All the Details of the New CBA Between MLS and MLSPA

It wasn’t that long ago that the 2021 MLS season looked like it was in jeopardy. The owners had threatened to lock out the players unless their terms were met. Well, they basically were. MLS and the MLS Players Association came to an agreement that will prevent a work stoppage (for another year at least). The season will go on (albeit a little delayed), but what came out of the deal?

This CBA is Loooong

The original Collective Bargaining Agreement (CBA) was agreed to before the 2020 season. It was set to run through the 2024 season. However, during the negotiations to bring MLS is Back to fruition in the summer of 2020, the deal was extended by a year. Now, two more years have been added on. The deal runs through the 2027 season (what the owners wanted) and the salary levels stay essentially the same from 2020 through 2022. That’s basically an eight year deal when it was originally five.

What Else Changed?

No pay cuts are the biggest “get” for the players. In addition, they get all their bonuses and in 2026 and 2027 free agency loosens up slightly with players needing to be just 24-years-old with four years MLS experience (instead of five). Additionally, the salary budget climbs 7.5 percent from 2025 to 2026 and 10 percent from 2026 to 2027. There are also small changes to minimum salaries. Nothing compared to getting to negotiate a whole new CBA after the 2025 season (if past CBA negotiations are any indication).

Another gain is around potential salary increases for free agents.

“The new rules also stipulate that in the 2026 and 2027 seasons only, free agents making the maximum salary budget charge or less can sign a contract with another club with an initial salary of the greater of $25,000 above the maximum salary budget charge, or 20% above the player’s prior salary. For players making between the maximum salary budget charge and the maximum targeted allocation money (TAM) amount, the player could earn 20% above the prior salary up to $500,000 above the maximum salary budget charge and 15% of such salary from $500,000 above the maximum salary up to the maximum TAM amount.”

The players gave back a little too, reducing their share of media right gains after 2023. 25 percent of the gains (above $100 million) from the new TV deal starting in 2023 were supposed to go to the salary budget. Instead, only 12.5 percent will for 2023 and 2024, with it not climbing to 25 percent until 2025.

New MLS Salary Budget

MLS doesn’t have a salary cap, instead they have a budget. That budget is basically unchanged from 2020 with minor tweaks in the coming years. The gains that were supposed to start in 2021, now won’t start until 2023. Here is the full layout for the next seven years, keeping in mind that the “available roster spend” doesn’t account for Designated Players or U-22 Initiative signings (outside of their budget charge, which doesn’t include their transfer fees).

New Minimum/Maximum Budget Charges

As with the delays in the salary budget, so too have the salary increases been delayed. Though the reserve minimum and senior minimum tick up slightly in 2022, unlike the max budget charge.

Maximum Buy Down Salary

As has been the case previously, the maximum amount a player can make and still have their contract bought down is $1,000,000 above the max budget charge. So for 2021, anyone making between $612,500 and $1,612,500 can have allocation money used to buy down their budget charge.

Johnny Russell is someone who possible fits into this mold and thus can likely have his contract turned from a Designated Player to just a rostered player, thus freeing up a DP slot. As seen above, all Targeted Allocation Money (TAM) is now discretionary and declines yearly while General Allocation Money (GAM) increases yearly (be sure to check out the roster rules to understand how this money can be spent).

Who Won?

The owners. Hands down. They had all the leverage and they used it. They wanted two more years and got them with some light concessions. Now the CBA will have essentially been eight years, which is really long. Plus, the next negotiation is pushed to more than a year after the 2026 World Cup that will be in North America.

Owners have effectively controlled costs for a long time, though it will probably slow the progress towards the goal of making MLS a Top Five league in the world. Owners can alter that by spending large quantities on DPs and U-22 Initiative players.

Who Lost?

The players “lost” in the sense that long-term salary growth has really gone down. Some pundits are still not claiming they’ve really “lost” because they kept 100 percent of their pay and seven years from now most of them won’t be in the league to be impacted. That said, five years from now a significantly larger percentage would still be in the league and the math isn’t that simple.

There are players right now being impacted. They had their options declined or they are free agents (the biggest, best and youngest class in history) and they aren’t getting signed. It’s because the salary budget is static from 2020 through 2022. That could have played a role in Sporting KC shedding large salaries of Gerso Fernandes, Matt Besler, Winston Reid and Felipe Gutierrez (in addition to not re-signing Erik Hurtado). The impacts aren’t as obvious with no salary cuts in the CBA, but they are still there.

We May be Here Again in a Year

The league can invoke force majeure again in 2021 and start this process over again. Let’s just leave it with that thought.