Explaining Major League Soccer’s Salary Cap and Inter Miami’s Roster Compliance

I. Introduction
The twenty-first century has seen the United States embrace the global passion for soccer. In the next few years, the United States is set to host the “2024 Copa América, 2025 FIFA Club World Cup, 2025 Concacaf Gold Cup, [and] 2026 FIFA World Cup….”¹[1]Michael LoRé, MLS Continues Growth In 2023 As Messi’s Arrival Added Fuel To Fire, FORBES (Oct. 19, 2023, 8:00 AM), https://www.forbes.com/sites/michaellore/2023/10/19/mls-continues-growth-in-2023-as-messis-arrival-added-fuel-to-fire/?sh=5a204a056daa. These major, global soccer events come on the tail end of Lionel Messi – widely viewed as the best soccer player ever – joining Inter Miami, for the 2023 through 2025 Major League Soccer (“MLS”) seasons.²[2]Lionel Messi joins Inter Miami in blockbuster free transfer, ESPN (July 15, 2023, 2:17 PM), https://www.espn.com/soccer/story/_/id/37820397/inter-miami-confirms-lionel-messi-signing-free-transfer. MLS has consistently set new single-season attendance records over the past few years, and Messi’s presence has now brought even more eyes and new fans to the sport and league specifically.³[3]Michael LoRé, MLS Continues Growth In 2023 As Messi’s Arrival Added Fuel To Fire, FORBES (Oct 19, 2023, 8:00 AM), https://www.forbes.com/sites/michaellore/2023/10/19/mls-continues-growth-in-2023-as-messis-arrival-added-fuel-to-fire/?sh=5a204a056daa. In addition to Messi, Inter Miami have signed superstars Jordi Alba,⁴[4]Inter Miami CF Communications Department, Inter Miami CF Signs Spanish International Defender Jordi Alba, INTER MIAMI CF (July 20, 2023, 3:32 PM), https://www.intermiamicf.com/news/inter-miami-cf-signs-spanish-international-defender-jordi-alba. Sergio Busquets,⁵[5]Inter Miami CF Communications Department, Inter Miami CF Signs Legendary Midfielder Sergio Busquets, INTER MIAMI CF (July 16, 2023, 3:32 PM), https://www.intermiamicf.com/news/inter-miami-cf-signs-legendary-midfielder-sergio-busquets. and Luis Suarez.⁶[6]Inter Miami CF Communications Department, Inter Miami CF Signs Iconic Striker Luis Suárez, INTER MIAMI CF (Dec. 22, 2023, 11:12 AM), https://www.intermiamicf.com/news/inter-miami-cf-signs-iconic-striker-luis-suarez. In a league with few notable players relative to European soccer leagues, Inter Miami stands out as a powerhouse club. MLS has a salary cap, but it is vastly different from other American sports leagues.⁷[7]Zach Lowy, SOCCER 101: GAM & TAM, ST. LOUIS CITY SC (Sept. 26, 2023, 12:36 PM), https://www.stlcitysc.com/news/soccer-101-gam-tam. Amidst this recent popularity and buzz surrounding MLS, many have questioned the integrity of the league’s salary rules. This article seeks to provide an understanding of the “2024 MLS Roster Rules and Regulations,”⁸[8]2024 MLS Roster Rules and Regulations, MLSSOCCER, https://www.mlssoccer.com/about/roster-rules-and-regulations (last visited Apr. 24, 2024). identify its significant and beneficial nuances, noting past violations and sanctions, and explain how a team such as Inter Miami are roster compliant.

II. MLS’s Roster Rules and Compliance
As of the 2024 MLS season, 29 clubs compete in the league under the Collective Bargaining Agreement’s roster rules.⁹[9]Id. In 2023, Inter Miami had the highest payroll in MLS of $39.42 million.¹⁰[10]Wage costs of clubs in Major League Soccer (MLS) in 2023, by club, STATISTA (Feb. 15, 2024), https://www.statista.com/statistics/551693/player-expenses-of-mls-teams/. The popularity, superstars, and recent success of Inter Miami, relative to the rest of the league, has drawn the attention of critics questioning their compliance with the salary regulations.

A. Major League Soccer Roster Rules and Regulations
In the 2024 edition of the MLS roster rules, clubs may have up to 30 players on their active roster.¹¹[11]2024 MLS Roster Rules and Regulations, MLSSOCCER, https://www.mlssoccer.com/about/roster-rules-and-regulations (last visited Apr. 24, 2024). For roster slots 1-20 (referred to as the “Senior Roster” slots) each club has a budget of $5,470,000 (“Salary Budget”), and a single player may not receive a salary over $683,750 (“The Maximum Salary Budget Charge”).¹²[12]Id. Roster slots 21-30 (“Supplemental Roster” slots) do not count toward the Salary Budget and comprise of typically lower wage or younger players, such as players earning the senior minimum salary ($89,716), reserve minimum salary ($71,401), or players that developed through a club’s academy.¹³[13]Id. However, the rules include a quirk – the “Designated Player” (“DP”) rule – that “allows clubs to acquire up to three players whose total compensation and acquisition costs exceed the Maximum Salary Budget Charge.”¹⁴[14]Id. For each DP, the club’s ownership group bears the cost of compensation above each player’s Salary Budget Charge.¹⁵[15]Id. This means that whether players are paid a salary of $1,000,000 or $10,000,000, both are DPs and the club is financially responsible for the compensation that exceeds the $683,750 threshold, of which only the $683,750 is charged against the Salary Budget.

