Nashville SC

Project 2021: What’s the deal with GAM?

Beautiful graphic created by Tim Sullivan/For Club and Country

Nashville SC has not added any players so far this offseason, but has lost one who had been under contract, extended a couple others, and retained the bulk of last year’s roster. There have also been a few moves as the club builds toward the 2021 season, and those moves have primarily revolved around the acquisition of General Allocation Money*.

*There are two types of allocation money – Targeted (“TAM”), which can only be used in specific ways and is no longer a tradable asset, and General (“GAM”) which can be used in a wider range of ways, and can be traded. You can see more detail on these accounting mechanisms – as they existed prior to 2021, at least – here, and described below.

Nashville has executed three postseason trades, and fortunately for us, they all consisted of the exact same terms: $175,000 allocation money acquired, International Slot sold.

NSC also received $50,000 in GAM as standard Expansion Draft compensation for losing Scott.

Why is Nashville so eager to get rid of international slots?

I’ll get into this in the next section, but it’s not so much that Nashville wants to unload the international slots, but rather that the $175k in GAM is worth more to Nashville than the international slots.

Each MLS team is granted eight international slots per season (216 total slots for the league, distributed evenly among the 27 teams and tradable). Players who are not US or Canadian* citizens – and also do not hold Permanent Residency (i.e. “Green Cards”) – must occupy an international slot. Obviously, there’s a whole world of top-notch players who are not from those two countries, so there is a lot of value in international slots. Want a Colombian, Costa Rican, German, and Venezuelan – say, Miguel Nazarit, Randall Leal, Hany Mukhtar, and Jhonder Cádiz – on your roster? Each of them must use one of those international slots unless and until he acquires a green card.

With Nashville selling three of its eight international slots, also having traded one in exchange for Alex Muyl last season, General Manager Mike Jacobs cannot add any players without American/Canadian citizenship or permanent residency, because all four available slots are filled.

There’s a twist, though! Actually two! For starters, at least a couple of Nashville SC’s internationals – Leal and Mukhtar, and possibly Nazarit – are close to earning green cards. As soon as any of those comes through, it opens international slot. The trade to RBNY for Muyl also expires in the mid-season transfer window, with the international slot returning to Nashville. NSC would certainly love to add more international players, but can soon do so, even without the outgoing slots.

It’s also worth noting that in its three slot-for-GAM trades, Nashville got a really good return! Montreal (twice) and Kansas City sold slots in October for $50k a pop. While offseason swaps tend to be more lucrative generally, Portland acquired $160,000 GAM from NYCFC this month for a slot: even at December 2020 exchange rates, Nashville got $15k more than other moves in the market. And did it three times.

*The rules with Canadians are a little more murky. Traditionally, they’ve counted as internationals for the US-based MLS teams. Alistair Johnston doesn’t take an international slot for reasons nobody has ever been able to explain to me. It’s not hyper-important because NSC’s upcoming international signings won’t be Canadians.

GAM, for lack of a better term, is good

In a salary-cap league, every team can spend the same amount on their player salaries. MLS is a soft-cap league for multiple reasons: Designated Players only have a small portion (in 2020, it was $612,500) of their salary count against the cap, no matter how much they make. And more importantly for today’s exercise, allocation money allows teams to essentially increase their salary cap. If you “buy down” a player’s salary (can be easier to envision as using GAM to “buy up” the cap itself), you’re able to spend more than the cap would otherwise allow.

If you, say, acquire $525,000 GAM in exchange for three international slots that were surplus to your requirements anyway (to use a TOTALLY HYPOTHETICAL example), your salary cap rises from $9,145,000* to $9,670,000 million. That’s an increase of nearly 6% available to spend on your on-budget roster. Spend that money wisely, and your squad can get a lot better.

*$4.9 million cap, plus 2.72 million TAM and 1.525 million GAM per team per year are the starting figures. Currently-available numbers are kept secret for competitive reasons in the global transfer market.

GAM is also valuable as a trade asset. Nashville SC did a lot of allocation-for-player dealing to build its inaugural roster ($325k combined allocation – TAM was tradable until this offseason – for Dom Badji, $650k GAM for Aníbal Godoy, etc. etc.) because expansion teams get a big allocation in Year One. The GAM-hungry start to the offseason indicates that NSC is probably looking to use its GAM to bump up the salary cap, rather than send it right back out in exchange for other assets. However it’s still worth noting the versatility of the accounting mechanism.

To get that in exchange for three assets that the club doesn’t need as it builds toward 2021 is to convert assets into a more useful form. It’s moneyballin’.

What does it mean as NSC builds toward 2021?

Obviously I touched on this in both the above sections, but it really depends upon how those assets are used, and how soon the green cards for returning players are flipped.

The latter question is easier to answer: At least two green cards are expected before the start of the season. That would return Nashville SC to a situation in which there are one or two International Slots in use (Cádiz and possibly Nazarit), and two or three of them yet to expend. We already know that the front office will be signing at least one international player soon, and with a pretty good idea who the next NSC player is. I would expect another international signing as well – or perhaps another deal on the way in which international slots that are surplus-to-requirement are sold.

That brings us back to how the GAM is ultimately used. It does seem, based on the totality of the circumstances, that NSC will be spending that GAM to raise its spending ceiling, rather than exchanging it for players. That can mean multiple things: raises for returning players – it would be a stunner if Walker Zimmerman, Joe Willis, and Dave Romney’s respective extensions did not come with an increase in pay – acquisition of higher-salaried players domestically or for transfer fees internationally, or to keep some powder dry for future moves in those regards. Nashville saved a war chest in 2020, adding Cádiz in the summer window, and it’s worth remembering that a Muyl-oriented international slot will also open up for that window in 2021.

Nashville was – both fairly and unfairly, at different times – considered a low-spender within the league in 2020. Next season, this won’t suddenly be a group of Galácticos, but even a squad that finished in the playoffs in its expansion year looks poised to improve.

Yes I wrote the whole post largely to make use of this graphic.

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