Targeted Allocation Money: What it is and What it Could Mean for Orlando City

Major League Soccer announced Wednesday a new device to help clubs add top tier talent without exceeding the allotted three Designated Player spots on their roster. The tool has been dubbed Targeted Allocation Money, and the league has committed $10 million to it across the league.

Per the league's release, each MLS club will receive $100,000 per year over five years ($500,000 combined) in additional funds to invest in a particular type of player – one who earns more than the maximum salary budget charge of $436,250 but is not considered a DP. These funds are meant to give teams the impetus to not only invest in their roster, but also to invest that money into quality players who command a higher salary than the league maximum.

In theory, a club will invest these funds into a star player or two rather than buying several lower budget (and presumably less talented) players, as the club may opt to do if a higher salary cap were implemented instead of Targeted Allocation Money. See: LA Galaxy and their pursuit of Mexican international star Giovani dos Santos – in addition to their three existing DPs in Robbie Keane, Steven Gerrard and Omar Gonzalez – as an example.

The league already provides its teams with general Allocation Money which, like TAM, can be used to sign new players or re-sign existing players. Unlike general Allocation, though, Targeted Allocation funds can only be used on players who earn more than the league maximum, while not being Designated Players. Targeted Allocation and general Allocation money cannot be used in combination; either can be used on a player in a single season, but not both.

All clubs receive an equal amount of this Targeted Allocation Money, which will encourage continued parity across the league. Clubs aren't required to use all $100,000 in TAM each season, but whatever amount remains unused must be used the following year, either to sign or re-sign a player/players or as part of a trade with another club.

So what could this new mechanism mean for Orlando City?

It means that the Lions could bring in a player of Designated Player caliber without slotting him as a DP, such as Lukasz Gikiewicz or Dom Dwyer, who misses his spiritual home (these are completely hypothetical and for the sake of example only).

OCSC could also use the Targeted Allocation Money to buy down the salary of a current Designated Player to replace him with a new DP. The Lions currently have Kaká, Carlos Rivas and Bryan Róchez filling their three DP slots, but one of them – we’ll say Róchez since he has yet to have an impact in 2015 – could, in theory, be paid down below the maximum salary number and replaced with another Designated Player like Chicharito (were his chances of landing in Orlando not on the decline).

The summer transfer window has only just opened, but the Lions are expected to be active between now and the Aug. 6 deadline, with needs to be filled across the roster. The rule certainly opens up possibilities for Orlando City, and the infusion of $10 million into club budgets from MLS over five years is certainly a good thing for the quality of play around the league.