Understanding MLS Roster Rules and Their Importance

Now that the Crew have won the 2020 MLS Cup, the attention will turn to what the league’s teams will do to improve for 2021. This will clearly be a much more difficult year to predict the offseason, but in any year MLS’ roster rules can be hard to follow. Most world soccer leagues don’t have a salary cap at all, and MLS’ can be much more complicated than the other American sports with caps. With that in mind, the following is a primer on the main MLS roster rules and how teams can use them to be successful.


Salary Cap


The MLS salary cap for 2020 was set at $4.9M, meaning that was the limit for how much teams could spend on between 18 and 20 players for their senior roster. The maximum for any one player was $612,500. That would be simple enough, but as we’ll see later on this doesn’t always represent a player’s actual salary.


Additional Roster Spots


In addition to the senior roster of up to 20, MLS teams can carry an additional ten players on the roster. Being effective in filling these roles can be vital to a team’s success - relatively cheap depth can be the difference as fixture congestion and injuries occur, while Generation adidas and Homegrown Players can represent the opportunity to position your team well going forward.


Slots 21-24


May be filled with players fitting four categories:

  • Senior Minimum Salary players (making $81,375)

  • Generation adidas Players - a joint program between MLS to develop exceptional collegiate underclassmen and youth national team members. The majority enter the league through the SuperDraft, and remain in this roster spot until they graduate the program.

  • Specific players eligible for the MLS SuperDraft

  • Homegrown Players who earn more than the Senior Minimum Salary (the combined amount earned above $81,375 for these slots or $63,547 for the slots below is limited to $125K per team)


Slots 25-28


May be filled with players fitting two categories, and must be 24 or younger:

  • Reserve Minimum Salary players (making $63,547)

  • Homegrown Players who earn more than the Reserve Minimum Salary


Slots 29-30

  • Homegrown Players who earn more than the Reserve Minimum Salary


Player Designations


To really understand the roster slots and how they can best be used by squads, it’s important to understand some of the designations that players can have under MLS rules.


Homegrown


A player who has been a member of the club’s youth academy for at least one year, and meets MLS’ retention and training requirements. The key advantage here is that these players do not need to go through any of the other player acquisition processes that would risk them going to another team.


Homegrown International


An player who meets the qualifications of a Homegrown player will not count as an international roster slot as long as:


  • The player became a member of an MLS club academy or a Canadian Approved Youth Club before the year they turned 16

  • The player signs his first professional contract with MLS or an MLS club's USL affiliate.


International


For clubs based in the US, an international player is anyone who isn’t either a U.S. citizen, a permanent resident, holder of a status such as refugee or asylum, or a Homegrown International; anyone who fits into those categories is a U.S. Domestic player. The same rules apply for Canadian teams except they can use either U.S. or Canadian domestic players that fit the same requirements; a Canadian team must have at least three Canadian domestic players. Each MLS club is given eight international slots per season, but those slots are tradeable with no particular limit to how many each team can acquire.


While Designated Players get the majority of the focus, the effective management of international slots is one of the more underrated aspects of building an effective MLS team. Teams can’t afford to waste these limited spots, as it puts them at a disadvantage in trade negotiations when other clubs know they need to acquire a slot. In contrast, being able to build a team primarily around domestic players shifts that advantage. Obviously, this is the overall intention of the rule in the first place - encouraging investment by MLS teams in domestic development.


Designated Player


Each MLS club is able to have three Designated players on their roster - those players can be acquired for and paid fees in excess of the maximum salary, with the clubs responsible for those excess funds. Despite that, their salary cap hit will still be limited to the maximum of $612,500. If the player is 24 or younger (determined by year and not date), that charge to the cap will be reduced to $200,000 (and further reduced to $150,000 if the player is 20 or younger); these are referred to as Young Designated Players.


Unlike international slots, Designated Player slots cannot be traded. Additionally, the third slot requires a payment of $150,000 (unless that player is a Young Designated Player). Clearly the limited nature of these slots and investment required makes them some of the most important decisions a club will make - the impact will be examined in more detail below.


Allocation Money


In addition to the Designated Player rule, there are two other options for clubs to reduce the salary cap hit of players - Targeted Allocation Money and General Allocation Money. GAM can be traded, but TAM cannot. Each of these is essential to building high-end depth in a roster, as they provide the opportunity to add more players above the maximum individual salary.


There’s not necessarily a right way to approach that, as it could be used to add a limited number of high-end players or a larger group of players earning just above the maximum hit. The right choice depends on a team’s strategy, current roster, and options available.


GAM


General allocation money can be used by teams applied to the below situations to “buy-down” the salary cap hit of a player:


  • To sign players new to MLS

  • To re-sign an existing MLS player.

  • To off-set loan and transfer fees

  • The extension of a player's contract for the second year if the player was new to MLS in the prior year.

  • To reduce the cap hit of a Designated Player to a minimum of $150,000.

  • To reduce the cap hit of a player whose hit exceeds the maximum salary to a minimum of $150,000.


Each club received $1,525,000 in GAM in 2020, along with extra for situations like missing the playoffs, having a player transfer outside of MLS, or qualifying for the CONCACAF Champions League.


TAM


Each club received $2.8M in Targeted Allocation Money that could be used to:


  • Sign a new player if his salary and acquisition costs are more than the maximum cap hit

  • Re-sign an existing player if he is earning more than the max cap hit

  • Convert a Designated Player to a non-Designated Player by buying down his cap hit. If Targeted Allocation Money is used to free up a Designated Player slot, the club must simultaneously sign a new Designated Player at an investment equal to, or greater than, the player he is replacing.

  • A club can convert a player previously bought down with Targeted Allocation Money into a Designated Player if that club has a free Designated Player slot

  • Up to $200,000 to sign new Homegrown Players to their first MLS contract


The Impact of Designated Players


With Designated Player slots so limited, the impact of effectively using these slots becomes essential. Similar to much of what we see in world soccer, the richest clubs have a distinct advantage here. The lack of a limit in spending on DPs should make the most successful teams those who have invested the most; that’s not always the case as the below figures from 2019 show.

Clearly there needs to be a significant investment in Designated Players, but money alone won’t signify success - the Galaxy are a perfect example of that. Designated Players need to fit within the overall strategy of a club and how they intend to build a squad, and that won’t be the same for each team. Atlanta and LAFC are great examples of how DPs can help bring success, despite each pursuing different strategies.


The key statistic above is $/Point Above Min, representing the money spent on DPs per every point earned above Cincinnati’s last place total. If this was only about spending the most, that amount would stay relatively static. That’s clearly not the case - too many teams are not spending this money wisely with a clear strategy in mind. Again, there is no definitive right strategy here - what should be learned from those who are most successful is the range of strategies available and the importance of exploiting inefficiencies to use the potential investment in the most effective manner possible.


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