Major League Soccer today announced that each MLS club will receive $100,000 per year for the next five years ($500,000 total) in additional funds to invest in their roster outside of the player salary budget. These funds, referred to as Targeted Allocation Money, are in accordance with the new Collective Bargaining Agreement that was concluded prior to the start of the 2015 season and are available to the clubs today, July 8, 2015, concurrent with the opening of the Secondary Transfer Window.
These funds will be in addition to the Allocation Money that has been previously made available to clubs.
Similar to general Allocation Money, Targeted Allocation Money may be used to sign new or re-sign existing players. In addition, Targeted Allocation Money may be traded.
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Unlike general Allocation Money, which may be used to sign players earning any amount, Targeted Allocation Money may only be used to sign or re-sign players who earn more than the maximum salary budget charge (but who are not Designated Players). In 2015, the maximum salary budget charge amount is $436,250.
Importantly, unlike Designated Players for which a club is responsible for any payments above the maximum salary budget charge, all clubs will be provided the same amount of Targeted Allocation Money through the League budget. As a result, all clubs will have the same opportunity to benefit from these new funds.
MLS clubs may bring forward a portion or all of their allotted Targeted Allocation Money, up to $500,000, to be used in a single season on up to three players at a time. For example, if a club wishes to sign a player at or above the maximum salary budget charge this season, that club may use up to $500,000 of their Targeted Allocation Money this year to acquire him.
Additionally, going forward clubs may use a portion or all of their allotted Targeted Allocation Money to convert a Designated Player to a non-Designated Player by buying down, on a prorated basis, his salary budget charge to at or below the maximum salary budget charge. If Targeted Allocation Money is used to free up a Designated Player slot, the club must simultaneously sign a new Designated Player at an investment equal to or greater than the player he is replacing.
Targeted Allocation Money and general Allocation Money may not be used in combination when signing or re-signing a player, or when buying down the budget charge of a Designated Player. Either Targeted Allocation Money or general Allocation Money may be used on a player in a single season, not both.
While MLS clubs are not required to use their full $100,000 each season, they are required to use the remaining amount during the following year. For example, if a club does not use its $100,000 allotment in 2015, that club must use or trade at least that $100,000 of Targeted Allocation Money in 2016.