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On Thursday Major League Soccer and the MLS Players Association reached an agreement on a new five-year Collective Bargaining Agreement (CBA). Overall, it looks like a win for the players as they’ve greatly increased their benefits. Some of the highlights include players sharing in media revenues starting in 2023, additional charter flights (16 by 2024 with all playoff games and international games added on top) and greater spending flexibility.
But let’s get a little into the weeds for a few things that really jumped out. The full CBA hasn’t been released yet, but here is what MLS and MLSPA released Thursday.
Third Designated Player Now Potentially Limited*
“The league will have the right to limit the compensation for the third Designated Player to the maximum TAM Salary, unless the player is 23 years old or younger, in which case there will be no limit.”
So the first two DPs are unlimited, but now the third, as was rumored earlier in the offseason, must be 23 or younger to spend freely. Otherwise the new cap is $1,615,500 (for 2020), which is the TAM maximum. Sam Stejskal says the league simply has the power to limit the third DP though and it’s not yet finalized.
Sam goes on to say he believes it’s a bad deal and I have to agree. Let teams spend as they want. Right now, it’s likely that Sporting Kansas City has two DPs that can’t be bought down with TAM or GAM (Alan Pulido and Felipe Gutierrez — though with the bumps in TAM limits, Guti is in a gray area). That would mean, if they wanted to go crazy and spend $20 million on Rodolfo Pizarro, that they couldn’t. Why limit ambition?
Minimum Salary Increases
For 2020 the Senior Minimum salary will increase to $81,375. That’s up from $70,250 in 2019. A bit over a 15% increase. By 2024 that number will increase to $109,200.
For 2020 the Reserve Minimum salary will increase to $63,547. That’s up from $56,250 in 2019. Nearly a 13% increase. By 2024 that number will increase to $85,502.
Max Budget Charge and TAM Limits Bumped Too
This is pretty standard to increase, but the jumps are fairly big from the $530,000 max in 2019. Here are the next five max budget charges.
2020 - $612,500
2021 - $651,250
2022 - $683,750
2023 - $743,750
2024 - $803,125
The TAM/GAM eligible buy down deals will increase too. The base will be the max budget charge and the yearly caps will be $1,000,000 above that number.
2020 - $1,612,500
2021 - $1,651,250
2022 - $1,683,750
2023 - $1,743,750
2024 - $1,803,125
TAM/GAM Changes
Instead of eliminating Targeted Allocation Money (TAM) and General Allocation Money (GAM), the league has gone with some tweaks that should allow more flexibility. Starting in 2020, all mandatory TAM is now converted to GAM. Then all remaining TAM becomes discretionary so teams don’t have to spend it or risk losing it. According to The Athletic, “each club is required to use their entire salary budget and GAM in each year of the agreement.”
MLS also gave a level of insight to their GAM figures that simply weren’t clear before along with the salary budgets over the next five seasons.
MLS Spending Increases
| Year | Salary Budget | General Allocation Money | Discretionary TAM | Available Spend on Roster* |
|---|---|---|---|---|
| Year | Salary Budget | General Allocation Money | Discretionary TAM | Available Spend on Roster* |
| 2020 | $4,900,000 | $1,525,000 | $2,800,000 | $9,225,000 |
| 2021 | $5,210,000 | $1,900,000 | $2,720,000 | $9,830,000 |
| 2022 | $5,470,000 | $2,585,000 | $2,400,000 | $10,455,000 |
| 2023 | $5,950,000 | $2,830,000 | $2,225,000 | $11,005,000 |
| 2024 | $6,425,000 | $3,093,000 | $2,125,000 | $11,643,000 |
*Clubs have the opportunity to exceed these figures with spending on up to three Designated Players and, beginning in 2021, up to three players through the under-22 player initiative (see more details below).
Free Agency is a Lot More Free
Since free agency came into existence after the 2015 season, it has been limited to players with eight years MLS experience who were at least 28. Now the restrictions are moved down to being just 24-years-old and having five years of MLS service. That’s a lot more inline with other major sports league in the United States. Reportedly this will more than double the available free agents. That seems significant but there were only 38 free agents in 2019.
Free Agent Compensation is Still Complicated
Something that existed in the past is being remedied, but it’s not as simple as it should be. Before the new CBA, if you made above the MLS max budget charge ($530,000 in 2019) and became a free agent, you couldn’t sign for anything above the max charge unless you stayed with your existing team. This impacted players like Matt Besler, Roger Espinoza, Benny Feilhaber and Graham Zusi before the 2019 season. Here is the new rule:
“For players making between the maximum salary budget charge and the maximum TAM amount ($1,615,500 for 2020), the player could earn 15% above the prior salary up to $500,000 above the maximum salary budget charge and 12.5% of such salary from $500,000 above the maximum salary up to the maximum TAM amount.”
It gets messier if the player made above the max TAM amount meaning they were a DP. Here is the full breakdown:
- If the player signs as a non-Designated Player, his initial salary may be up to the maximum TAM amount.
- If the player signs as a Designated Player, the player will negotiate compensation level and contract term with MLS;
- The player may re-sign with his prior team at the salary amount and contract term negotiated with MLS;
- If the player was earning from the maximum TAM amount up to $3,000,000, the player may sign with another MLS team as a Designated Player at an amount equal to 10% less than the salary amount negotiated with MLS.
- If the player was earning above $3,000,000, the player may sign with another MLS team as a Designated Player at an amount equal to 15% less than the salary amount negotiated with MLS.
“Under-22” Player Initiative Starts in 2021
Not much is known on this new rule.
“Beginning in 2021, MLS will have the discretion to allow clubs to sign up to three players who are 22 years old or younger with a reduced budget charge.”
There are already rules around getting extra money for off-budget Homegrown players. This would seem to expand these rules to encourage the development of youth players. According to The Athletic, “a source familiar with the negotiations said that the initiative isn’t fully fleshed out yet, and that additional details could be determined in the coming months.”
This new rule has some exciting potential and I could see teams like Atlanta United or Los Angeles Football Club spending a lot on young players to flip to Europe a year or two later.
More Salary/Budget Tidbits
Sam Stejskal and Paul Tenorio do a fantastic Q&A where some people got really into the weeds of all this. It’s worth a read, but a few things stood out.
- Bona fide offers still exist. It’s complicated, but it gives teams control and potentially keeps some players underpaid. Stejskal did say there will be “some changes to what constitutes a bona fide.”
- All TAM that has been previously traded will likely convert to GAM. The only TAM that could be traded in the past is the non-discretionary type and it’s gone.
- In 2020 each team must take eight charter flight legs. They are required. No more. No less. In addition, all CCL and playoff games must be chartered.
- Homegrown territory restrictions haven’t been lifted.
- If the league bumps up discretionary TAM again then they have to bump up GAM by 40% of the TAM increase.
- The Re-Entry and Waiver Drafts are likely to still exist, though the age/experience limits will probably change.