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Q&A: Elliot Fall sheds light on Targeted Allocation Money

On Wednesday, Major League Soccer introduced Targeted Allocation Money.  We brought in RSL Assistant GM Elliot Fall to help explain the mechanism and how it can affect Real Salt Lake.

Q: What do those three words mean – Targeted Allocation Money?

Elliot Fall: Targeted Allocation Money … Alright.  In brief, it’s essentially a new mechanism that the league has implemented to allow teams to bolster their roster with high-level players that maybe aren’t quite Designated Players, but they straddle that threshold of max-salary to Designated Player.  I think the idea is that we as a league have a lot of high-level Designated Players at this moment.  So the top end of our rosters are very good, for the most part.  The league has identified those roster spots 4-7 as the key area to really improve if we want to take another step forward as a league.  And so, the idea here is that they’ve given each team $500,000 over the next five years to spend on players that make over the max salary to essentially buy their cap hit under the max salary or Designated Player threshold.  The idea is that you can sign a player who makes a bit more than maximum salary and you can use some of that $500,000 to buy them down.

Q: Could you use all $500,000 in one lump sum or is it just $100,000 per year?

Elliot Fall: You can use all 500,000 at once.  What’s interesting is that you have $100,000 each year for the next five years, but you can use as much of it as you want, as early as you want.  So you could, say, use all $500,000 right now to go sign a player that makes $500,000 more than maximum salary and buy him down.  Or $300,000 more than maximum salary and buy him down to a cap hit that’s 200,000 below maximum salary.  You can use it on up to three players.  You can use it all up front, but the catch is, you can’t save it all.  Each year has 100,000 allotted to it and you have to use that year’s money by the end of the next year, or you forfeit it.

Q: Can you trade it?

Elliot Fall: Yes.  That’s one way you can use it.  For example, if you’re right now looking at things and you say, “I don’t have a player that I want to use this on right now … but I have a player that I want to acquire and that team has a need for some Targeted Allocation Money.”  You could give them 100,000 of it and that’s you using your 100,000 for 2015 to acquire that player.

Q: What was the impetus behind it?

Elliot Fall: I think the idea was, the league really wanted to find a way to improve the roster slots 3-7 or depending on how many DPs you have.  And something that the league is going to allow teams to do right now in 2015 but only in 2015 – is take a player that makes, say $300,000 more than maximum salary and use their Targeted Allocation Money on that player to buy them down below the DP threshold and take the DP tag off of them, which would then allow that team to go out and sign a new Designated Player.  The only stipulation there from the league is that you have to sign a player at an investment level greater than the player who you bought down.  It’s very flexible.  There are a lot of ways you can use it and I think it can be a very useful tool for teams.

Q: What does it mean for Real Salt Lake?  Does it make options available now for Real Salt Lake?

Elliot Fall: Sure.  It absolutely makes options.  We would be one of those clubs that has options to go either direction with it.  If we found a player that we wanted this year that was a Designated Player at a high level of investment, then we would have the option to buy down one of our current Designated Players under the threshold and acquire a new Designated Player.  On the flipside we could use it to acquire a new player at that investment level.  I think we have a lot of options.  We have the ability to do a lot of things and have some flexibility.  So we’re obviously looking at all that and what we believe is best for this club in the short term and in the long term.  It’s another useful tool for teams to use to increase the quality on the field.