Follow Major League Soccer for any amount of time and you’ll hear about the salary cap. Many sports leagues impose salary caps, but what are they? Shall we start with a basic dictionary definition? Dictionary.com, what say you? “Salary cap: an upper limit to the combined salary of an entire team.” That’s easy enough, but MLS throws in some curves. Most numbers come from the MLS Player’s Union CBA. Let’s look at some specifics.
Team Salary Budget
This is the official MLS term for the salary cap. In 2017 that number is $3,845,000 ($3.66M in 2016; $4.035M in 2018).
The Senior Roster salary aggregate counts toward the cap. The Senior Roster is made up of slots 1-20 on the roster. Slots 19 and 20 are not required to be filled, but the team still takes a minimum salary budget hit whether there’s a player there no not. That’s an average of $192,250 per Senior Roster player.
The Senior Minimum Salary is $65,000. The maximum budget hit is $480,625 (12.5% of the total cap). Any player making above this counts as a Designated Player (see Weston Jensen’s article on the Beckham Rule for more on DPs).
Slots 21-24 are the Supplemental Roster and do not count toward the Team Salary Budget. They are restricted to players making minimum salaries, Homegrown Players, Generation Adidas Players, or MLS SuperDraft players.
Slots 25-28 are the Reserve Roster and must be filled with Homegrown Players or players making the Reserve Minimum Salary of $53,000.
So that’s it? Nope. There’s allocation money? Yep, different types of money.
General Allocation Money
GAM is money that is does not count toward the Team Salary Budget and is used apart from that budget. Teams can trade this money, use it to sign new players, or use it to buy a player’s salary down to below the DP threshold. Teams get an allotment of GAM every year. They get extra when expansion teams come into the league, for losing players in the expansion draft, for failing to make the playoffs, for selling players outside the league, and for getting into the CONCACAF Champion’s League tournament.
Targeted Allocation Money
TAM is even more money that does not count against the Team Salary Budget. TAM, like GAM, can be traded to other clubs. It is designed to be used to buy down the salaries of players to below the DP threshold, removing their DP status and allowing teams to sign new players to DP contracts. Teams received $800K in TAM in both 2016 and 2017. They also get $100K in TAM per year over five years which started in 2015. It’s an incentive and a tool to sign high profile players.
In short. The budget for players on each team is $3.845M, except it’s not. There are eight player exceptions. There’s also a wad of pretend money that knocks a dent in that, too.