Allocation money

In Major League Soccer, allocation money represents an amount of money teams can use to sign players and/or allocate to their salaries to get under the salary cap.

Allocation money given to teams for eight reasons:

General allocation money can be used in several ways:

General allocation money must be used within 30 days of the close of the third full MLS transfer window after it was acquired. If a quantity of general allocation money is not used within that timeframe, it's halved by the league. That halved amount is then available for use during the next two transfer windows. If it's still not used after those transfer windows, the quantity is no longer available for use.

Targeted allocation money can be used in several ways:

Targeted allocation money must be applied, if not necessarily used, within four MLS transfer windows of its acquisition. In this case, “applied” doesn’t mean a team actually has to use the amount within four windows. Rather, they merely have to notify the league of how they plan on using their expiring targeted allocation money – allocating a specific amount to a specific player – in the following window by the end of the fourth window after it was acquired. If they don’t do that, that amount expires.

Targeted allocation money and general allocation money may not be used in combination when signing or re-signing a player. Either targeted allocation money or general allocation money may be used on a player in a single season, not both.

Amounts of allocation money held by each team are not disclosed to the general public. Only in the case of a trade will the amount of allocation money involved be made public.

Twice in league history, an allocation received for a lost player was used on the same player upon his return to the league: by the Chicago Fire on Ante Razov and by the New England Revolution on Daniel Hernandez.

Allocation money is not to be confused with the MLS Allocation Order, which is a ranking used to determine which MLS club has first priority to acquire a player who is in MLS allocation list. MLS allocation list contains select U.S. National Team players and players transferred outside of MLS garnering transfer fee of at least $500,000. Along with Allocation Money, Allocation Order rankings can be traded, provided that part of the compensation received in return is another club’s Allocation ranking.

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