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Inside the MLS Salary Cap: What’s New for 2023?

Check out the new MLS salary cap details for 2023, including updated minimum and maximum salaries and updates to Allocation Money totals and the Designated Player rule.

Major League Soccer returns for its 2023 campaign on Feb. 25, and the league is bigger and more bustling than ever. A full 29 teams will compete for this year’s MLS Cup championship thanks to the arrival of expansion club St. Louis City SC — and as the summer transfer window approaches and teams make opportunistic swoops to add more talent, they’ll more dough to spend on bolstering their rosters than ever before.

On Friday, the league confirmed its new roster spending rules for the new season, which includes an increase of over 6% of each team’s individual salary budget compared to last year’s numbers.

Let’s talk MLS salary cap details for 2023, including new thresholds and regulations regarding max and minimum salaries, Allocation Money, the Designated Player rule, and more.

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MLS Salary Cap 2023: Inside the Numbers

According to an official release from the league, here are your top-line team budget limits for the 2023 MLS season:

  • The MLS salary cap, officially referred to as the Salary Budget, is set at $5,210,000 per team
    • Up 6.33% from the 2022 MLS salary cap ($4,900,000)
  • The minimum MLS salary for a senior-team player is $85,444
    • Up 1.72% from last year’s minimum salary ($84,000)
  • The maximum salary cap hit for an MLS player salary is $651,250
    • Up 2.44% from 2022’s max cap hit ($612,000)
    • This total can be “bought down” using Allocation Money or bypassed via the Designated Player rule
  • The maximum salary number for a Targeted Allocation Money (TAM) player is $1,651,250
    • Up 2.43% from last year’s max TAM salary ($1,612,000)
    • Refers to players who exceed the standard player salary limit but do not qualify under the Designated Player rule
  • Teams can convert up to $1,157,625 in player transfer revenues into General Allocation Money (GAM)
    • Up 5% from 2022’s limit ($1,102,500)

Key MLS Salary & Contract Terms You Need to Know

Allocation Money

Allocation Money provides a path for MLS teams to sign players by defraying transfer costs, re-sign current talent, and “buy down” incumbent players’ salary numbers in order to achieve salary cap compliance.

General Allocation Money (GAM) can be used to pay down a player’s (a) effective salary cap hit of a non-Designated Player down to the league minimum salary or (b) a Designated Player’s salary number down to $150,000.

Targeted Allocation Money (TAM) can be used to pay down the cap hits of player signings whose salaries exceed the $651,250 salary cap maximum but do not exceed the $1,651,250 TAM threshold for 2023. Using this method, a Designated Player can be bought down from DP status, freeing up his Designated Player spot.

Both GAM and TAM can be used as trade assets in transactions with other MLS teams.

Designated Player

There is no universal max salary in MLS; teams can pay as many as three Designated Players in excess of the maximum salary cap hit of $651,250 without any additional change to their cap number. Teams are not required to field any Designated Players.

The DP Rule is also colloquially known as the “David Beckham Rule” given the situation surrounding its creation — league rules had to be changed in order for LA Galaxy to sign David Beckham in 2003.

Senior Roster

Players taking up many as 20 roster spots per team are referred to as Senior Roster players and count against the MLS salary cap. Teams with fewer than 18 Senior Roster players will be charged the league minimum salary of $85,444 for each unfilled spot.

Supplemental Roster

Players occupying roster spots 21 through 30 are considered Supplemental Roster players and do not count against the MLS salary cap. Teams may not carry more than 10 Supplemental Roster players.

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About The Author
Sam Dunn
Sam Dunn
Sam Dunn is the Managing Editor of Boardroom. Before joining the team, he was an editor and multimedia talent for several sports and culture verticals at Minute Media and an editor, reporter, and site manager at SB Nation. A specialist in content strategy, copywriting, and SEO, he has additionally worked as a digital consultant in the corporate services, retail, and tech industries. He cannot be expected to be impartial on any matter regarding the Florida Gators or Atlanta Braves. Follow him on Twitter @RealFakeSamDunn.