MLS's new Targeted Allocation Money rule, explained

MLS has announced a new fund of allocation money — "Targeted Allocation Money" —consisting of $100,000 per year for the next five years for all MLS clubs, available to those clubs starting today with the opening of the transfer window.

What's Targeted Allocation Money?

In short, Targeted Allocation Money is a league-funded effort to enhance MLS rosters without overthrowing the existing salary cap structure which has served the league's interests well. It's $100,000 per year over five years that can be used all at once or year-by-year.

What can you do with it?

Targeted Allocation Money, like general Allocation Money, can be used to sign or re-sign existing players, but it's dissimilar in that it can only be used to sign or re-sign players making more than the maximum salary budget charge, but who aren't designated players. This new fund can also be traded.

Teams will have to use it, though — if they don't use all of their allotment in a single year, either by trading it or actually using it, they'll have to use the remaining portion the next year.

What can't you do with it?

Teams can't expend both general allocation and targeted allocation on a single player in a single season, and it can't be used to buy down designated players below the charge. But it does affect existing designated players — they can be converted under the rule.

How will it effect existing designated players?

In terms of Real Salt Lake, while initial indications were that someone like Kyle Beckerman's salary budget charge could be bought down, this rule would seem to indicate that, because he's a designated player, his charge couldn't be brought down to a non-designated player level.

However, despite the wording of that rule, targeted allocation money can be used to "convert" a Designated Player to a non-Designated Player by — and I'll quote here — "buying down, on a prorated basis, his salary budget charge to at or below the maximum salary budget charge." If a team does do that, they'll be required to sign a new designated player "at an investment equal to or greater than the player he is replacing."

So, for instance, if a player was making $500,000 and was a designated player, their charge could be brought down below the maximum charge — but the team doing it would have to use targeted allocation that was equal to or greater than that excess charge of the player's contract, prorated. It's unclear whether that would be over the length of the contract, or if it would be on a year-by-year basis.

In our example, if that player was on a three-year contract, the team would have to spend $204,000 of its targeted allocation money, bringing forward at least $104,000 from upcoming years.

What effect will it have on rosters?

Targeted allocation money, the press release says, cannot be used in combination with general allocation money when signing or re-signing a player — so, in effect, the fund becomes specifically for either bringing in or retaining players who would, in effect, make maybe $100,000 more than the maximum salary budget charge of $436,250.

So this could mean for teams they either sign more high-level designated players by converting their existing DPs just over the mark to below the line, or they could sign more players who are just over the mark themselves.

It could either be a leveling factor or something more outrageous — a way, perhaps, to bring in three players who might have been more in the original vision of the "Beckham rule."

What did we expect?

While some indications from various sources covering the league were that the announcement today would be a "core player rule," it takes the form of more of the same for Major League Soccer. Rather than a new designation, this is a new fund of salary cap currency.

Some had said this would function as a "fourth designated player" spot, but that's only true for teams whose existing designated players could be converted to non-designated players. Any team whose DPs were already at a high level could, in essence, use it to boost the 25-man sub-roster, which, I must emphasize, is not a term from the rules, but something I'm using as a descriptor.