2018 Roster Panic Part 2: Lost in Spreadsheets

In a recent post, we explored the dread of a possible impending 2018 Expansion Draft for LAFC, and what that might mean for Atlanta United’s 2018 roster. If you missed it, you are lucky. Do not click this.

In today’s dreadful post, I look at the salary budget situation for Atlanta United heading into next year, or at least, I try to explore it as best I can given the limitations on information related to the team’s balance sheet (talkin’ General Allocation and Targeted Allocation moneys here) and certain other unknowns (Guzan’s wages).

This post will mostly avoid the basics of MLS roster and salary cap rules and GAM and TAM, not because I expect anyone to have them memorized nor because I pretend to be an expert, but mainly because they’ve been covered several times elsewhere, often by much smarter people. If you aren’t in a rush and want a primer on these complicated bylaws, below are some links to previous discussions by a host of writers as well as the official MLS rules literature:

• Official MLS Roster Rules
• The Economics of GAM and TAM and Part 2 by yours truly @Tiotal Football
• Jason Longshore’s DSS Post on Allocation Money
• Matt Doyle on Salary Budgets
• Paul Tenorio on Dwyer Trade and Mega-deals
• Sam Stejskal on the basics and on the new TAM coming

Instead, this post is about where Atlanta United stands as they finish out 2017 and look to 2018 roster building.

I’m going to start with an overview of what the team’s wage structure looks like right now, only counting the senior roster players as these are basically the only wages that matter for the maximum salary budget calculation (I’m just gonna call it the “cap”).

That’s a total of $8.2M of wages on a salary cap of $3.8M, but relax. We’ll whittle it down. The max budget charge for any given player is $480K, and anyone making above that can be bought down to the max charge using GAM or TAM, or they can be one of the club’s three designated players (wrinkle: young DPs like Almiron and Tito have a max charge of $200K). So if we work that out we get closer. We take off $3.2M of wages above the budget charges for Almiron, Villalba, and Martinez, and we take off around $470K for McCann, Carmona, and Guzan, and we whittle it down to $4.5M, still above the cap of $3.8M.

So this tells us that in addition to the $470K of TAM used to buy down McCann, Carmona, and Guzan to the max budget charges, the club surely used additional GAM or TAM to buy down wages to get the team from $4.5M to the actual cap of $3.8M (around $700K by my estimations).

This is fine. They’re clearly compliant with the budget rules in 2017 (otherwise they wouldn’t be competing), and the club has built a solid contender that we as fans can all be happy with. This is an understatement even. There were some very clever, and perhaps genius moves made by the front office, and as Matt Doyle once told us, perhaps we should build a statue to Paul McDonough for his accomplishments in 2017 alone.

So, we know they built a strong 2017 roster, but is it sustainable in its current form for 2018? That depends on several important mysteries that we should explore. Top of mind for me are questions that follow in this order:

1. How much GAM and TAM does the club carry over to / receive from the league in 2018? This requires us to do some investigating and make assumptions to determine the amount the team started with in 2017 and some other guesses about 2017 trades.
2. Is the amount of GAM and TAM determined in Question #1 enough to allow the club to continue to buy down the team’s wage bill (as currently constructed) below the cap in 2018? Especially considering a full year of Guzan, and Almiron and Villalba no longer qualifying as “young DPs” will make things tighter?
3. Does the club have enough GAM and TAM or other types of roster flexibility to execute purchase options on Greg Garza and/or Yamil Asad, who we must remember are on loans from Tijuana and Velez, respectively.
4. If any of the three above questions take us in a pessimistic direction, what are the clubs options to fix it?

Let’s begin.

1. How much GAM & TAM did ATLUTD start with in 2017? After trades and buy-downs in 2017 and additional league injections anticipated in the offseason, what does the GAM/TAM war chest look like heading into 2018?

This is an important question, and while I do not know the answer for certain, I can lay out my approach and venture a guess.

1A. What we know about GAM. What we can guess about GAM.

