Details of revised MLS Collective Bargaining Agreement

The fight is over. For now.

With Major League Soccer owners and players coming to a temporary détente in their interminable labor fight, the parties can finally turn their focus to the battles on the field. The Collective Bargaining Agreement has been ratified by both parties, and there will be labor peace at least until Dec. 2, 2021. At that point, the parties will once against have the chance to revisit the CBA — should conditions warrant — but barring a major turn for the worse in the ongoing coronavirus pandemic, there will be a 2021 season.

To that end, the usual business of soccer has begun in earnest, with MLS releasing key details of the new deal. And there have been some significant changes that will impact team budgets for the next couple of years.

When the players and owners agreed to a new five-year CBA in 2020, the players won some gains in terms of salary and free agency, among other things. As everyone knows by now, the pandemic upended life world wide, and the failure to ratify that CBA meant the owners were able to renegotiate the agreement in June, and then opted to do so again at the end of the season. Thus, the players were forced to give away some of those increased benefits, in addition to the CBA now extending through the 2027 season, as opposed to the 2024 season in the original deal.

Additionally, the salary budget, originally set to be at $5.21 million for 2021, will remain at $4.9 million for both 2021 and 2022. Discretionary TAM and General Allocation will essentially remain stagnant as well.

Minimum salaries for players on the senior roster increase from $81,375 in 2021 to $125,875 in 2027 while minimum salaries for players on reserve roster increase from $63,547 in 2021 to $97,700 in 2024.

As the salary budget will be stagnant for the next two years, so too will the maximum budget charge ($612,500) before a player qualifies as a Designated Player based on salary. The impact of this will be felt acutely on teams already at or near the salary cap, including the Seattle Sounders. General Manager and President of Soccer Garth Lagerway had previously mentioned that the Sounders were essentially at the budget limit, though the loan of Jordan Morris and the transfer of Henry Wingo have provided some financial relief.

MLS also confirmed that teams will be able to exceed the salary budget to sign up to three players through the League’s under-22 player initiative. Specific details on this initiative are expected to be released in the coming weeks, but previous reports have suggested teams will be allowed to spend an unlimited amount of transfer fees as long as those players are paid less than a certain amount in salary.

Of the other ancillary benefits won by the players in the original 2020 CBA agreement, they have taken a cut on their share of income from media rights from the league’s next TV deal. Instead of a 25% cut of the league’s increased income (over $100 million) from a new TV deal starting in 2023, the players will now receive 12.5% in 2023 and 2024, before increasing to 25% in 2025.

The one area where players appear to gain some modest gains is in free agency, though those benefits will not actualize until the start of the 2026 season. Under the most recent CBA, to be eligible for free agency a player needed to be 24 years old and have five years of service in the league. Beginning in 2026, the eligibility has been expanded to include players who are 24 years old with four years of service in the league.

The new rules also stipulate that in the 2026 and 2027 seasons only, free agents making the maximum salary budget charge or less can sign a contract with another club with an initial salary of the greater of $25,000 above the maximum salary budget charge, or 20% above the player’s prior salary. For players making between the maximum salary budget charge and the maximum targeted allocation money (TAM) amount, the player could earn 20% above the prior salary up to $500,000 above the maximum salary budget charge and 15% of such salary from $500,000 above the maximum salary up to the maximum TAM amount.