In the past few years, Major League Soccer has witnessed significant growth. The renowned US-based soccer league has cemented its place in the beautiful game via unconventional approaches that set it distinct from other recognized championships such as the Premier League, La Liga, and Serie A. But one of the most notable aspects of MLS, which sets it apart from its European counterparts, is its two unique terminologies, GAM and TAM. 

Comprehensively known as General Allocation Money and Targeted Allocation Money, what exactly are these nuances? Before we dive deeper, let’s get familiar with the MLS salary cap.  

What is the MLS salary cap? 

Every MLS season has a predetermined cap on how much capital teams can invest in their rosters, which has two purposes. First, it guarantees that the league’s total spending is in check. Second, it promotes equity by aiming for nearly comparable costs for each squad, contributing to the league’s competitive balance. By using these methods, the MLS has improved the caliber of players joining the league in recent years and efficiently controlled spending. Notably, player pay is divided into two categories: General Allocation Money (GAM) and Guaranteed Spend, which includes the wage budget.

The second category is discretionary spending, which includes Designated Players, Targeted Allocation Money (TAM), and expenditures in the new under-22 player strategy. The base wage cap for the 2024 MLS season is $6.4 million, with an additional $3.09 million coming from GAM and $2.1 million from TAM. Teams must divide their pay money among a minimum of 18 and a maximum of 20 players. But the catch remains how the teams can sign three players whose combined pay and acquisition expenses exceed the maximum individual wage allotment according to the DP rule, which gives them the leeway to sign high-profile players like Lionel Messi and Luis Suarez.

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What is General Allocation Money (GAM)?

General Allocation Money (GAM) means that a player’s budget charge can only be lowered by a maximum of 50%, except for loan or transfer costs, which can be lowered by 100%. Notably, GAM can be applied to any player without any limits. For instance, if a player is making $750,000, a club has the option to employ GAM to reduce 50% of the player’s earnings.

It would leave a lowered salary budget charge of $375,000, below the maximum budget charge. Likewise, a player can receive a bigger paycheck than the maximum salary budget charge without taking up a DP slot. However, the clubs must use all of their GAM because it is non-transferable. Moreover, they should also use their total salary budget. Now, how is GAM distinct from TAM?

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What is Targeted Allocation Money (TAM)?

Targeted Allocation Money (TAM) has played a crucial role in the mass exodus of international stars to the States. Established in 2015, its prime purpose is to allow teams to pursue players whose transfer fees and salaries are grander than the maximum amount allotted to the budget without branding them as DPs. TAM is the extra cash, which is up to the team if they wish to splurge or not. 

Although clubs are not required to use TAM, it gives them the freedom to seek players outside of their assigned DPs. Clubs can use up to $200,000 of available TAM to sign fresh, homegrown players to their first MLS agreements. In addition to signing new players, clubs can use TAM to re-sign existing players who earn more than the maximum allowed and switch DP to non-DP status.

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