• All MLS teams get $200K in GAM as a starting point with this number potentially rising based on several factors (teams that didn’t make the playoffs the previous year get $200K more, teams get $100K for making Concacaf Champions League and up to $200K for making the knockout rounds).
• Expansion teams get an undisclosed amount of additional GAM the aim being to help them catch up competitively in year one so they don’t get destroyed week in and week out. This is just a big fat guess on my part, but I’m going to mark this down as $500K.
• Minnesota United and Atlanta United received an undisclosed amount of additional GAM to compensate them for the 2017 Expansion Draft being reduced from the traditional 10 picks down to 5. Again, without knowing for sure, I’m going to guess and value this at $250K, based on the fact that whenever a player is taken in an expansion draft, the team that lost said player is awarded $50K as compensation ($50K X 5 = $250K).
• Atlanta United traded away $50K of GAM for the rights to sign Miguel Almiron and traded away $50K of GAM for the rights to sign Greg Garza.
• Atlanta United traded away undisclosed amounts of GAM for Michael Parkhurst and Tyrone Mears. My best guess is $50K each.
• Atlanta United traded away and undisclosed amount of GAM for Sean Johnson and then turned around and traded Sean Johnson for an undisclosed amount of GAM and TAM. My guess is that the net GAM exchange between these two trades was $0.
• Atlanta United traded Clint Irwin (selected in expansion draft) back to Toronto in exchange for an undisclosed amount of GAM (highly believed to be the $50K generated based on Irwin’s selection) + Mark Bloom.

Conclusion: My best guess is that Atlanta United started with $950K of GAM and after all of the various trades with undisclosed amounts, they had $800K to start the 2017 season and to potentially buy down wages in excess of the salary cap.

1B. What we know about TAM. What we can guess about TAM.

• MLS teams received $500K of TAM in 2015, and Atlanta United and Minnesota United received a pro-rated amount of $300K each from this allotment.
• MLS teams received $800K of TAM in 2016 (including Atlanta United and Minnesota United)
• MLS teams received $1.2M of TAM in 2017 (including Atlanta United and Minnesota United)
• It is rumored that an additional $2M of TAM will be available in 2018, and perhaps an additional optional amount ($800K?) for teams who would like to “purchase it” from the league. As far as I know the league still needs to approve 1 or both of these items.
• Atlanta United traded away Sean Johnson in exchange for an undisclosed amount of GAM and TAM. My best guess is that this amount of TAM was $50K.
• Atlanta United traded away $75K of TAM in exchange for an international slot.

Conclusion: I am nearly certain that Atlanta United started with $2.3M of TAM and after a couple of trades, they had $2.45M of TAM to start the season with and to potentially buy down wages in excess of the salary cap. Additionally, they would’ve used this amount to pay a transfer fee for Leandro Gonzalez Pirez, a fee which we do not know, but which I estimate to be somewhere around $2M.

See below for a summary of my estimation of the “pre-wage buy down GAM and TAM balances”

So if we start with these amounts, and then reduce TAM by $470K to bring McCann, Carmona, and Guzan down to the max charges, and then use $700K of additional allocation money (not sure how much from each pool) to buy down the team’s adjusted wages from $4.5M to the $3.8M cap (remember from earlier), we’re left with $2M and change, which incidentally is right around the amount I estimate as the transfer fee paid for Leandro Gonzalez Pirez.

So there you have it. 2017! If my estimations are close to correct, Paul McDonough and company basically maxed out of the assets available to them and put together a fantastic team full of ambition and one that we are all very proud of. If we tack on an additional anticipated $2M of TAM for 2018 and the standard $200K of additional GAM that all teams get (and we assume Atlanta makes the playoffs and so they don’t get much else), we can start our 2018 analysis with basically these amounts to work with:

2. Is the amount of GAM and TAM determined in Question #1 ($2.2M) enough to allow the club to continue to buy down the team’s wage bill (as currently constructed) below the cap in 2018? Especially considering a full year of Guzan (est. $240K of additional cap hit to put him at $480K max, and $135K additional TAM to get him down to that amount), and Almiron and Villalba no longer qualifying as “young DPs” (and therefore each carrying with him an additional $280K cap hit)?

