Why RSL traded TAM for GAM, and what it means

Real Salt Lake just executed one of those head-scratching MLS trades: They’ve traded $75,000 of their Targeted Allocation Money to Chicago Fire, receiving $50,000 in 2020 General Allocation Money.

Let’s take a step back here and break this one down. There’s no other detail you need to get it, but frankly, these can be a little confusing.

What RSL traded

$75,000 of their Targeted Allocation Money.

Why did they do this?

I dunno. I have my hypotheses.

What did they receive?

$50,000 in General Allocation Money to be used in the 2020 season.

So... money for money?

I mean, sort of. But there are two salient facts here.

First, Targeted Allocation Money expires. If the club has no intended use for it, trading it for something else — even just money for next year — is valuable.

Second, General Allocation Money is more flexible. TAM can only be used on players above (and below) a certain threshold.

So RSL wasn’t going to use it this year?

I mean, maybe. We actually have no way of knowing, but that’s my assumption. It could also mean that RSL has more plans for next year and how it can be used.

We do know this is “mandatory” TAM, which is what the league gives every club. Clubs may also use “discretionary” TAM, but they can’t trade it.

So all we really know from this is that the club wasn’t going to use all of their allocation money. They still might use a bunch of it. Or they might not.

So, what do you know?

RSL traded $75,000 in TAM for $50,000 in GAM.

And?

Well, this does help us get a sense of the value of TAM.

Here’s a trade from May.

Minnesota United acquire $225,000 in GAM from the LA Galaxy in exchange for $325,000 in TAM.

In that case, LA Galaxy’s GAM was worth 1.44-repeating units of TAM.

In our case, the GAM we received was actually worth 1.5 units of TAM.

So you know what? Let’s celebrate this. We just landed a better deal than LA Galaxy and Minnesota United. And in doing so, we landed a deal that’s exactly as good as most of the TAM-for-GAM deals in the league. So... there’s that.

Did you write all this just to justify writing an article about it?

I mean, kind of. But it’s also worth sometimes highlighting the utter absurdity of Major League Soccer.