homegrown Players (like Stiven Jimenez).

That was a lot of words, can you sum up in less words?

Sure?

Teams have basically a $5.5 million Salary Budget, and players cannot have a Salary Budget Charge higher than $683,750, which includes transfer fees.

MLS teams have to make 18-20 players fit this Salary Budget.

Teams can exceed the Salary Budget and max salaries, but they have to use MLS roster mechanisms to do so.

First, there is about $5 million in allocation money, between GAM and TAM, to play with.

Second, teams can have up to three DPs.

Third, teams can have up to three U22s.

And that’s (basically) it.