MLS Salary Budget Under CBA 2021

CBA 2021-27 and its effect on Salary Budget for MLS teams.

Collective Bargaining Agreement 2021-27

The new Collective Bargaining Argreement (“CBA”) is finally in place in Major League Soccer. MLS Players ratified amendments to the Collective Bargaining Agreement on February 8, 2021.

Background

Despite having reached agreement on a new Collective Bargaining Agreement prior to the start of the 2020 season, which was subsequently forced into renegotiation in summer 2020, as 2020 drew to a close it became clear that COVID-19 would continue to drastically limit attendance, the major source of revenue for MLS teams. The league thus informed the Players’ Association that it would invoke the force majeure clause that had been agreed to in the summer 2020 renegotiation of the new CBA, a move condemned by the MLSPA. This clause, once invoked, required players and the league to make a “good faith” effors to renegotiate the CBA for a third time in a year.

In this third round of negotiating the new CBA, MLS (the league) is the clear winner.

The new CBA now runs through 2027, a full two years beyond when it was supposed to expire in 2025.

Salary cap, GAM and TAM

The league salary cap will remain at $4.9 million for 2021 and 2022 before slowly increasing to just over $7 million for the 2027 season. General Allocation Money, which can be spent on any player, is set at $1.5 million for 2021 and will slowly increase to just under $4 million for the 2027 season. Targeted Allocation Money, which can only be spent on specific roster acquisitions or player raises, begins 2021 at $2.8 million before slowly decreasing to $2 million in 2027.

2021-2027 MLS Player Compensation

YearSalary BudgetGeneral Allocation MoneyDiscretionary TAM$ Available Spend on Roster*
2021 $4,900,000$1,525,000$2,800,000$9,225,000
2022$4,900,000$1,625,000$2,800,000$9,325,000
2023$5,210,000$1,900,000$2,720,000$9,830,000
2024$5,470,000$2,585,000$2,400,000$10,455,000
2025$5,950,000$2,930,000$2,225,000$11,105,000
2026$6,425,000$3,280,000$2,125,000$11,830,000
2027$7,068,000$3,921,000$2,025,000$13,013,000
*Franchises have the opportunity to exceed these figures with spending on up to three Designated Players and up to three players through the League’s under-22 player initiative.

The maximum budget charge for a single player, often referred to as the designated player threshold, will see annual increases beginning in 2023. For 2021 and 2022, the maximum charge will be $612,500. In 2023 the maximum charge increases to $651,250; in 2024 the maximum charge increases to $683,750; in 2025 the maximum budget charge increases to $743,750; in 2026 the maximum budget charge increases to $803,125; and in 2027 the maximum budget charge increases again to $883,438.

The new under-22 player initiative, in which the league will encourage teams to sign talented players aged 22 or younger to contracts that carry a reduced budget charge, remains, but the details are yet to be disclosed. The only thing known so far is that each team will be able to sign up to three players under this initiative.


Player Categories on the Roster

Domestic/International

In 2020, a total of 208 international roster slots are divided among the 26 clubs, an increase from the 2019 total of 192 international roster slots due to the addition of new teams in Nashville and Fort Lauderdale.

In 2008, each MLS club was given the right to have eight international players on its roster and each subsequent expansion club was likewise given the right to have eight international roster slots for its inaugural season. These roster slots are tradable, in full season increments, such that some clubs may have more than eight and some clubs may have less than eight. There is no limit on the number of international roster slots on each club’s roster.

Domestic Players

  • U.S.-based clubs: For U.S. clubs, a domestic player is either a U.S. citizen, a permanent resident (Green Card holder) or the holder of certain other special status (i.e., has been granted refugee or asylum status) or a player who qualifies under the Homegrown International Rule. There is no limit as to the number of U.S. Domestic Players on a U.S. club’s roster.
  • Canada-based clubs: For Canadian clubs, a domestic player is either a Canadian citizen or the holder of certain other special status (i.e., has been granted refugee or asylum status), a player who qualifies under the Homegrown International Rule*, or a U.S. Domestic Player. There is no limit as to the number of Canadian Domestic Players on a Canadian club’s roster.
    • There is no limit as to the number of U.S. Domestic Players or Canadian Domestic Players on a Canadian club’s roster; provided, however, that a Canadian club is required to have a minimum of three Canadian Domestic Players on its roster at all times.

International Players

  • U.S.-based clubs: Any player who does not qualify as a U.S. Domestic Player in a U.S. club shall be considered an International Player, and must occupy an international roster slot on a U.S. club’s roster.
  • Canada-based clubs: Any player who does not qualify as a U.S. Domestic Player or a Canadian Domestic Player shall be considered an International Player, and must occupy an international roster slot on a Canadian club’s roster.

Designated Player

The Designated Player Rule allows clubs to acquire up to three players whose total compensation and acquisition costs exceed the Maximum Salary Budget Charge, with the club bearing financial responsibility for the amount of compensation above each player’s Salary Budget Charge. Designated Players may be new players signed to MLS via the Allocation Ranking List, Discovery Process or can be re-signed existing players on a club’s roster.