Understanding Targeted Allocation Money and Sporting KC

With the league’s recent announcement that another $400,000 per club of Targeted Allocation Money (TAM) would be injected into Major League Soccer (MLS) for 2017, it seems like a good time to explain what the heck TAM is and how it will impact Sporting Kansas City.

A History Lesson

Targeted Allocation Money or TAM, was invented for the 2015 MLS season. The league agreed to add $500,000 per team, between 2015 and 2019. Teams can choose to use it or lose it over that time. The rule basically was invented so that the Los Angeles Galaxy could sign Giovani Dos Santos.

In 2016 the league doubled down on TAM by adding $800,000 per team in both the 2016 and 2017 season. This week’s announcement adds another $400,000 to 2017, bringing the total to $1.2 million for next season.

TAM, What is it Good For?

Targeted Allocation Money isn’t just extra money that is available beyond the salary cap, it can only be used for specific players (for a fantastic understanding of the salary cap, read Eric’s piece from last week). There are two ways that TAM can be spent.

If a team wants to sign a player who’s contract would be above the league maximum ($480,625 for 2017) they can do one of two things. They can either buy down an existing Designated Player’s salary to below the max and immediately sign a new player above the previous DP’s salary or the new player they sign can have their salary bought down below the max. Teams can actually buy a player down to count as little as $150,000 against the cap.

(Edit: The TAM rules changes since the initial announcement and that is outlined here.) Additionally, something new that came in the expansion of TAM, is the ability to outright sign a player who is between the max MLS salary charge ($480,625 for 2017) and $1 million. TAM can also be traded, which could be helpful. The unused portions from 2016 roll over to 2017, but expire after that (barring a change of rules).

How are Sporting KC Impacted?

First, we need to understand that SKC are already using TAM along with General Allocation Money (GAM), though we don’t know who has received what. Sporting KC already have three Designated Players: Graham Zusi, Roger Espinoza and Diego Rubio (a young DP).

They also have five players making over the league maximum: Zusi, Espinoza, Dom Dwyer, Benny Feilhaber and Matt Besler. That means Besler, Dwyer and Feilhaber have all had their cap charge bought down under the league maximum. If Sporting want to add another player (like rumored winger Gerso Fernades), they would either have to buy that player down or buy down someone like Espinoza or Zusi. It’s unclear if Rubio can be bought down as he’s a young DP and his salary is only $200,000, but an unknown transfer fee was paid for him.

Who is TAM Really Helping?

My immediate thought is this is to help teams like the LA Galaxy, and it may very well be to help them. Though, it would seem to help teams with Designated Players that aren’t paid outrageous salaries. Teams like Sporting KC, who have DP’s that don’t even make a million dollars.

With the new way that TAM can be used, to simply sign a player between the max and $1 million, there could be a lot more mid-tier guys between the fourth and seventh highest paid player on each team that should be better than they previously were.

In the end, it would appear there is enough TAM for Sporting KC to sign not one, but two new Designated Players this offseason, or simply add some TAM level players. Peter Vermes hates to “overpay” for players, but if the money has to be spent this year, he should at least be buying one and maybe trading some of that money to a team that needs more for a buy down.