In addition to the Salary Budget of $5,470,000, each club may spend additional funds on player compensation either through “General Allocation Money” (“GAM”) – a league-wide allocation pool – or “Target Allocation Money” (“TAM” ) – a specified amount given to each team each year.¹⁶[16]Id. In 2024, each club receives an allotment of $2,585,000 in GAM and $2,400,000 in TAM.¹⁷[17]Id. Clubs may receive additional GAM through other various mechanisms such as failing to qualify for the MLS Cup Playoffs, qualifying for the CONCACAF Champions Cup, or trading amongst the other clubs.¹⁸[18]Id. Contrary to GAM, TAM is set by the league each year and may not be traded.

GAM may be used for any player on the Senior Roster.¹⁹[19]Id. Additionally, clubs may use GAM to pay down the salary cap hit of DPs from $683,750 to $150,000.²⁰[20]Id. On the other hand, a club may use TAM to afford players who make over $683,750 and pay down their salary to under this threshold, converting the otherwise DP to a non-designated player status.²¹[21]Id.

B. Recent Salary Cap Violations
Since David Beckham signed for the LA Galaxy in 2007 and MLS instituted the DP rule, the salary rules have remained vastly similar from year to year.²²[22]Zach Lowy, SOCCER 101: GAM & TAM, ST. LOUIS CITY SC (Sept. 26, 2023, 12:36 PM), https://www.stlcitysc.com/news/soccer-101-gam-tam. Since its inception, MLS has consistently been vigilant in monitoring, investigating, and enforcing these rules.

For example, in 2019 an investigation found that the LA Galaxy breached the salary rules by failing to disclose salary agreements and improperly allocating TAM to acquire Cristian Pavon.²³[23]MLSsoccer staff, MLS announces sanctions after LA Galaxy violate salary budget and roster guidelines, MLSSOCCER (Dec. 2, 2022, 4:30 PM), https://www.mlssoccer.com/news/mls-announces-sanctions-after-la-galaxy-violate-salary-budget-and-roster-guideli. His salary was listed at $1.2 million and should have occupied a DP slot, however the team categorized him otherwise and wrongfully allotted him TAM.²⁴[24]Id. Among the many sanctions, LA Galaxy were fined $1 million, stripped of $1 million of future GAM, and LA Galaxy president Chris Klein was suspended through 2023.²⁵[25]Id.

Similarly, during the 2020 season (prior to the Messi era in MLS) Inter Miami were found to have violated the Salary Budget in signing Blaise Matuidi by exceeding their limit in TAM.²⁶[26]Franco Panizo, MLS finds Inter Miami violated DP rule in 2020 with Blaise Matuidi signing, SBI (Apr. 16, 2021), https://sbisoccer.com/2021/04/mls-finds-inter-miami-violated-dp-rule-in-2020-with-blaise-matuidi-signing. Matuidi needed to occupy a DP slot, but Inter Miami already had three DPs, and thus they improperly exceeded their TAM in trying to pay down his salary.²⁷[27]Franco Panizo, MLS finds Inter Miami violated DP rule in 2020 with Blaise Matuidi signing, SBI (Apr. 16, 2021), https://sbisoccer.com/2021/04/mls-finds-inter-miami-violated-dp-rule-in-2020-with-blaise-matuidi-signing. Inter Miami was fined $2 million, the sporting director was suspended through the 2022 MLS season, and MLS reduced their 2022 and 2023 allocation dollars by $2,271,250.²⁸[28]MLS announces sanctions for Inter Miami violating salary budget and roster guidelines, MLSSOCCER (May 28, 2021, 6:31 PM), https://www.mlssoccer.com/news/mls-announces-sanctions-for-inter-miami-violating-salary-budget-and-roster-guide.

