Major League Soccer owners voted on several rule changes Tuesday that are expected to be implemented for the upcoming summer transfer window, according to multiple sources briefed on the items discussed at the board of governors meeting.
The three major changes to the rules are an alteration to designated player and under-22 initiative spending and roster construction, an increase in the number of contract buyouts, and increasing benefits of player sales. The changes will not be official until the league has met with the MLS Players Association. Once approved, the alterations will add layers of funding to general team spending.
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It is not the norm to see changes to the MLS roster rules midseason, though it’s not without precedent either. The changes come at a time when some owners have been pushing for more flexibility and freedom to spend to improve rosters and the on-field product. MLS has just two summer transfer windows left ahead of the 2026 World Cup, and only three total transfer windows until Lionel Messi’s initial contract is up — the Argentine star is signed through the end of 2025.
Both are markers for the league to try to capitalize on the wider audience that could be tuning in for games. Discussions around rule changes have been ongoing since last summer, but these are the first substantial changes to come in front of the full board.
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Designated players and under-22 initiative changes
The rule change:
This is the biggest change. It will impact how teams can spend on the top six roster spots that allow for significant spending outside of the salary budget: designated players and under-22 initiative players. Currently, teams with three senior DPs can have just one U-22 player. Teams with two senior DPs and one young DP or a DP that can be bought down with targeted allocation money (TAM) can have up to three U-22 players.
Under the new rules, teams can have either three DPs and three U-22 players, or they can have two DPs and four U-22 players, plus $2 million in general allocation money (GAM).
The change offers greater flexibility to MLS teams building their rosters while also guaranteeing them six spots to use on typically more established talent (DPs) and rising prospects (U-22s).
In effect, teams can now choose whether to focus spending on the top three roster spots or spread out spending across more of the middle of the roster.
What it means:
Under the new rules, some teams may opt to have three senior DPs making $4 million each, while other teams may opt to have two DPs making $4 million each plus four U-22s — which have no restrictions in terms of acquisition costs (transfer/loan fees and the like), but cannot make more than the maximum budget charge — and then use the extra $2 million in GAM to increase spending on roster spots across more of the roster.
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Don’t discount that $2 million of GAM, a very flexible form of spending that can be used to buy down cap hits across the roster. That will create an interesting decision point for aggressive teams: whether to acquire a third designated player, or receive extra funds to facilitate building a more balanced roster.
It’s also a fairly significant philosophical shift for the league to move discretionary spending — the third designated player slot — into the general spending pool. Typically, MLS has added funds in very tightly-controlled mechanisms like targeted allocation money and the U-22 initiative.
We could see an immediate application of this new rule from teams around the league. A team like Inter Miami that has multiple big-name players could, in theory and depending on cap space, add a third senior DP (Leo Campana is currently a DP, but can be bought down with allocation money) to the team, or sign another U-22 player and another high-earning player that can be bought down with the extra GAM.
Notably, teams with two DPs (of which there are many) will get just $1 million in extra GAM this season because the rule is being implemented halfway through the year.
Four of 29 teams are using all three DP spots in a way that previously allowed for just one U-22 player: Nashville SC, New England Revolution, Orlando City and FC Cincinnati. Those teams will be able to sign more U-22 players once the new rule is implemented.
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Two buyouts per season
The rule change:
MLS will increase the number of contract buyouts available from one to two per season, per team.
The increase comes after a previous change in which the league allowed a club to buy a player out during the season. Previously, the buyout had to occur during the offseason.
What it means:
One of the most difficult aspects of MLS’s salary budget, as compared to the rest of the world, is its lack of wiggle room for mistakes. It’s incredibly difficult for teams to move on easily from bigger roster errors, and players underperforming their contracts can become multi-year anchors on roster builds.
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Adding a second buyout gives teams more flexibility to fix mistakes and move players off their budgets so that they can add more talent. Most teams in MLS will benefit from this rule. Multiple front offices have already used their buyout this season and now could have the option to use a second, but every team will now have more flexibility to move on from players if needed.
A buyout, in some ways, is equal to more discretionary spending. Owners willing to take the hit and pay a player to get them off the budget now have the flexibility to do so and open up cap space to sign more players.
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More GAM for transfers
The rule change:
Under current rules, MLS teams can convert up to $1,215,506 of any transfer/loan revenue into general allocation money. Under new rules, teams will be able to convert up to $3 million per year in transfer or loan revenue into GAM.
What it means:
This change primarily benefits teams that may sell only one player per year. When the Chicago Fire sold Gaga Slonina to Chelsea for $10 million, they could max out the GAM benefit at that $1.2 million figure. Meanwhile, a team that sold two players for a total of $4 million would be able to convert up to $2.4 million into GAM.
Under the new rule, teams that sell players will have the same maximum amount of GAM that they can reach per year, across all sales.
It’s a rule that appears to be solving for a very specific problem, ensuring that teams get rewarded for how much transfer revenue they bring rather than the number of transfers. In the future, if MLS teams begin to sell players more often, this rule may need to be changed to accommodate those teams. For now, it’s another way for MLS teams to add more GAM to their pot — which essentially just means more cap flexibility.
(Photo: Michael Janosz/ISI Photos/Getty Images)