Obtaining allocation money
Allocation money given to teams for seven reasons:
- Annual allocation money for each team ($150,000 general allocation money, $100,000 targeted allocation money, and $800,000 additional targeted allocation money in 2016)
- Teams that have missed the playoffs the previous seasons
- Expansion teams in their first season
- Transferring a player to a foreign club for value
- Teams playing in the CONCACAF Champions League Group Stages or Knockout Round (with additional money being given for each of those a team is in for a given season)
- Teams can trade in 2 of their 10 "Off-Budget" (non-cap) roster spots for allocation money
- Teams that have yet to purchase a 3rd Designated Player Slot split the money paid by teams getting their 3rd slot as allocation money.
Allocation money can be used in several ways:
- Reduce the amount of money that a non-Designated Player Rule Player costs against the salary cap down to the league minimum salary ($62,500 in 2016).
- Reduce the amount of money that a Designated Player Rule Player costs against the salary cap down from $457,500 to a minimum of $150,000.
- Change a player whose salary would get a Designated Player Rule Slot back into a normal salary slot (by reducing the salary below $457,500).
- Acquire players outside the MLS (using Allocation Money for any part of the salary or trade cost)
- Trade it to another team for any value desired
Whether the allocation is given, and its size is determined by MLS; the details are not disclosed to the general public. Citing this, some in the MLS community[who?] have accused the league of favoring major market teams, particularly the Los Angeles Galaxy, in the use of allocations.
Twice in league history, an allocation received for a lost player was used on the same player upon his return to the league: by the Chicago Fire on Ante Razov and by the New England Revolution on Daniel Hernandez.
Allocation money is not to be confused with the MLS Allocation Order, which is a ranking used to determine which MLS club has first priority to acquire a player who is in MLS allocation list. MLS allocation list contains select U.S. National Team players and players transferred outside of MLS garnering transfer fee of at least $500,000. Along with Allocation Money, Allocation Order rankings can be traded, provided that part of the compensation received in return is another club’s Allocation ranking.