Overview

Collective Bargaining Agreement (CBA)

The CBA runs from February 1, 2020 until January 31, 2024, a period of five years that takes the league through the end of the 2024 season.

Essentials

The CBA will allow teams to spend more on players and allows teams a greater degree of flexibility in how that money is distributed across their rosters. It also includes several major gains in player rights, including, for the first time, a share of revenue from media rights and changes in free agency eligibility, increased minimum salaries and mandatory charter flights.

The CBA includes several significant changes addressing many of the MLS players’ demands. It also contains some wins for the league, including the continued existence of targeted allocation money (TAM), restrictions on the percentage of media rights available to players in 2023 and 2024 and continued caps on increased compensation for free agents.

“Through this work and our solidarity, we have been able to reach an agreement that will provide players with greater rights and increased compensation, and will ensure that the league’s resources continue to be used to create a league of choice for players both on and off the field.”

Jeff Larentowicz, MLSPA Executive Board Member

Here is an overview of the major changes throughout the MLS CBA.

Spending and roster construction

In combination with substantially increasing the amount its teams can spend on their rosters, MLS is also loosening the rules that dictate how teams can distribute their money.

The league is raising the amount its teams can spend on non-designated players (salary budget + TAM + GAM) from $8.49 million in 2019 to $9.225 million in 2020. That number will climb by roughly $600,000 per season until it arrives at $11.643 million in 2024, the final year of the agreement.

Changes to Targeted and General Allocation Money:

A big change here, where MLS is introducing gradual changes to the use of Targeted Allocation Money (“TAM”). Over the last three seasons, teams were allowed to spend $1.2 million per year in non-discretionary TAM and an additional $2.8 million in discretionary TAM.

That $1.2 million in non-discretionary TAM (money a team must spend) is now being folded into general allocation money (GAM). The amount of GAM available to each team will rise substantially each season, eventually landing at $3.093 million in 2024.

As the amount of GAM increases, the amount of TAM — which is now entirely discretionary — will decrease correspondingly. More importantly, each club is required to use their entire salary budget and GAM in each year of the agreement.

Sharing Media Rights Revenue

MLS is going to have a new broadcast rights agreement in 2023, while the new CBA is in effect. One of the issue for the players association was to advocate for a share of the expected increase in the dollar value of those broadcast rights. This happened in the new CBA. It is perhaps the most significant change. For the first time in league history, the players could share in media revenue when the league’s next media rights agreement begins in 2023. In 2023 and 2024, 25 percent of the increase in media revenue that exceeds $100 million above 2022 levels will go into player spending.

In addition, beginning in 2021, MLS “will have the discretion to allow clubs to sign up to three players who are 22 or younger with a reduced budget charge. The actual details on this new 22-and-under player initiative (for example, the amount of the reduced budget charge, what kinds of players will be eligible, etc.) are not yet known. It’s likely that this initiative isn’t fully ready yet, so expect more details later in the year.

Designated Players

MLS clubs will continue to be able to sign up to three DPs, but there could a change in that the league “will have the right to limit the compensation for the third DP to the maximum TAM salary (remember the amount of TAM will decrease each of the next 5 seasons as shown below), unless the player is 23 years old or younger, in which case there will be no limit.” I mentioned that when discussing the negotiations, and The Athletic first reported that the league was considering that change last month. 

Remember that with a DP, no matter the amount he is paid, there is a maximum salary budget charge that is applied to his salary. That maximum salary budget charge for DPs will remain at 12.5 percent of the total salary budget, the same percentage as it has been set since the rule was introduced in 2007. It will be set at $612,500 in 2020 and rise to $803,125 in 2024.

Here is the amount available for spending by year under the 2020-24 CBA:

 YearSalary BudgetGAMTAMTotal*
 2020 $ 4,900,000 $ 1,525,000$ 2,800,000$ 9,225,000
 2021 $ 5,210,000$ 1,900,000$ 2,720,000$ 9,830,000
 2022 $ 5,470,000$ 2,585,000$ 2,400,000$10,455,000
 2023 $ 5,950,000*$ 2,830,000*$ 2,225,000$11,005,000
 2024 $ 6,425,000*$ 3,093,000*$ 2,125,000$11,643,000

*Salary budget and general allocation amounts are subject to change in 2023 and 2024 pending the next media rights deal

Free agency and player rights

The biggest win for the players comes in the form of free agency, where the rules concerning eligibility are changing drastically, from 28 years of age and eight years’ experience to 24 years of age and five years’ experience. This will more than double the number of players eligible for free agency. 

From the league’s perspective, it maintained caps on how much a player can earn in a new contract through free agency, as detailed here:

For players making the maximum salary budget charge or less, a free agent can sign a contract with another club with an initial salary of the greater of $25,000 above the maximum salary budget charge, or 15% above the player’s prior salary.

For players making between the maximum salary budget charge and the maximum TAM amount, the player could earn 15% above the prior salary up to $500,000 above the maximum salary budget charge and 12.5% of such salary from $500,000 above the maximum salary up to the maximum TAM amount.

There are also changes to the eligibility restrictions for designated players, which represents an improvement from the last CBA, when out-of-contract free agent DPs were only eligible for new contracts that were below the DP level, or could only sign DP contracts with their current teams. From the release:

Designated Players whose total compensation in the year before free agency was greater than the maximum TAM amount will be eligible for free agency either as a non-Designated Player with his new team, or as a Designated Player with his new team subject to the criteria set out below.

  • If the player signs as a non-Designated Player, his initial salary may be up to the maximum TAM amount.
  • If the player signs as a Designated Player, the player will negotiate compensation level and contract term with MLS;
  • The player may re-sign with his prior team at the salary amount and contract term negotiated with MLS;
  • If the player was earning from the maximum TAM amount up to $3,000,000, the player may sign with another MLS team as a Designated Player at an amount equal to 10% less than the salary amount negotiated with MLS.
  • If the player was earning above $3,000,000, the player may sign with another MLS team as a Designated Player at an amount equal to 15% less than the salary amount negotiated with MLS.

Minimum Wage Increase

Also notable are increases in the minimum salaries for players on both the senior and reserve rosters. The yearly incremental increases aren’t yet clear, but the senior minimum will increase from $70,250 in 2019 to $81,375 in 2020 and $109,200 in 2024. The reserve minimum will grow from $56,250 in 2019 to $63,547 in 2020 and $85,502 in 2024. 

By the end of the deal the average player salary will be over $500,000 and the senior minimum salary over $100,000. 

Charter flights

The issue of charter flights has received much publicity over the past year, with social media posts by players describing their long, uncomfortable journeys across the continent. Now, under the new CBA their travel conditions are set to improve.

Previously, teams were limited to just four legs of travel per season, with occasional additional allowances for playoff travel. The charter flights were optional, so teams that didn’t like to spend money didn’t even use all four of those legs each season.

Under the new CBA, charter flights become mandatory, with clubs obliged to use charters for eight legs of regular-season travel in 2020, with that number growing by two per season until arriving at 16 for the 2024 season. Clubs will also be required to use charter travel for all playoff games and for all CCL matches involving international travel. Playoff and CCL charters will not count toward the regular season requirements.

Beyond charter flights, there are also important improvements to other player health-related concerns, including an extension of benefits to veteran players, increased moving stipends and benefits, 401K contribution increases, and increased per diem travel allowances.