Minnesota United has been involved in two trades in 2017 that involved 2018 allocation money. One went through; the other needed revising. So when can a club trade future funds?
On Wednesday morning, Minnesota United traded its top spot in the Allocation Ranking Order. Vancouver moved up to acquire three-time MLS All-Star Fredy Montero. In return, Minnesota moved to fifth in the order and received $100,000 in 2018 General Allocation Money (GAM), $125,000 in 2018 Targeted Allocation Money (TAM), and an international roster spot for 2017.
The return is a good one for Minnesota. The Loons were unlikely to use the top allocation slot to acquire a player, making a trade a pragmatic way to utilize it. The club has acquired allocation money to help with next year’s roster, and critically with respect to the near-future, it acquired a 10th international roster spot. This opens up the possibility of signing trialist Alvin Jones (or someone else) as the club looks to bolster its full back depth.
However, this prompted a couple of head scratches. Someone cue du Nord’s music!
@jeffrueter Have you heard why Minn could NOT trade for 2018 TAM during SuperDraft (deal with Philly) but can today?
— Bruce John McGuire (@dunord) February 15, 2017
A tale of two trades
First, let’s look at the aforementioned SuperDraft deal. Per Sam Stejskal: “The Union eventually won out. Philadelphia offered Minnesota $50,000 in [TAM] in 2018 and the 42nd pick for the 25th selection, but, after some confusion, it was determined future TAM could not be traded. Minnesota got $50,000 in [GAM] instead.”
In that deal, MNUFC was unable to trade for future TAM. However, the Loons got $125,000 of 2018 TAM from the Whitecaps this morning. So what gives?
Basically, it’s all about timing. Clubs get pools of allocation money (both GAM and TAM) going into each season. In 2017, pre-existing clubs received $200,000 GAM and $1.3 million TAM. Per Paul Tenorio, Minnesota and Atlanta started with around $2 million in GAM and $1.5 million in TAM as they built their inaugural rosters. These funds can be used to buy down player salaries against the salary cap or to acquire players from other leagues.
What tripped up Philadelphia in its initial offer for the 25th overall SuperDraft pick is that clubs aren’t allowed to trade future amounts of assumed allocation money. They can only trade what they have on hand in their current-year budgets. In the Union’s case, they didn’t have $50,000 of 2017 TAM remaining to release. However, Vancouver had more than enough 2017 GAM and TAM to fork over to Minnesota.
As far as Minnesota electing to use the allocation money it received from Vancouver in 2018 is practical. It means that $100,000 of GAM and $125,000 of TAM will sit idle until the first of January. Once the ball drops on the New Year, Vancouver will effectively complete this trade. Minnesota elected to use the funds towards its 2018 budget. The amounts traded to Minnesota are directly pulled from the Caps’ current budget of $1,300,000 of TAM and $200,000 of GAM.
Simple, right?
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