clock menu more-arrow no yes mobile

Filed under:

Allocation money explained

Ernst Tanner has been stockpiling allocation money this off-season, but what does that mean?

MLS: Colorado Rapids at Philadelphia Union Derik Hamilton-USA TODAY Sports

With the 2020 Philadelphia Union schedule released Thursday afternoon, excitement for the upcoming season is extremely high.

Hoping to build off a 2019 campaign that saw the Union win their first playoff game, Ernst Tanner now has several roster spots to fill after the offseason trades of Auston Trusty to Colorado and Fafa Picault to Dallas.

Tanner now has a nice chunk of allocation money available and the decision not to retain Marco Fabian relieved the salary cap and opened a designated player (DP) slot. Now if you are asking yourself, what is allocation money, designated player slots and how much do the Union have available, then you’ve come to the right spot. I will hopefully bring some clarity to a subject that has most MLS fans confused.

First, I will start off with the Designated Player Rule, which was designed to get around the salary cap for up to three players. DP slots are how clubs can sign marquee players, such as Zlatan Ibrahimović, and not use all their salary cap.

The current DP rule is split into age brackets:

  • DPs over the age of 24 will carry the maximum salary charge ($530,000) if signed before the league year. If signed during the secondary transfer window, then the budget charge will be $265,000
  • DPs between 21-23 will carry a budget charge of $200,000
  • DPs age 20 and younger will carry a budget charge of $150,000

Currently, Alejandro Bedoya is the only Union player who falls into this category, so be on the lookout for Tanner to splash some cash on a fancy signing or two this offseason.

Now on to the fun stuff… Allocation Money (aka ‘Garber Bucks’)

Allocation Money comes in two forms: General and Targeted. Allocation money is money available to each club in addition to its salary cap, per MLS. Similar to the DP rule, TAM and GAM are ways to sign players to contracts which are competitive worldwide, yet stay below the salary cap.

General Allocation Money aka GAM: GAM can be used in multiple ways. It is often used to reduce a non-DP player’s salary down to the league minimum, or to reduce the cap hit of a DP player below the $480,625 threshold, which would open a DP slot. In addition, to the $150,000 given annually, per, MLS teams get additional GAM in the following cases.

  • Failure to qualify for the MLS Cup Playoffs
  • Transfer of a club’s player to another club outside of MLS
  • Qualification for the CONCACAF Champions League

An example of the Union using GAM: The recent trade of Auston Trusty to Colorado in exchange for $300,000 in GAM for 2020 and $300,000 in GAM for 2021.

Targeted Allocation Money aka TAM: TAM is very similar to GAM in that it is money allotted outside of the salary cap in order to reduce various players salary cap hits. However, the difference between GAM and TAM is that TAM must be used for players that make more than the maximum budget charge ($504,375) in annual salary, with the ceiling set at $1.5 million per year. However, per MLS rules, “If Targeted Allocation Money 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.”

An example of the Union using TAM: in 2018, the Union bought down David Accam’s salary to free up a DP slot when the club signed Bořek Dočkal to a DP contract.