C. Inter Miami’s Current Compliance
Understanding the salary cap rules and MLS’s past diligence in sanctioning violations, this article examines Inter Miami’s current compliance. First, it is important to note that in the past year Inter Miami have acquired additional GAM by failing to qualify for the 2023 MLS Playoffs, qualifying for the CONCACAF Champions Cup, and engaging in various trades of MLS specific roster designations,²⁹[29]Inter Miami CF Communications Department, Inter Miami CF Trades DeAndre Yedlin to FC Cincinnati for General Allocation Money, INTER MIAMI CF (Mar. 4, 2024, 10:00 AM), https://www.intermiamicf.com/news/inter-miami-cf-trades-deandre-yedlin-to-fc-cincinnati-for-general-allocation-mon (“Inter Miami CF… has traded defender DeAndre Yedlin to FC Cincinnati, gaining important roster flexibility, in addition to acquiring $172,799 in 2024 General Allocation Money (GAM).”). SuperDraft picks,³⁰[30]Inter Miami CF Communications Department, Inter Miami CF Acquires $300,000 in General Allocation Money in Exchange for MLS SuperDraft 2024 Pick Swap, INTER MIAMI CF (Dec. 19, 2023, 3:32 PM), https://www.intermiamicf.com/news/inter-miami-cf-acquires-300-000-in-general-allocation-money-in-exchange-for-mls- (“Inter Miami CF… has acquired $250,000 in 2024 General Allocation Money (GAM) and $50,000 in 2025 GAM, as well as the No. 15 overall pick in the MLS SuperDraft 2024… from FC Dallas. In exchange, Inter Miami will send its natural third overall pick in the draft.”). and player transfers.³¹[31]Inter Miami CF Communications Department, Inter Miami CF Acquires International Roster Slot in Exchange for $150,000 in General Allocation Money, INTER MIAMI CF (Apr. 4, 2024, 10:54 AM), https://www.intermiamicf.com/news/inter-miami-cf-acquires-international-roster-slot-in-exchange-for-150-000-in-gen (“Inter Miami CF… has acquired a 2024 International Roster Slot from CF Montréal in exchange for $150,000 in 2024 General Allocation Money.”).

Since 2023, Inter Miami have signed numerous Senior Roster players, such as Julian Gressel, Tomas Aviles, Diego Gomez, Facundo Farias, and Frederico Redondo, all within the Salary Budget and using their additional GAM.³²[32]Inter Miami CF Transfers, ESPN, https://www.espn.com/soccer/team/transfers/_/id/20232/year/2023/inter-miami-cf (last visited Apr. 24, 2024); Inter Miami FC Active Roster, MLSSOCCER (Dec. 19, 2023, 3:32 PM), https://www.mlssoccer.com/clubs/inter-miami-cf/roster/ (last visited Apr. 24, 2024). Lionel Messi signed for Inter Miami on July 15, 2023 as a free transfer, occupying a DP slot, with a salary of $20.45 million.³³[33]Jeff Carlisle, Inter Miami’s Messi tops MLS highest-paid list at $20.4M, ESPN (May 16, 2024, 2:34 PM), https://www.espn.com/soccer/story/_/id/40158648/inter-miami-messi-tops-mls-highest-paid-list-204m. Despite having the highest salary in MLS in 2024, his DP status allows Inter Miami’s ownership to cover the cost. Similarly, Sergio Busquets occupies a DP slot, with a salary of $8.77 million and Leo Campana occupies the team’s third DP slot.³⁴[34]Henry Bushnell, Lionel Messi’s salary, Inter Miami’s payroll are MLS record highs, YAHOO SPORTS (May 16, 2024, 1:57 PM), https://ca.sports.yahoo.com/news/lionel-messis-salary-inter-miamis-payroll-are-mls-record-highs-180015335.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAHJMgnqvCYoMbS9h1K8xzt4lo9hVnpbzIfuOtOtZD266OPmFA0HJnczPvfswBc2iqztPyA_PN4VkM7Koz1E30zy7_HCay1jOwK7cm173ltEL3yq3ZjmSLgZZijOFe2JqVm8sTbPb2hzbZRvnNOzY-MX2NxyUbIGKM-3UdI06Pk1o. Jordi Alba and Luis Suarez each earn a salary of $1.5 million, but do not occupy DP slots.³⁵[35]Id. Instead, Inter Miami have used their available TAM to pay down their salaries, adding flexibility to the roster in order to afford these numerous superstars.³⁶[36]Id.

Thus, Inter Miami maintains roster compliance with three DPs and their additional GAM earned over the past year allowing the club to afford the many new, expensive signings. MLS is in the business of maintaining its integrity and should Inter Miami have exceeded their allocation money or otherwise violated the rules, MLS would investigate and implement sanctions, as it has done previously.

III. Conclusion
To summarize, clubs have a budget of $5,470,000 to spend on the Senior Roster, that is supplemented by GAM ($2,585,000 plus any other traded or earned funds) and TAM ($2,400,000). Not included in the salary cap, clubs have an unlimited budget for three players occupying DP roster slots.

MLS does not appear to have an issue in regulation or enforcement and the salary cap rules are important to the structure of the league. Unlike soccer leagues across Europe, that garner significantly more viewers, MLS’s salary cap does prohibit teams from attracting some of the top global talent. However, in the absence of a tiered system with promotion and relegation, MLS’s salary cap ensures competitive balance by annually reassessing and reallocating the clubs’ payroll budget. Additionally, the DP rules enable three players to have unlimited salaries, and thus allows for clubs to sign players like Messi, without exhausting a club’s entire budget. Excluding the three DPs, clubs then have roughly equal budgets to afford the rest of their squad. Compliance among clubs, such as Inter Miami, and the integrity of the league is paramount, and MLS has demonstrated a commitment to regulation. Thus, MLS seems to strike a compromise that is beneficial for the clubs, fans, and the league.

Written by: Zachary Braverman
Zachary is a 2025 J.D. Candidate at Brooklyn Law School.