Making the Most from Trading: Setting Your Team Up For Success in the MLS Transfer Market
/In Major League Soccer circles, the words and phrases “GAM”, “TAM”, “Allocation Order”, and “Superdraft” are commonplace whereas those same words and phrases are completely meaningless to fans of non-US leagues. This dichotomy of understanding comes from the uniqueness in MLS player acquisition rules. In addition to signing a player through a traditional transfer, MLS offers its teams many unique ways to acquire players, including trades, a draft of college players, expansion and re-entry drafts, and free agency. These different ways to acquire players also presented another opportunity to teams: they are able to trade for players in currency other than money. Teams can trade International Slots, College Draft Picks, GAM, TAM, and more.
So what do each of these bargaining chips actually stand for?
International Slots: Teams are allowed 8 international players on their roster, with the rest of the roster needing to be made up of either United States citizens or Green Card holders. Needless to say, for teams who scout and sign players from foreign markets, these slots can be incredibly valuable.
The Superdraft: Teams can also acquire younger players through the College Superdraft. This process takes place every January where teams select the best college players from the NCAA. Notable players to have come out of this draft are Jack Harrison, Steve Birnbaum, Jozy Altidore, Geoff Cameron, and more. Teams can use their picks to sign players, can trade picks for players currently in the league, or even trade their picks for other bargaining chips such as International Slots, GAM, TAM, or other Superdraft picks.
GAM and TAM: MLS teams are beholden to a budget charge which means they can only spend up to a certain amount of money every year on player salaries and transfer fees. Unlike European teams who are only restricted by financial fair play (sometimes), this helps promote fairness within the league and theoretically does not allow larger market teams to bankroll their team to immediate success.
Within the salary cap rules, teams use General Allocation Money (GAM) and Targeted Allocation Money (TAM) to spend more on player salaries than the Salary Cap allows. According to MLSsoccer.com and the new Collective Bargaining Agreement (CBA), in 2020 each team had a maximum salary budget of $4.9 million (note: salary budget includes salary as well as amortized transfer fees). The league covers this portion as well as granting an additional $1.525 million GAM which can be used to get their roster into cap compliance or to acquire other assets. Additionally, at their discretion, a team can purchase up to $2.8 million TAM to buy down a player’s budget charge. However, unlike GAM, TAM cannot be traded and may be somewhat restricted by the league on which players it can be used on. Prior to the most recent CBA, teams were given both GAM and TAM and both could be traded.
The first step in building a trade analyzer is converting everything to a standardized value. In this case, it is easiest to convert everything to GAM, as it is the most used currency when trading in the league (60% of MLS trades since 2017 involved GAM). Best put, this conversion allows for comparisons between apples and oranges by converting both to a dollar value.
Framework
This framework works for each process except one: trading a player. In non-player trades, the bargaining chip is static and the value does not change. Simply put, an international slot does not change in value or possess varying degrees of skill. In player trades, this is not the case as a better player should theoretically go for more money than a worse player. In order to solve this problem conversion, we need a metric that measures a player’s talent into a single value. The best metric we have for this is Goals Added.
Goals Added is a single metric that encapsulates a player’s skill into one number that essentially starts at 0 and grows upwards based on the quality of performance (You can read more about Goals Added here). As a reference point, Carlos Vela had 18.59 Goals Added in 2019, the most ever for a single season in MLS. Players who often come off the bench and play lower minutes for the season will have lower total Goals Added than their counterparts who play lots of minutes.
After this conversion happens, we can identify how many dollars in GAM a single “Goal Added” is worth, providing a baseline in trading GAM for Players.
After appending each player’s Total Goals Added from each season to our dataset, converting a single Goal Added to a GAM amount becomes relatively easy.
Results
Based on the history of MLS Trades, each bargaining chip can be valued as the following:
Players: ~$60,000 per Goal Added in GAM
International Slot: ~$100,000 in GAM
Superdraft First Round Pick: ~$105,000 in GAM
Superdraft Non-First Round Pick: ~$50,000 in GAM
Waiver Order Increase: $60,000 in GAM
This framework allows for the analysis of trades that happened within the league as well to see who benefited the most from each transaction.
A Specific Trade Analysis
DC United recently acquired Yordi Reyna and an International Slot in exchange for $400,000 in GAM for the 2021 season. Knowing that the international slot costs on average $100,000 in GAM, DC United signed Reyna for essentially $300,000 GAM. In his last two full seasons, Reyna amassed 6.65 (2018) and 5.63 (2019) Goals Added. If we know that each Goal Added is worth ~$60,000, and DC United projects him to amass 6 Goals Added based on how he has played previously, that would make Reyna worth $360,000 in GAM. In this case, DC United paid for 5 Goals Added but would theoretically get 6 in return.
