MLS has added yet another term to their already massive dictionary. The latest term is "targeted allocation money" which is somehow different from the traditional allocation money which has been around the league for years now.
The league confirmed on Wednesday the new spending mechanism that had been reported for a number of months. What was previously being referred to as a "Core DP" has been given a different name by league HQ but the underlying purpose of the new mechanism is the same as what was reported last week.
MLS will be providing each club with $100,000 per year for the next five years that will be used for additional investment outside of the existing salary budget. This targeted allocation money will be made available to clubs immediately so that they can use it during the summer transfer window which opened on Wednesday morning.
Like allocation money these new funds will be available for clubs to use to either sign or re-sign players and can also be traded. In that sense it sounds like the new money is almost identical to the previous allocation money but the key difference is that targeted allocation money can only be used on a specific category of player.
That category of player is those hanging out around the lower end of the Designated Player range. Teams can only use this targeted allocation money on players who are above the maximum salary budget charge but are not a designated player. With the maximum charge being $436,250 in 2015 any player making more than that could be paid down to below the DP threshold with these new funds.
It gets a bit more convoluted when MLS throws in the fact that a team can bring forward some or all of their $500,000 to a single year and use it on up to three players. That means that a team could theoretically spend nearly $1 million on a single player in one season and keep them below the DP level using this mechanism. Doing that would leave them without these funds for the rest of the five years though.
A club can also use these funds to free up a Designated Player slot as long as they are going to be signing a new DP at the same time. That is how these funds are going to allow the LA Galaxy to pay down Omar Gonzalez's salary to a low enough figure that they free up a DP slot to go out and acquire Giovani Dos Santos. It is also a part of the mechanism that Toronto FC will not be able to take advantage of since their trio of DP level players are too far above the threshold to be paid down.
What Toronto FC may be able to do with these funds is go out and sign another around the DP level and pay them down. They probably do not have the money to do that though and remain under the salary cap as they would still have to find room for over $400k on their books.
The other option is that TFC might be able to use some of these funds to pay down the salary of either Damien Perquis or Benoit Cheyrou as both are reportedly making above that DP number but have been paid down with allocation funds. The issue there is that TFC would have already used allocation money to pay them down and teams are not allowed to pay down a player with a combination of the two types. That may very well mean that the team is unable to take advantage of the new mechanism in this way as well unless the league allows them recoup their allocation money and use targeted allocation instead.
The last option for TFC could be using these funds as part of a trade. In an ideal World they could find a team that needs to acquire a few extra dollars in targeted allocation and are willing to take on a bit of a bad contract to make it happen. It could be just what TFC needs to complete a deal that allows them to trade for some cap relief that allows them to make moves this summer.
On the whole, this is another mechanism in the MLS rule book that makes things even more convoluted than before. It will certainly benefit some teams (LAG) and may force a few of the smaller budget teams to spend more money (there are provisions to force teams to spend it or trade it) which could improve the quality of the league overall but it is never straight foward with MLS and this is another example of that.