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U22 Initiative officially unveiled with 2021 roster rules

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Teams can spend unlimited amounts on transfers but salaries are limited.

MLS: MLS Media Day Noah K. Murray-USA TODAY Sports

Major League Soccer released its 2021 roster rules Tuesday, and a long-rumored initiative has finally come to pass.

MLS announced the implementation of the “U22 Initiative” that will allow teams to increase their investment in dynamic, promising young players without breaking the bank, or their salary budgets.

Starting this year, teams will now be able to sign up to three young players (age 22 and younger) to higher-value contracts at a reduced budget charge. This is in addition to the standard three Designated Players that teams are allowed to sign though there is a significant caveat in how the initiative will be applied.

To qualify, players signing from other professional leagues must be joining on their first MLS contract. According to the roster rules, SuperDraft picks will be eligible to occupy a U22 Initiative Slot during their second contract, and Homegrown Players will be eligible during their first or second contracts, depending on age and compensation received. Players may occupy a U22 Initiative Slot through the season in which they turn 25.

The benefits to this initiative are obvious. In addition to increasing investment in young players, the reduced budget charge will decrease the risk associated with acquiring or retaining players who have not reached their potential.

Per a release from the league, the application of the rule is as follows:

Number of Slots:

Each MLS team will have up to three U22 Initiative Slots that will each occupy one of the 20 existing Senior Roster Slots. The number of U22 Initiative Slots available to each team will be based on that team’s use of its third Designated Player slot.

If a Club has a vacant third Designated Player slot, the Club will have available three U22 Initiative Slots.

If a Club elects to sign a third Designated Player, the number of U22 Initiative Slots would be impacted in the following way:

  • If the third Designated Player is a Young Designated Player, the club will have all three U22 Initiative Slots.
  • If the third Designated Player is age 24 or older, yet is at, or below, Maximum Targeted Allocation Money Amount ($1,612,500), the club will have all three U22 Initiative Slots.
  • If the third Designated Player is age 24 or older and is above Maximum Targeted Allocation Money Amount ($1,612,500), the club will have one U22 Initiative Slot.

That means for a team like the Seattle Sounders, they would currently have only one U22 slot available to use, as they currently have three Designated Players over the age of 24 and who make more than the TAM maximum (Raul Ruidiaz, Nicolas Lodeiro, Joao Paulo). It is possible that Joao Paulo could be bought down in the future, which could impact the Sounders’ ability to sign more U22 players.

Other highlights of the initiative:

Eligibility for U22 Initiative Slot:

Age: A Player must be 22 years old or younger in the first year he is eligible to play in an MLS game (e.g., not eligible for 2021 if he turns 23 in 2021). A player who signs at age 22 or younger may continue to occupy a U22 Initiative Slot through the year in which he turns 25, provided that for non-Homegrown players, such player is on his initial contract.

Compensation: A player’s salary may not exceed the Maximum Salary Budget Charge in any given year, including option years. A Homegrown or SuperDraft player on his second contract may earn up to $200,000 above the Maximum Salary Budget Charge in any given year, including option years.

In addition, Clubs may pay, without limit, additional amounts in the form of acquisition fees (i.e. transfer or loan fees).

U22 Initiative Slot Budget Charge:

Players occupying a U22 Initiative Slot will have a Salary Budget Charge that mirrors that of a Young Designated Player:

  • Ages 20 and younger: $150,000
  • Ages 21-23: $200,000

Minimum Slot Occupation Length:

A player must occupy a U22 Initiative Slot for a minimum of two seasons; provided, however, if the compensation (including acquisition fee, loan fee, and/or conditional compensation) amortized over the first three years is greater than the Maximum Salary Budget Charge, then he must occupy a U22 Initiative Slot for a minimum of three seasons.

The full outline of the initiative can be found here.

Other highlights from the MLS Roster rules:

2021 SALARY BUDGET INFORMATION

  • Club Salary Budget - $4,900,000
  • Maximum Salary Budget Charge - $612,500
  • Senior Minimum Salary - $81,375
  • Reserve Minimum Salary - $63,547
  • Designated Player Salary Budget Charge - $612,500
  • Second Designated Player Salary Budget Charge - $612,500
  • Third Designated Player Salary Budget Charge - $612,500
  • Young Designated Player Budget Charge (20 years old or younger during the League Year) - $150,000
  • Young Designated Player Budget Charge (21-23 years old during the League Year) - $200,000
  • Mid-Season Designated Player Salary Budget Charge - $306,250
  • Mid-Season Young Designated Player Salary Budget Charge - $150,000
  • Maximum Targeted Allocation Money Amount - $1,612,500
  • U22 Spot Budget Charge (20 years old or younger during the League Year) - $150,000
  • U22 Spot Budget Charge (21-23 years old during the League Year) - $200,000

Targeted Allocation Money

In 2021, each club will receive $2,800,000 in TAM, which can be used to buy down designated players who do not exceed the maximum threshold. Additionally, the money can be used to sign or re-sign players who make more than the maximum budget charge ($612,500).

General Allocation Money

Each club will receive $1,525,000 in allocation money for the 2021 season. That money can be used to buy down player salaries to create additional budget relief, and offset acquisition costs (transfer/loan fees).