Another interesting trade to evaluate is Houston Dynamo’s acquisition of Wilfried Zahibo and an International Slot from the New England Revolution in exchange for Tommy McNamara and $175,000 in total GAM. Once again, an international slot is worth $100,000 in GAM, making this trade essentially Zahibo for $75,000 GAM and Tommy McNamara. Zahibo is a defensive midfielder that has averaged around 3 ⅓ Goals Added per Season over the past two years, making him worth ~$200,000 in GAM. Tommy McNamara is a midfielder who put up 2.85 Goals Added in his last full season, making him worth $171,000 in GAM. This framework rates Zahibo to be worth $29,000 more in GAM than McNamara, but Dynamo gave up $75,000 in total GAM to get him, making the trade swing slightly in favor of the New England Revolution, though not by much.
Last but not least we can analyze Will Trapp’s move from The Columbus Crew to Inter Miami. Columbus received an international roster slot and $100,000 in GAM, plus a potential $200,000 in future GAM depending on if Trapp meets certain performance-based metrics. Future performance-based deals are difficult to analyze because the trading team gives up control of whether or not they are going to receive funds or not. For argument's sake, we will analyze two different options: one where Columbus receives the performance-based GAM and one where Columbus does not.
So let’s say Columbus gets the performance-based GAM and Trapp has a good first year in Miami. Columbus in total will receive $100,000 in GAM plus $200,000 in future GAM, plus an international roster slot which is worth $100,000 in GAM. We can then assume Columbus values Trapp at around $400,000 in total GAM. At his peak, Trapp put up 5.95 Goals Added in 2017, decreased slightly to 5.85 Goals Added in 2018, and further decreased to 3.36 Goals Added in 2019. If Miami assumes that Trapp will have a slight resurgence and puts up 5.5 Goals Added, he would then be worth $330,000 in GAM, under the $400,000 in GAM they paid for him. If Miami assumes he performs at the same rate as his most recent performance (3.36 Goals Added), and they have to pay the extra $200,000 in performance-based GAM, they would have paid $400,000 for $201,000 in on-field performance.
If Inter Miami assumes that they will not have to pay the performance-based GAM, and plans to hold Trapp out of games to ensure that, they may be making a smart deal. If Trapp has his resurgence, he will be worth $330,000 in GAM on a deal that only required Miami to spend $200,000 in GAM. If he does not have his resurgence and performs largely as he did in 2019, Miami would be getting a fair deal at $200,000 in GAM for $201,000 in performance.
In Columbus’ eyes, Trapp had decreasing performances on a salary of $600,000 and offloaded him for greater salary cap flexibility, as his salary was set to go over the max budget charge for 2020.
5 Rules for Trading in MLS
By looking at the history of trades, different themes emerge when smart and not so smart decisions occur. Because there are over 270 trades that have occurred over the last few years, it felt most apt to summarize them in a Tom Worville inspired list of MLS’s 5 Rules of Successful Trading.
Be Smart: It’s a Toss Up
Out of 87 trades involving players over the past three years, 43% favored the team receiving the player they traded for. This percent is essentially a toss up, meaning that smart trades can happen whether you are receiving the player or selling the player. It is important to ensure that the player you are receiving or selling is valued at the right price.
Don’t Get Caught in the Player Wormhole
Stick to a maximum value that your team is willing to pay and don’t go over it. Teams can find allure in a single player and spend all their GAM or TAM on that player, rather than spend it across the board. Rushed and rash spending can hamstring a club for the future while putting all their eggs in one basket.
Split The Sauce and Get Creative
If your team wants to splash on a big name player, structure the deal to involve future GAM or trading chips. Spreading out money over multiple years can alleviate initial and future pains while involving trading chips can help your team sign that player for less ~actual~ money.
I.e. Instead of buying an American for $500,000 GAM, send over an international slot (you weren’t going to use it anyway), a first round draft pick, and $100,000 in GAM for the next three years. It’s the same monetary value as $500,000 in GAM but alleviates a lot of financial pressure for the initial year and years ahead.
Maximize Value in Non-Player Trades
If a team needs an international slot that you do not plan to use, try to gain more than just the straightforward $100,000 in GAM. By involving other chips in the deal, it becomes easier to garner higher value for what your team is looking for.
Find a Good Mix
Find a good mix of buying and selling to complement the financial situation of your team while also aiding your goals for success.
Application
Front offices across the league can utilize these values to identify undervalued trade targets within the league, and work out deals that favor their club ahead of the competition. Similar to xComp and xMarketValue models written about in The DePo Models article, these numbers should be used as a guide. There are times where an overpay for the right player is necessary and that’s okay. With good planning and evidence-based decisions, teams can set themselves up to exploit the MLS trade market in their favor.
You, the user, can find the xGAM values for players across the league at the Alphonso Front End.
You can also find a complete data set of MLS Trades here:
A huge thanks to Eliot McKinley(@etmckinley) for his understanding of MLS Rules and Regulations.
A huge thank you to Sophie Leksan (@SophieLeksan), Andrés Del Castillo (@adelcastillom10), Zach Beery(@beeryball), Alexander Hopkins (@MnrHopkins), Felix Pate (@lgopfelix), Luke Sandblom (@lpsand), and Pranav N (@npranav10) for their generous help with data collection and cleaning. Without them, this research would have never been possible.