I believe technically the answer to this is “yes.” Obviously in any offseason players will depart (in part due to budgetary constraints) and other players will arrive, and that’s difficult to predict, but as a mental model, if we take the exact same roster and plop them into the 2018 future Atlanta United and check the wage bill and budget charges against the cap (which rises to $4M in 2018), then the team wage budget and GAM/TAM balance sheets look like this:

Basically in the above exercise, we’re increasing the wage bill to account for Guzan’s full year, the overall initial budget charges go up also due to Guzan, and due to Tito and Miggy no longer being young DPs, and the club uses $1.9M of the $2.2M of allocation money it has to pay down these salaries to the increased 2018 cap of $4M. This scenario assumes so many things (same roster, Tito as DP and not bought down with TAM, no additional transfer fees paid...etc). But yes, it looks as though they could stay in the cap based on the assets we expect to be available in 2018.

3. Does the club have enough GAM and TAM or other types of roster flexibility to execute purchase options on Greg Garza and/or Yamil Asad, who we must remember are currently on loans from Tijuana and Velez, respectively.

Well...no? I think? I’ll give this a shot. I mean, I have no idea what the contract situation is like with either player. MLSSoccer.com published these details about the Garza trade last year, which I interpret as there being perhaps another year’s worth of loan option remaining (a 2 year loan perhaps?), but no one has confirmed that. If we put Garza aside for a second (and let’s just pencil him in for another loan year at similar wages..hmm maybe a stretch), and again not knowing anything about Asad’s loan but assuming that there’s a purchase option (either a little less than a million, or a little more), I’m not sure Atlanta can pull it off keeping everything else the same, as we did in the above scenario. There’s not enough allocation money if in fact the fee is a little less than a million (there’s only around $360K free), and any fee over a million would make him a 4th DP — which is illegal (kind of!).

Again, that assumes everything else is constant, which it surely won’t be, but this should be our baseline framework to work with. There are certainly things that could be done. For what it’s worth I looked into paying down Tito’s wages with TAM to free up a DP spot for Asad. It might help some in that the transfer fee wouldn’t count against the cap or use any TAM, but in any realistic scenario the team would need to find $300K or so of cap room either synthetically (GAM or TAM) or otherwise based on the following: around $290K to buy Tito down from $770K to $480K, and then $350K to properly account for Asad’s wages (if we assume he gets a new DP level deal, it seems reasonable to put him right around $480K instead of the current $150K Atlanta is paying) compared to the $360K we estimate in the above section that they might have on hand for 2018 after the rest is accounted for.

4. Are there other options?

Certainly. If there’s a way to loan Asad in for another year, you do that. Same with Garza. But if those aren’t options, I think you start by making Asad a DP to get his transfer fee of the books, then you go about looking for allocation money and/or cap space to buy down Tito and bump Asad up to the max. Your options are as follows:

• If the league ends up allowing teams to purchase $800K or so of additional TAM as is rumored, I suppose you do this, buy down some wages and be done with it. Otherwise,
• Hmm, where might we find some cap room?

Finding a home for either of the first two players, even if traded for no assets in return might free up enough space and/or TAM to get Asad in the door by paying down Tito’s wages to the max charge.

• Special Discovery Player

There’s a weird rule in the MLS book that allows a team to sign a player and instead of taking his acquisition cost into the annual budget (as is the general rule), amortize his acquisition cost up to $500K over the player’s contract. In this case, to make the math easy, if Asad were to sign a 5 year deal and his fee was $1M, $600K would hit the cap in 2018 ($500K which can’t be amortized plus one fifth of the remaining $500K), which with some other tinkering involved, the club might have room for. The drawback being that a team can have only one special discovery player on its roster at any time, so they would sort of be “burning” this option upon use. Also, I’m not aware of the club having already used this on anyone else (say LGP) but had they and not disclosed it, it would change many of the conclusions in this post.

Conclusion:

Having painfully gone through it all, I feel better about this than I expected to. While the club is definitely stretching the limits of the MLS roster rules and available budget assets (as we’d want them to), the incoming league money infusions may just be enough to keep the 2017 team mostly intact. Otherwise, there are some options that have tradeoffs. And there will always be ins and outs once we actually get into the off-season and all that follows it. Let me know how you feel about it, if you made it this far. Interested to hear if anyone has other ideas. I suppose you can ask questions you may have about the rules and the math as well, but I don’t promise to be able to answer them.