Editor’s note: In this blog, we will attempt to shine a little bit of light onto the murky waters of Major League Soccer’s designated player/allocation money rules, which seem to only make sense to MLS execs, if even them. If anyone sees some inconsistencies in this report, feel free to chime in.
Whenever a new team joins Major League Soccer, the league has the team conduct an expansion draft, where the team can choose from players left ‘unprotected’ by their clubs. Each team is allowed to protect 11 players, while everyone else on the roster who isn’t a Generation Adidas player (essentially a youth player) will be available to be chosen in the draft. After each player is picked, the team they are picked from is allowed to protect one additional player. This year, since there were two teams drafting, it left teams with, in theory, a harder job of hanging onto their prized assets. Anyway, after the draft was conducted, a flurry of activity ensued, with both Vancouver and Portland trading players for draft picks in January’s “SuperDraft” (I apologize for the random capitalization, but blame the MLS), other players, or in some cases, allocation money.
Which is the point of this article.
Before I delve into it further, it should be noted that there has been some criticism for not being more forthcoming when it comes to allocation – i.e.: where it comes from, who gets it, why they get it, how much they get, etc… Some have suggested that teams in bigger markets get a larger share of the pie than your Salt Lakes and Kansas Citys of the world. Is this true? Only the Galaxy, Red Bulls and teams of those ilk and the MLS know. We won’t engage in that speculation.
So here is our best stab at how allocation money works: Allocation money is money given to clubs in basically three main circumstances: When the team has performed poorly (A typical American sports way of trying to level the playing field for fans), when players leave teams to play in another league, or when an expansion team joins the league. This money is then used to acquire new players, or, in theory, to help “buy down” the cost of adding new players to the team, primarily through the designated player rule, which I’ll attempt to explain right now. Current MLS rules allow each team to have two “designated players” – that is, two players whose salary exceeds current the current MLS salary cap of $2.55 million – while only charging the team a relatively negligible amount of $335,000, which is paid by the league. This enables teams to sign two players for more than the amount of $335,000 (i.e. David Beckham, who makes $5,500,000 a season) and then pay the remainder of their salary without it adding up against the cap. In addition, teams can pay a luxury tax of $250,000 to add a third. As far as I can understand, teams are no longer allowed to trade their designated player slots for money.
The thing that is confusing about this is, since the league makes no effort to explain the amount of allocation money or how they deem teams are worth of it, it’s impossible to judge how it’s awarded or how much is awarded for certain things. Allocation money could then be very effective in allowing teams to add multiple designated players, while then having most of the cap hits taken away by using their allocation money to cover the purchases, at least partially. This would then allow them to use more money to build their roster without exceeding the salary cap. So, at least in theory, if a team has a lot of allocation money, which no one knows if they do or not, since the league isn’t open about this sort of thing, they could use most of their designated player cap money to pay for the salaries of other professionals who might not be quite DP quality (or name, in some cases) but will help make the team stronger. Meanwhile, a team with less allocation money would have to spend more money against the cap if they wanted to bring in a designated player, thus making the rest of the team weaker, in theory. (Thanks to our friends at Major League Soccer Talk for helping sort this out for us, by the way).
In the case of this year’s expansion draft, the Timbers traded their first pick, Dax McCarty, to DC United along with allocation money in exchange for defender Rodney Wallace and a 4th round pick in the SuperDraft. They then traded 4th pick Anthony Wallace back to the team they drafted him from, Colorado, in exchange for allocation money, and then they sent midfielder Arturo Alvarez (their 10th pick) to Real Salt Lake for a second round pick. They also received an international player slot from the Galaxy, allowing them to now have nine foreign players on their roster, instead of the usual eight, in exchange for allocation money.
As far as the Whitecaps go, they traded forward O’Brian White to Seattle for allocation money, and fellow expansion picks Alan Gordon and Alejandro Moreno were both traded as well, for a foreign player slot and allocation money, respectively.
Where does this leave the two new teams? Well, no one really knows. Portland picked up seven new players in the draft, and Vancouver picked up six. You can probably expect a lot more activity in the days leading up to the draft, as well as more talk about allocation money.
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