The use of Targeted Allocation Money, which was implemented in 2015, is destined to grow.
On Friday, MLS announced an extension of the mechanism for the 2018 and 2019 seasons as well as a
new category of capital: Discretionary TAM.
The current program by which teams can spend up to $1.2 million per season to lower the salary-budget charge of a player making more the
Designated Player threshold will continue for the next two seasons.
It can now be used on salaries of up to $1.5 million per year. The previous limit was $1 million. Teams can use their
allotment of TAM for 2019 in 2018 as long as the total expenditure stays within the stipulated limits.
The league has also introduced Discretionary TAM. It can be used as regular TAM and
there's a lot more of it -- $2.8 million per team per year -- but unlike all other forms of allocation money, Discretionary TAM cannot be used in trades.
Many teams have used significant
amounts of General Allocation and TAM in trades to upgrade their rosters. This option will continue, but Discretionary TAM requires teams to use large sums directly on their rosters, and as such
should encourage teams to spend more to both sign new players and keep ones they already have.