Major League Soccer adds a new roster rule. But what does it mean for the LA Galaxy?’
THE RULE:
It just wouldn’t be a Tuesday if MLS didn’t have a new acronym for fans to learn. Today’s acronym is TAM, which stands for Targeted Allocation Money. Ostensibly, TAM is a roster mechanism to facilitate player investment. Taylor Twellmen described it as a $10 million injection into the pool of resources devoted to player salaries, which is true, but that $10 million investment is amortized over five years, so one could also think of it as MLS allocating each club $100,000 per year for five years, or, since MLS has made clear that the entire $500,000 can be spent to sign a player immediately, one could just conclude that MLS is giving each club $500,000.
“Major League Soccer is putting ten million into the player pool….”
-Taylor Twellman, Interview, Dan Thomas, ESPNFC.Com
The one catch is that if a club does not use its annual $100,000 allocation by the end of the following season, it loses it. For example, if the Philadelphia Union does not invest or trade $100,000 of its $500,000 in TAM by the end of the 2016 season, its total TAM will still drop to $400,000 at the beginning of the 2017 season. This caveat was obviously introduced to incentivize frugal clubs to spend the money or trade it to a club that will spend it, instead of holding onto the money as certain clubs are wont to do (ahem New England, Colorado, Philadelphia…).
Also of note is that TAM cannot be combined with your regular, run of the mill, Allocation Money. That’s right, you can’t mix the TAM with the AM! So don’t even think of trying to pay down a salary with the combination of those two acronyms. TAMAM isn’t happening.
The reason why MLS is adding another silly spending rule to our lexicon as opposed to simply adding a fourth DP slot is that MLS believes this latest mechanism will focus clubs on recruiting players valued between ½ million and 1 million dollars and/or open up DP slots currently being used by players whose salaries fall in the vicinity of this range so that these slots can be used on more expensive players. A number of current DP players fall within this salary range: Diego Valeri, DaMarcus Beasley, Maurice Edu, Matt Besler, Fanendo Adi, Chris Wondolowski, etc.
MLS believes this latest mechanism will focus clubs on recruiting players valued between ½ million and 1 million dollars…
Now who on the LA Galaxy roster looks ripe for TAM-ing? Omar Gonzalez is the obvious choice. According to the MLS Player Salaries list released by the player’s union in September of 2014, Omar’s base salary is $1,000,000 and he receives guaranteed compensation of $1,250,000. The annual average guaranteed compensation number includes not only a player’s salary but also all signing bonuses, marketing bonuses, performance bonuses, and guaranteed bonuses annualized over the term of the player’s contract, including option years. But let’s assume that bonuses aren’t included for the purposes of ensuring a player’s salary falls within the cap.
The July 29, 2015, All-Star Game marks the midseason point for the MLS 2015 Season. If Giovani Dos Santos was to sign with the LA Galaxy on August 1, 2015, as a DP, then Bruce Arena would have to figure out a way to pay down Omar’s salary starting August 1, 2015, since the most an MLS club can pay a non-Designated Player is $436,250.
…since the most an MLS club can pay a non-Designated Player is $436,250
However, since we’re already halfway through the season, the prorated amount remaining on Omar’s salary is $500,000 ($1,000,000 ÷ 2), and the prorated amount that can be attributed to the salary cap is $218,125 ($436,250 ÷ 2). Which means that if Bruce wants to keep Omar on the LA Galaxy’s books, he will need to use $281,875 of the TAM to pay down Omar’s salary this year ($500,000 – $218,125 = $281,875). [This assumes that Bruce is required to prorate the amount chargeable under the cap for Omar’s salary, as opposed to paying Omar $436,250 all under the cap and then only having to pay down $63,750 on his salary this year.]
Now perhaps the same question occurred to you that occurred to me. Hey, that’s totally cool if we have Steven Gerrard, Robbie Keane, Giovani Dos Santos and Omar Gonzalez with the LA Galaxy this year – we’ll rule in 2015! But since each MLS club is only allocated $500,000 total TAM money, and we’re using $281,875 of that $500,000 to pay down Omar’s salary for the second half of 2015, how will we be able to keep Omar with the LA Galaxy in future seasons?
Well, I can think of six possibilities.
THE POSSIBILITIES:
(1) Omar Leaves the Galaxy. The most likely scenario is the one that makes me the saddest. In August of 2013, Omar Gonzalez signed a three year contract with the LA Galaxy, which means Omar’s current contract is set to expire on or about August of 2016 (Unless of course, his contract is good through the entire 2016 season). The TAM money is almost enough to pay down Omar’s salary for the duration of his contract – which could mean that Omar will leave the LA Galaxy in late 2016. It’s hard to imagine that European clubs wouldn’t have some interest in the big guy, though losing him would be a huge setback for the Galaxy.
(2) Other Clubs Trade Their TAM to the LA Galaxy. MLS made clear that TAM is tradeable, i.e., a club that is disinclined to bring in a player from overseas that costs between $500,000 and $1,000,000, can still make use of its TAM by trading its TAM to a club that want to do so. What, you may ask, does the LA Galaxy have to trade? To me the obvious answer is players. The LA Galaxy has far more depth than most MLS teams and boasts one of, if not the best academy in MLS, and the best coaching staff for developing young players. If the LA Galaxy continues to develop great Homegrown Players like Gyasi Zardes, Jose Villareal, and Bradford Jamieson IV, then it only makes sense that other players will be traded to open up roster slots for the youngsters. After all, Marcelo Sarvas was traded to the Colorado Rapids in exchange for an allocation ranking jump and allocation money prior to the start of the 2015 season. There are plenty of squad players on the LA Galaxy who would be starters on other MLS teams and I can imagine a number of MLS clubs offering their TAM to the Galaxy in exchange for current LA Galaxy players. Trading TAM is an attractive option for clubs who want to improve the quality of their team, but would prefer to add a player who costs $250,000 instead of $750,000.
(3) MLS Allocates More TAM to Clubs. The third scenario is that, if the TAM mechanism yields moderate success at achieving its goal of bringing in more quality players to the league, MLS may simply allocate more TAM money to the clubs, and Bruce can just continue to pay down Omar’s salary for the foreseeable future.
(4) MLS Increases Maximum Salary for Non-DPs. The fourth scenario is that MLS increases the maximum salary that can be paid to non-Designated Players.
(5) MLS Adds a Fourth DP Slot. If MLS adds a fourth DP slot next year, then Omar can be the LA Galaxy’s fourth DP. Though it might be hard to take four cap charges of $436,250 and still build a roster within the salary cap, there is no greater master of the art of MLS salary-capology than Bruce Arena.
(6) The LA Galaxy Rule the World. The final, somewhat implausible scenario is that Bruce is banking on the LA Galaxy winning the CONCACAF Champion’s league every year for the foreseeable future, and therefore expects to fall ass-backwards into a pile of allocation money on a regular basis.
So what do you think? Should the LA Galaxy “TAM” Omar Gonzalez?