Obtaining allocation money
Allocation money given to teams for eight reasons:
- Annual allocation money for each team ($200,000 general allocation money, $100,000 targeted allocation money, and $1,200,000 additional targeted allocation money in 2017)
- Failure to qualify for the MLS Cup Playoffs ($200,000 general allocation money per team)
- The transfer of a team’s player to another club outside of MLS (up to $650,000 general allocation money per transfer)
- Qualification for the CONCACAF Champions League ($100,000 general allocation money per team)
- Advancement to Knockout Stage of CONCACAF Champions League ($200,000 general allocation money to be split between all advanced teams)
- Expansion teams in their first season
- Losing a player in the Expansion Draft
- Third Designated Player charge distribution
General allocation money can be used in several ways:
- Reduce the amount that a non-Designated Player costs against the salary cap down to the league minimum salary ($65,000 in 2017).
- Reduce the amount that a Designated Player costs against the salary cap down to $150,000.
- Sign players new to MLS.
- Re-sign an existing MLS player.
- Off-set acquisition cost (loan and transfer fees).
- In connection with the extension of a player's contract for the second year provided the player was new to MLS in the immediately prior year.
- Trade it to another team.
Targeted allocation money can be used in several ways:
- Sign a new player to MLS provided he is earning more than the maximum salary budget charge ($480,625 in 2017) up to $1,000,000.
- Re-sign an existing MLS player provided he is earning more than the maximum salary budget charge ($480,625 in 2017) up to $1,000,000.
- Convert a Designated Player to a non-Designated Player by buying down his salary budget charge to below the maximum salary budget charge provided the club then signs a new Designated Player at an investment equal to or greater than the player he is replacing.
- Sign new homegrown players to their first MLS contract using up to $200,000 of targeted allocation money.
- Trade it to another team.
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.