I know that at least for me when I started watching MLS and seeing trades and signings happen, the terms and contracts were so confusing that I couldn’t understand whether it was a good or bad thing. Teams are throwing around GAM, TAM, and some players are getting paid the “salary maximum”, yet their teammate is getting paid more? Well hopefully, this sorts some things out for you, as it did me.
The current salary cap in the MLS is $4.035 million, but that is only for players 1-20 on the roster. The player’s after that do not count against the cap. This means the “maximum” salary for players in the MLS is around $500k/yr. Well … now we have these things called “Designated Players.” The Designated Player rule (David Beckham Rule) allows for teams to go get an International player and have only $400k count against the cap if they are over 23 years old, only $200k if younger than that. You are allowed two DP players, although you could buy a third for $150k in allocation money if you wanted.
So now there is GAM (General Allocation Money) and TAM (Target Allocation Money). GAM can be used to lower a player’s salary hit against the cap. You could even use it to create another DP slot by lowering another player’s salary hit against the cap. TAM is used specifically to pay players who intend to make more than the league maximum but are not a DP. Both of these can be traded as well. Some clubs have even played off this idea and offered FAM (Fan Allocation Money), such as D.C. United. This allows for season ticket members to trade in their tickets back to the club in return to virtual currency that can be redeemed for exclusive fan packages like standing in the tunnel while the players come on to the pitch, or upgrading your seats. A fun spin-off on the league practices.
Although this probably has left you just as confused as you were before you opened this article, hopefully it has given you a starting point into the rabbit-hole that is TAM, GAM, and all the in between.