Major League Soccer owners voted on several rule changes on Tuesday that are expected to apply to the upcoming summer transfer window, according to multiple sources briefed on the items discussed at the board of governors meeting.

The three main rule changes are a change in designated player and under-22 initiative spending and roster building, an increase in the number of contract buyouts, and increased benefits from player sales. The changes won’t be official until the league meets with the MLS Players Association. Once approved, the changes will add layers of funding to the team’s overall expenses.

It’s not the norm to see MLS roster rule changes in the middle of the season, though it’s also not without precedent. The changes come at a time when some owners have sought more flexibility and freedom to spend to improve the roster and product on the field. MLS has only two summer transfer windows before the 2026 World Cup, and only three transfer windows until Lionel MessiHis initial contract is up – the Argentine star is signed until the end of 2025.

Both are indicative of the league trying to capitalize on the wider audience that can tune in for games. Discussions about rule changes have been ongoing since last summer, but these are the first substantive changes to come before the full board.

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Designated players and under-22 initiatives vary

Rule change:

This is the biggest difference. It will affect how teams can spend on the six main roster spots that allow significant spending outside the salary budget: designated players and starter players under 22. Currently, teams with three top DPs can only have one U-22 player. Teams with two senior DPs and one junior DP or one DP who can be bought with target allocation money (TAM) may have up to three U-22 players.

Under the new rules, teams can either have 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 provides greater flexibility for MLS teams building their rosters, while also guaranteeing them six spots to use on typically more established talent (DP). AND rising prospects (U-22).

In effect, teams can now choose whether to focus spending on the top three spots on the roster or spread spending across much of the middle of the roster.

What does it mean:

Under the new rules, some teams can choose to have three senior DPs making $4 million each, while other teams can choose to have two DPs making $4 million each plus four U-22s – who don’t have limits on acquisition costs (transfer/loan fees and the like) but can’t do more than the maximum budget fee – and then use the extra $2 million in GAM to increase spending on roster spots in more from the list.

Don’t discount that $2 million GAM, a very flexible form of spending that can be used to buy maximum hits across the roster. This will create an interesting decision point for aggressive teams: whether to acquire a third designated player, or take additional funds to facilitate building a more balanced roster.

It’s also a pretty significant philosophical shift for the league to move discretionary spending — the third designated player slot — into the general spending pool. Typically, MLS has added funding to tightly controlled mechanisms such as targeted allocation money and the U-22 initiative.

Inter Miami’s Leo Campana could be acquired to potentially ease Miami’s cap situation under the new rules (Peter Joneleit/Icon Sportswire via Getty Images)

We could see an immediate application of this new rule by teams around the league. A team like Inter Miami that has a lot of big name players could theoretically and depending on cap space add a third senior DP to the team (Leo Campana is currently a DP but could be acquired with split money ) or sign another U-22 player and another high-earning player who can be bought with additional GAM.

Notably, teams with two PDs (of which there are many) will only receive $1 million in additional GAM this season because the rule is being implemented halfway through the year.

Four of the 29 teams are using all three DP spots in a way that previously only allowed one U-22 player: Nashville SC, New England Revolution, Orlando City and FC Cincinnati. These teams will be able to sign more U-22 players once the new rule is implemented.

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Two purchases per season

Rule change:

MLS will increase the number of contract buyouts available from one to two per season, per team.

The increase follows a previous change in which the league allowed a club to buy a player during the season. Previously, the acquisition had to happen during the off-season.

What does it mean:

One of the most difficult aspects of the MLS salary budget, compared to the rest of the world, is the lack of room for error. It’s incredibly difficult for teams to easily move on from the biggest roster blunders, and players who don’t live up to their contracts can become multi-year anchors in roster construction.

Adding a second acquisition gives teams more flexibility to fix mistakes and remove players from their budget so 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 may now have the option to use a second one, but each team will now have more flexibility to move on players if needed.

A purchase, in some ways, equals cheaper spending. Owners who are willing to take the hit and pay a player to take them out of the budget now have the flexibility to do so and open up space to sign more players.

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More GAM for transfers

Rule change:

Under current rules, MLS teams can convert up to $1,215,506 of any transfer/loan income into general money. Under the new rules, teams will be able to convert up to $3 million a year in transfer or loan income to GAM.

What does it mean:

This change mainly benefits teams that can only sell one player per year. When the Chicago Fire sold Gaga Slonina to Chelsea for $10 million, they could maximize GAM’s profit on that $1.2 million figure. Meanwhile, a team that traded two players for a total of $4 million would be able to convert up to $2.4 million in GAM.

Slonina signed with Chelsea in 2022. (Photo by Jamie Sabau, USA TODAY Sports)

Under the new rule, teams that sell players will have the same maximum amount of GAM they can achieve per year, across all sales.

It’s a rule that appears to be solving a very specific problem, ensuring that teams are rewarded for how much transfer revenue they bring in rather than the number of transfers. In the future, if MLS teams begin selling players more frequently, 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 basically just means more cap flexibility.

(Photo: Michael Janosz/ISI Photos/Getty Images)

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