Courtesy of Major League Soccer

LA Galaxy Get “Play Money” from DC United for the Rights to Paul Arriola

The LA Galaxy have received Targeted Allocation Money (TAM) and General Allocation Money (GAM) from DC United as they announce the signing of Paul Arriola – a former Galaxy Academy player.

The total amount in GAM and TAM was indicated as $500,000. With $300,000 of that amount being GAM ($200,000 in 2018 and $100,000 in 2019) and the remainder, $200,000 being TAM in 2018.

That money will NOT have to be used this year – a common misconception about TAM (it does have a time limit but will likely expire years from now) – and will likely allow the Galaxy, along with some expiring contracts, to free up quite a bit of Salary Cap space going into 2018.

Ashley Cole, Jelle Van Damme, and Jermaine Jones could all see their contracts up at seasons end — if Van Damme doesn’t go back to Belgium sooner. The Galaxy could clear more than $1.7 million dollars from their total salary outlay and more than $423,750 in TAM — that’s under the assumption that the Galaxy only pays the minimum amount of TAM to get Van Damme and Jones to the Maximum Salary Budget Charge of $480,625 which probably isn’t true. They probably pay more TAM down to create more cap space.

  • Ashley Cole – $377,625 (Salary Cap Player)
  • Jermaine Jones – $722,500 (TAM Player) $241,875 Above Max
  • Jelle Van Damme – $662,500 (DP/TAM Player) $181,875 Above Max

Add $500,000 in TAM and GAM that was picked up in this deal, plus rumored amounts of TAM that could be added in 2018 or 2019 (up to $2 million), and the Galaxy could be onto something.

As is often the case with Major League Soccer, the rules aren’t always clear and the mechanisms by which the players enter or exit the league aren’t always well known, but in this case, the Galaxy held the right of first refusal after they offered Arriola a legitimate contract offer. Arriola decided instead to head to Tijuana and the Xolos where he played, starting in 2013, and made 83 appearances.

As UCLA Law Professor Steven Bank points out, the Galaxy retained Arriola’s rights because of their contract offer. When he turned them down it gave the club his MLS rights were he ever to return. This all tries to ensure that there aren’t multiple MLS teams creating a bidding war against each other.

While it may not be popular, a team holding the MLS rights to someone like Arriola never got compensated for the training money they sunk into developing him. This is a way for the Galaxy to be more than fairly compensated for a player who developed in their system but spurned a contract with the senior team (likely a Homegrown contract).

But can the Galaxy use any of this money this year? No. But they do have other money they can use if need be.

With Galaxy Head Coach Sigi Schmidt pretty adamant the teams’ hands are tied, this may open some things up for the club down the road.

“There’s a lot of teams out there that have a lot of, whatever that is, all that play money – General allocation, TAM allocation,” Schmid told reporters after training on Thursday, “But we’re not in that financial position – for whatever reason.”

With an additional $500,000 in combined allocation, the question now becomes: should the Galaxy spend the money and how could they do that?

The MLS Secondary transfer window is closed. That means that the Galaxy can’t bring anyone from outside the league in, or do a trade for anyone within the league, that is under contract. But Free Agents don’t have to worry about that. Meaning the club could get someone who isn’t under contract up until the MLS Roster Freeze Deadline (September 15, 2017).

  • The 2017 Roster Freeze Date is September 15, 2017, at which time teams must submit their final 30-man roster that cannot be changed through the day after MLS Cup.

This is how the club brought in Christian Wilhelmsson during their MLS Cup run in 2012. A free agent who was added (signed on September 5, 2012) after the transfer window had closed but contributed on the field for the rest of the season.

If the Galaxy needed to bring in someone, perhaps a replacement for Van Damme, they could technically use his allocation money to do that. The money dealt to the Galaxy today won’t be available until next year.

This is money earmarked for next year. It seems wise for the Galaxy to put this in their pocket to see what the offseason brings. This isn’t a matter of blowing up the team – a topic for another time – but more about return on investment for a team that is currently ninth in the Western Conference and 19th of 22 teams in the league.

Story Updates

8.10.2017; 1:45 p.m. – Added information on Targeted Allocation Money and when it will be available to the Galaxy. All money acquired from this deal is not available until 2018 (2019 for $100K of GAM).