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A wrinkle in TAM

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MLS is raising the cap on Targeted Allocation Money to $4.0 million. There are pros and cons to this for the Colorado Rapids.

MLS: MLS CUP-Commissioner Don Garber State of the League Address Dan Hamilton-USA TODAY Sports

Targeted Allocation Money, known as ‘TAM’ for short, was invented in July 2015 by Major League Soccer. At first, it was a modest contribution from the league office of just $100,000. That pooled money was to be used by individual teams to spend on potential transfers. TAM, from its inception, did not count against a team’s salary cap, and stood alongside its acronymical partner, GAM (General Allocation Money), as a mechanism that allowed teams to spend more freely on players. Both TAM and GAM were also tradable.

MLS expanded the TAM amount for every team to $800,000 in 2016 and $1.2 million in 2017.

TAM and GAM functioned as *actual* cash from the league. When the Colorado Rapids wanted to open up a Designated Player slot in July, 2016, they did so by ‘paying down’ the budget charge of DP Kevin Doyle to $457,500, the full amount allowed for a non-DP player. The $587,500 needed to do that came from MLS. I like to imagine that Don Garber drove a Brinks truck up a driveway in Cherry Hills and handed him a duffel bag filled with cash.

When Major League Soccer announced Friday, December 8, that the league was increasing TAM by $2.8 million, I was overjoyed. More TAM means every team can buy better players. As a league-wide rule with equal funding, it was MLS’ way of both fairly distributing TV revenues in a way that went directly to players. It also made the league capable of competing worldwide for better players, allowing the league as a whole to elevate its quality and grow its way into being, someday, one of the top leagues in the world.

Here’s where I throw in a very large ‘However’.

However, the latest TAM rules had a slight wrinkle to them that took me a full day to digest. Here is the language, directly from the MLS press release:

Following the 2017 MLS season where each club received an allotment of $1.2 million dollars of TAM, all 23 MLS teams will continue to receive $1.2 million of TAM per year in 2018 and 2019. MLS clubs may pull forward and use immediately the $1.2 million of TAM designated for 2019.

MLS clubs also will have the flexibility to spend up to an additional $2.8 million of TAM, on a discretionary basis funded by the team, per year in both 2018 and 2019, which will further enhance the quality of play across the league.

The key phrase in that sentence is “will have the flexibility to spend”. Until Friday, TAM was free money from the league to spend on players, or potentially to trade to other MLS teams for things like draft picks, international slots, or to improve a team’s allocation order. That all changes with the phrase “will have the flexibility to spend”.

MLS still gives every team $1.2 million TAM. But the new $2.8 million in TAM is discretionary spending that each team with have to pony up on their own. Those six words may suddenly open up a chasm between the MLS upper class and working class, between the haves and the have-nots.

Wealthy teams with free-spending owners, like Atlanta United, LA Galaxy, and NYCFC will likely use that money on expensive new players. The thriftier teams in MLS, like Minnesota United, Columbus Crew, and Colorado Rapids, might choose not to spend the extra money.

Spending more money on players does not guarantee success in sport. The LA Galaxy opened up their pocketbooks in 2016 and 2017 for Jermaine Jones, Pele Van Anholt, Jonathan and Giovani Dos Santos, Romain Alessandrini, Ashley Cole, Jelle Van Damme, and Nigel De Jong. They finished last in the Western Conference this year.

Nonetheless, better players tend to cost more money. If some teams are willing to spend, and others try to get by on the cheap, it might create a quality-divide between teams in the league.

It might also be that Rapids Interim GM Padraig Smith will be capable of maneuvering just fine in this brave new world. New available TAM could be bought or swapped for affordable domestic players or draft picks. A smart team might construct their roster by only using league-provided TAM (the $1.2 million) and without using their own out-of-pocket TAM (the $2.8 million “flexibility to spend” amount).

Another detail that might cause Rapids fans to relax a little came from Ives Galarcep:

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Even the small-market teams were excited about the new TAM rules, so clearly many of them either anticipated getting the green light from their owners to loosen their purse strings, or were equally excited about the potential of constructing creative new deals.

The new rules could be a problem for the fiscally-conservative Rapids. Or it could fuel new investment in better players and a lot of Front Office wheeling and dealing resulting in a better football team. We’ll have to wait and see.