This offseason, much talk has centered on the war chest of General Allocation Money (GAM) that Mike Jacobs amassed through a series of trades.
This week, Jacobs added to Nashville SC’s allocation money coffers with yet another trade of an international slot. That makes a cool $1.25 million GAM added the past two months just from trading unused international slots. Pair that total with the $1.0 million added through the Alistair Johnston trade, and it is easy to see the treasure trove that Nashville is sitting on.
While all the offseason talk has focused on the growing GAM reserves, Nashville have quietly freed up a significant amount of Targeted Allocation Money (TAM). Jacobs accomplished this mainly with the departures of David Accam and Miguel Nazarit. Combined, not accounting for any loan fee, the pair required $771,000 in allocation money expenditures each year for Nashville to remain salary cap compliant. By shedding their salaries, a gold mine of TAM opened up for Nashville.
Reports confirmed this week that the Coyotes are interested in C.D. Tenerife defender Shaq Moore. While the addition makes sense on the field, a Shaq Moore transfer would also provide another means to spread around Nashville’s TAM budget.
A refresher on Targeted Allocation Money
Targeted Allocation Money (TAM) is one of the two types of allocation money provided to every MLS club. On a macro level, clubs apply allocation money to buy down players’ budget charges to comply with the salary cap. TAM is the more restrictive of the two allocation money types.
MLS introduced TAM in 2015 to increase spending and acquire talented players from outside the league. However, since MLS designed TAM for a particular purpose, there are strings attached to how it can be used.
First, the player’s budget charge must be above the Maximum Salary Budget Charge ($612,500). This high bar means only a select number of players will qualify. Here are a couple of quick examples of players who would be TAM eligible.
|Salary||+||Acquisition fee paid that year||=||Budget Charge|
|Player A||$700,000||+||$0||=||$700,000 (TAM ELIGIBLE)|
|Player B||$400,000||+||$0||=||$400,000 (NOT ELIGIBLE)|
|Player C||$400,000||+||$225,000||=||$625,000 (TAM ELIGIBLE)|
Starting in 2020, the rules governing TAM became even more restrictive. Unlike its budgetary sister, GAM, which is often the principal asset used in intraleague trades, TAM can no longer be traded. It has also become a use-it-or-lose-it asset. You can only roll over unspent TAM for one season.
With the TAM refresher out of the way, let’s turn to Nashville’s current budget.
Nashville’s current TAM spending
**Warning: Most of the incoming figures are estimates. While the MLSPA publishes salary figures annually, it is not transparent about future contract figures. These numbers will assuredly be slightly inaccurate. But they do paint a general picture of Nashville’s budget.**
In 2022, the league provided $2.8 million TAM to each club to spend on its roster. Based on salary information published last year, Nashville only have three TAM-eligible players earning above the Maximum Budget Charge, Walker Zimmerman, Anibal Godoy, and Dax McCarty, outside of the Designated Players who do not require budgetary buy down. Sean Davis may also fit into that group depending on the size of his contract with Nashville SC. By MLS free agency rules, Nashville could have signed Davis to a contract only $25,000 above the Maximum Budget Charge.
One of the wrinkles to using TAM is that clubs can, at maximum, only buy down a player’s budget charge to $150,000. Let’s layout how Nashville’s three TAM-eligible players would be treated under the budget. I have given each player a five percent salary increase from the published 2021 guaranteed compensation figure and rounded to the nearest ten-thousand-dollar mark.
|Player||’22 Estimated Salary||TAM Applied||Budget Charge|
Total TAM applied: $2,151,000
Total TAM applied: $2,638,500
With the maximum amount of TAM applied under MLS rules to its three eligible players, Nashville would still have an estimated $649,000 in TAM available from the initial $2.8 million TAM outlay provided to each club. If Davis’ contract is above the Maximum Budget Charge, Nashville would hold an estimated $161,500 in unspent TAM.
Until Jacobs finds a purpose for the unspent amount, it is a hole in the budget and a wasted resource. Now, Nashville could elect to carry over the unspent TAM to the 2023 season. But the club would likely run into the same budgetary hole of unspent TAM until it acquires another TAM-eligible player.
How Shaq Moore fills Nashville’s TAM hole
So, let’s say Nashville can work out a transfer for Shaq Moore. How would it work under Nashville’s salary budget?
I will take this in reverse from how supporters typically view transfers. Rather than discuss the acquisition fee first, it is essential to establish Moore’s salary. A lot of transfers work this way. Acquiring clubs reach a verbal agreement with the prospective player before finalizing the transfer fee. This order of operations is even more critical in the MLS context. If a player is to remain TAM eligible, the overall budget charge must stay under the TAM ceiling ($1,612,500). So, let’s start with the contract.
According to Football Manager, Moore’s current contract with C.D. Tenerife is worth $583,000 per year. Moore is looking for increased playing time with a transfer to MLS, not necessarily a hefty salary bump. But with rising prices dominating the news, who isn’t looking for a small pay bump? In this hypothetical deal, Nashville signs Moore to a new contract with a 10% pay increase taking him to $640,000 per year. This contract would push Moore just above the Maximum Budget Charge ($612,500) on salary alone.
Salary is just one-half of the budget charge equation. Acquisition costs also factor in
A report from Juanjo Ramos, a local sports journalist in Tenerife, pegs a potential transfer fee for Shaq Moore at €1 million ($1.11 million). For this budgetary exercise, we will assume that is the fee.
If Nashville does not want Moore to take up a DP slot and remain TAM eligible, Nashville would need to structure the transfer to be paid over at least two seasons. This stretching of acquisition costs is necessary to keep the overall budget charge under $1.612,500. With the fee stretched over two years, the potential deal could be announced as a loan, with a relatively high loan fee, and a small purchase option to be paid in 2023.
Let’s see how this works in practice.
|Acquisition / Transfer Fee Allocated:||$950,000|
|Remaining TAM applied:||$649,000|
|New Budget Charge:||$941,000|
|Salary (3% raise):||$659,000|
|Remaining Transfer Fee:||$150,000|
|2023 Budget Charge:||$809,000|
|Remaining TAM Applied:||$649,000|
|New Budget Charge:||$160,000|
By structuring a hypothetical Shaq Moore transfer in this manner, Nashville keep their third DP slot open and finds a use for all of its TAM reserves for the 2022 and 2023 seasons.
With the departure of Alistair Johnston, Moore makes a lot of sense on the field for Nashville. But just as importantly, he makes sense from a budget management perspective as well. Whether it comes in the form of Shaq Moore or another addition, Nashville hold an excess of TAM that needs to be filled.