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Does MLS have a salary cap for 2023? GAM, TAM, designated players and how much soccer stars are paid

Major League Soccer has always done things differently when it comes to paying players and 2023 is no different, with a particular set of regulations in place to help drive parity and financial security in the league.

One of the most notable aspects of MLS, which sets it apart from its European counterparts, is the fact that a salary cap is in place. However, there are some exceptions to the cap, which facilitate the acquisition of the more expensive talents, usually from abroad.

GOAL takes a look at MLS' salary cap, how much players are paid and exceptions such as the Designated Player rule.

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  1. What is the MLS salary cap?
    1. MLSPA & the Collective Bargaining Agreement
  2. What is the Designated Player rule?
    1. Notable MLS Designated Players
  3. What is Targeted Allocation Money?
  4. How much do U.S. soccer stars earn?

What is the MLS salary cap?

The salary cap or salary budget in MLS is the maximum amount of money each team is allowed to devote towards their roster outside of specially designated players.

In 2023, the base salary cap is set to be $5.2 million, with an additional $1.9 million available in General Allocation Money (GAM) and $2.7 million in Targeted Allocation Money (TAM).

There are also both minimum and maximum wages for individual players set annually by the league.

A team is not obliged to spread their salary budget across 20 senior team players, but must do so for a minimum of 18 players and no more than 20. Meanwhile, the salaries of players on the Supplemental Roster (roster slots 21-30) do not count toward a club's salary cap figure. All Generation adidas players are Supplemental Roster players during the initial guaranteed term of their contract.

There are some exceptions to the salary cap - specifically Designated Players and Targeted Allocation Money - which we will tell you about further down this article.

Zlatan Ibrahimovic LA Galaxy 2019

MLS Players' Association & the Collective Bargaining Agreement

The salary cap has slowly risen over the years. Negotiations take place between league officials and the MLS Players' Association (MLSPA) to agree to payment figures, as well as issues such as travel and compensation.

The MLSPA negotiates collective bargaining agreements which aims to secure a fair deal for players regarding pay, workers' rights and benefits. The latest CBA came together in 2021 and lasts through 2027.

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What is the Designated Player rule?

The Designated Player rule is an exceptional regulation which allows MLS teams to sign players who fall outside the remit of the league's salary cap protocol.

In effect, the Designated Player rule allows MLS clubs to dip into the international transfer market in order to attract star players to the league through inducements such as lucrative contracts and transfer fees.

For example, while the maximum single salary for a player in a club's salary budget was capped at $530,000 a year back in 2019, Zlatan Ibrahimovic's base salary as a designated player at LA Galaxy was $7.2 million.

Introduced in 2007, the Designated Player rule is sometimes referred to as 'the Beckham rule' as it was instituted specifically to deal with global superstar players such as the former England international.

In 2023, the Designated Player Rule will let teams bring in up to three players whose total compensation and acquisition costs exceed the maximum individual salary allotment.

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Notable MLS Designated Players

David Beckham's arrival at LA Galaxy as a Designated Player (DP) in 2007 paved the way for a long line of global stars in MLS.

Among those to become DPs in MLS are Thierry Henry, Kaka, Robbie Keane, David Villa, Andrea Pirlo, Steven Gerrard and Wayne Rooney.

You can see a list of selected designated players from MLS history below.

Year signedPlayerSigned for
2007David Beckham LA Galaxy
2007Denilson FC Dallas
2010Landon Donovan LA Galaxy
2010Thierry Henry New York Red Bulls
2011Robbie Keane LA Galaxy
2011Freddy Adu Philadelphia Union
2014Kaka Orlando City SC
2014David Villa New York City FC
2014Michael Bradley Toronto FC
2015Frank Lampard New York City FC
2015Andrea Pirlo New York City FC
2015Steven Gerrard LA Galaxy
2015Didier Drogba Montreal Impact
2015Sebastian Giovinco Toronto FC
2017Bastian Schweinsteiger Chicago Fire
2018Wayne Rooney D.C. United
2018Carlos Vela Los Angeles FC
2019Nani Orlando City SC
2019Zlatan Ibrahimovic LA Galaxy
2022Thiago AlmadaAtlanta United

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What is Targeted Allocation Money (TAM)?

Targeted Allocation Money (TAM) a sum of money given to teams by MLS in order to recruit or retain players who will have an immediate impact on the pitch. In 2023, TAM is $2.7 million.

So what is it for? There are a number of ways in which TAM can be used:

  • To convert a Designated Player to a non-Designated Player by 'buying down' their salary.
  • Once a DP slot has been freed up using TAM, it must be filled by a player of equal or greater value
  • During trades as a bargaining chip

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How much do MLS stars earn?

Depending on their status and where they ply their trade, U.S. national team stars earn different sums through their playing contracts.

Last year in MLS, for example, Lorenzo Insigne was by far the highest paid player with a $14 million annual salary. Xherdan Shaqiri, Federico Bernardeschi, Javier Hernandez and Gonzalo Higuain rounded out the top five.

Christian Pulisic actually earns less than Insigne at a reported £145,000 a week with Chelsea - an annual salary of £7.5m ($10m) - but would rank second to the Italian if paid the same amount in MLS.

And the average, non-DP MLS player earns less than $1 million annually.

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