Major League Soccer owners voted Tuesday on several rule changes expected to be implemented for the upcoming summer transfer window, according to multiple sources briefed on the items discussed at the board of governors meeting.
The three major rule changes are a change in initiative and construction spending for designated and under-22 players, an increase in the number of contract buyouts, and increasing benefits from player sales. The changes won’t be official until the league meets with the MLS Players’ Association. Once approved, the changes will add funding levels to the team’s overall expenses.
It’s not the norm to see changes to MLS roster rules mid-season, although it’s not unprecedented either. The changes come at a time when some owners are calling for more flexibility and spending freedom to improve staffing and the product on the field. There are only two summer transfer windows left in MLS before the 2026 World Cup, and only three transfer windows in total until Lionel Messi’s initial contract ends – the Argentine star is signed until the end of 2025.
Both are markers for the league to try to capitalize on a larger audience that might attend games. Discussions around rule changes have been ongoing since last summer, but these are the first substantive changes to be presented to the full board.
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Designated Player and Under-22 Initiative Changes
The rule change:
This is the biggest change. This will impact how teams can spend on the top six roster spots that allow for significant spending outside of the salary budget: designated players and initiative players under the age of 22. Currently, teams with three senior DPs can only have one U-22 player. Teams consisting of two senior DPs and one youth DP or one DP that can be bought out through Targeted Allocation (TAM) can have up to three U-22 players.
Under the new rules, teams can have either three DP and three U-22 players, or two DP and four U-22 players, plus $2 million in general allocation money (GAM).
The change provides greater flexibility for MLS teams building their rosters while also guaranteeing them six spots to use on typically more established talent (DP). And growing prospects (U-22).
This is because teams can now choose to focus their spending on the top three spots on the roster or spread their spending across more of the middle of the roster.
What this means:
Under the new rules, some teams can choose to have three senior development directors earning $4 million each, while other teams can choose to have two development directors each earning $4 million plus four U-22s – who have no restrictions on acquisition costs (transfer/loan fees and others), but cannot earn more than the maximum budget fee – then use the additional $2 million in GAM to increase spending in places on a larger part of the list.
Don’t overlook that $2 million in GAM, a very flexible form of spending that can be used to buy back hits across the roster. This will create an interesting decision point for aggressive teams: acquire a third designated player or receive additional funds to facilitate building a more balanced roster.
It’s also a pretty big philosophical shift for the league to move discretionary spending — the third designated player slot — into the general budget. Typically, MLS has added funds through very tightly controlled mechanisms, such as targeted allocations and the U-22 initiative.
We could see immediate enforcement of this new rule from teams across the league. A team like Inter Miami that has several big-name players could, in theory and depending on available space, add a third senior DP (Leo Campana is currently DP, but can be bought out with allocated money) to the roster. team, or sign another U-22 player and another high-earning player that can be purchased with the additional GAM.
Notably, teams with two DPs (and there are many) will only receive $1 million in additional GAM this season, as the rule is implemented mid-year.
Four of the 29 teams are using all three DP spots in a way that previously allowed only one U-22 player: Nashville SC, New England Revolution, Orlando City and FC Cincinnati. These teams will be able to sign more U-22 players once the new rule is implemented.
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Two redemptions per season
The rule change:
MLS will increase the number of contract buyouts available from one to two per season per team.
This increase follows a previous change in which the league allowed a club to buy out a player during the season. Previously, the buyout was expected to take place during the offseason.
What this means:
One of the most difficult aspects of the MLS salary budget, compared to the rest of the world, is its lack of room for mistakes. It’s incredibly difficult for teams to easily overcome larger roster mistakes, and players who don’t fulfill their contracts can become multi-year anchors in roster construction.
Adding a second buyout gives teams more flexibility to correct mistakes and remove players from their budget so they can add more talent. Most MLS teams will benefit from this rule. Several front offices have already used their buyout this season and may now have the option to use a second one, but each team will now have more flexibility to move on from players if necessary.
In some ways, a buyout equals more discretionary spending. Owners willing to take the hit and pay a player out of the budget now have the flexibility to do so and open up cap space to sign more players.
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No more GAM for transfers
The rule change:
Under current rules, MLS teams can convert up to $1,215,506 of any transfer/loan income into general allocation money. Under the new rules, teams will be able to convert up to $3 million per year in transfer or loan income into GAM.
What this means:
This change primarily benefits teams that can only sell one player per year. When the Chicago Fire sold Gaga Slonina to Chelsea for $10 million, they were able to maximize GAM’s profit at that $1.2 million figure. Meanwhile, a team that sold two players for a total of $4 million could convert up to $2.4 million into GAM.
Under the new rule, teams that sell players will have the same maximum amount of GAM they can achieve per year, for all sales.
This is a rule that appears to solve a very specific problem, ensuring that teams are rewarded based on the amount of transfer revenue they generate rather than the number of transfers. In the future, if MLS teams start selling players more often, this rule may need to be changed to accommodate those teams. For now, it’s another way for MLS teams to add more GAM to their kitty, which essentially means more cap flexibility.
(Photo: Michael Janosz/ISI Photos/Getty Images)