General Allocation Money in Major League Soccer
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General Allocation Money in Major League Soccer
Next up in our “missing manual” approach to Major League Soccer management is what they call “General Allocation Money.”
The concept here is actually pretty simple. Major League Soccer has a hard salary cap, one that we defined the other day as $5,470,000. Of course, because this is a competitive sport that brings in quite a bit of money, the owners can’t help themselves — and so we have the exceptions to the salary cap rule.
We went over the famous Beckham Rule a few days ago:
As I mentioned then, it’s kind of strange to have a hard and fast salary cap when you’re just going to make up a bunch of random rules to circumvent it. Then again, this is the world we’ve been given, not the world we’ve chosen.
Well, now we come to General Allocation Money, which is one method MLS teams can use to buy down what would otherwise be a big hit to the salary cap.
Now, this is not “real” money. This is basically fake money on paper used specifically for certain salary cap purposes. It’s kind of like a real life version of in game currency.
This money comes to teams in various ways — some tied to success on the field, some not:
$200,000 for each team that does not make the post season
$1.1 million for an expansion team
$100,000 for each existing team during expansion years
$200,000 for each team every year no matter what
$140,000 for qualifying for the CONCACAF Champions League
A certain amount for transferring or loaning players to clubs outside MLS, for up to $750,000 for each transfer or loan (and the rules are complex)
A certain distribution for having a third Designated Player (which gives you an incentive to have three Designated Players)
$50,000 for every free agent you lose
$50,000 for every player taken from your team in the expansion draft
Basically, if you’ve got a bad team that doesn’t make the postseason and it happens to be an expansion year, you could theoretically see your General Allocation Money go up by huge amounts. I’m talking $1 million or more.
The idea here, of course, is to give teams incentive to spend this money on players that could help the team in the long run. The idea is to use this funding to spend down certain player costs and get back into competition.
Now, keep that in mind as we look at how this can be used:
Sign players whose salary is more than the maximum salary ($683,750 per year in 2024). This basically allows you to buy expensive players without having a huge hit to your salary for salary cap purposes.
Convert a Designated Player to non-Designated Player status. You can buy down his salary to the $683,750 threshold or below. However, the caveat is that you have to then sign a new Designated Player at a price equal to or greater than the guy who is now not Designated.
Sign new homegrown players to their first homegrown contract
Trade money to other teams
Now, you’re probably not going to use it for new homegrown players, since their contracts are small. What the General Allocation Money is best at is letting you pay down the cost of high salary players. It is also quite effective for trading, which is what I recommend most Football Manager players use the money for.
The big question we need to ask is whether all of this actually fixes the problems of the NASL. And we’ll talk more about that tomorrow.