How Do Transfers Work in the MLS


As a global sport, soccer has an intricate system that allows clubs to exchange players during specific periods called transfer windows. Transfers play a crucial role in shaping a team’s roster, injecting fresh talent, and maintaining a competitive edge both on and off the field. While transfers are a common feature across various soccer leagues, MLS has a unique system that sets it apart from other leagues worldwide. In this article, we’ll delve into the nuances of MLS transfers, exploring the different types of transactions, the rules governing them, and their impact on the league.

The concept of transfers in professional soccer

Transfers in soccer represent a process through which a player moves from one club to another. This movement can occur within the same league or across international leagues, depending on the agreement between the clubs and the player. The transfer system is designed to facilitate the exchange of players and ensure competitive balance among teams. During a transfer, a player signs a new contract with the acquiring club, and in most cases, the clubs involved agree on a transfer fee – a sum of money paid by the buying club to the selling club.

Importance of transfers in shaping a team’s roster and competitiveness

Transfers are essential for various reasons. First, they allow clubs to strengthen their squads by acquiring new talent. This could involve signing experienced players to fill a specific role, attracting promising youngsters with potential, or replacing departing stars. Transfers can also be used to offload players who may not fit into the team’s tactical system, have underperformed, or simply need a change of scenery.

Additionally, transfers can generate revenue for clubs through transfer fees, which can then be invested in other areas, such as infrastructure, youth development, or future signings. In this context, transfer dealings are not only vital for the sporting success of a club but also its financial stability.

The Unique Transfer System in MLS

While the fundamental concept of transfers is consistent across soccer leagues, MLS has developed a distinct system tailored to the unique characteristics of the North American market. The league’s transfer rules are designed to promote parity among its teams and maintain a sustainable financial model that adheres to strict salary cap regulations. As a result, the MLS transfer system features several specific mechanisms, such as Allocation Money, Designated Players, and Homegrown Players, which we will discuss in detail in the following sections.

With this foundation in place, we will proceed to examine the intricacies of the MLS transfer system, dissecting its various components and highlighting the key differences that set it apart from other leagues. This understanding will offer MLS fans and soccer enthusiasts alike a comprehensive insight into the fascinating world of transfers in the league, and how they continue to shape the landscape of North American soccer.

Overview of the MLS Transfer System

Transfer windows in the MLS

Like other soccer leagues, MLS has two transfer windows during which teams can officially register new players. These windows allow clubs to strengthen their squads and make necessary adjustments throughout the season.

Primary transfer window

The primary transfer window typically runs from early February to early May. This window is crucial for teams as they prepare for the upcoming season, often focusing on making significant signings and adjustments to their rosters.

Secondary transfer window

The secondary transfer window, also known as the summer transfer window, lasts from early July to early August. During this period, clubs can continue to refine their rosters and make last-minute additions or changes as they evaluate their performance during the first half of the season.

Key differences between MLS and other leagues

Several features distinguish the MLS transfer system from those of other soccer leagues around the world. These unique aspects are designed to maintain competitive balance and ensure financial sustainability among MLS teams.

Salary cap

MLS enforces a salary cap, which restricts the total amount of money a team can spend on player salaries. The salary cap promotes parity among clubs and prevents wealthy teams from dominating the league through excessive spending. Each season, the league adjusts the salary cap to account for inflation and other factors.

Designated Players

The Designated Player rule (DP) allows MLS clubs to sign up to three players whose salaries exceed the maximum budget charge, without those salaries fully counting against the salary cap. This mechanism enables teams to attract high-profile international stars and significantly improve the overall quality of play in the league.

Allocation Money

Allocation Money is a unique feature of the MLS transfer system that allows clubs to “buy down” player salaries, effectively reducing their impact on the salary cap. There are two types of Allocation Money:

  1. General Allocation Money (GAM)
  2. Targeted Allocation Money (TAM)

Both types can be used to pay for transfer fees, loan fees, and other acquisition costs.

Homegrown Players

The Homegrown Player rule encourages clubs to develop local talent through their academies. Homegrown Players are those who have spent at least one year in a team’s academy and are signed to a professional contract by that team. Homegrown Players do not count against the salary cap, providing teams with an incentive to invest in youth development.

With this overview in mind, we’ll delve deeper into the different types of transfers in the MLS, the rules and regulations surrounding them, and how they contribute to the league’s growth and competitiveness.

Types of Transfers in the MLS

In the MLS, transfers can be categorized into three primary types: domestic transfers, international transfers, and loans. Each type serves a distinct purpose and offers unique advantages for clubs seeking to strengthen their rosters and enhance their competitiveness.

1. Domestic transfers

Domestic transfers involve the movement of players within the league. These transactions can take several forms, including intra-league transfers and trades between MLS teams.

2. Intra-league transfers

Intra-league transfers are transactions where a player moves from one MLS team to another, usually in exchange for Allocation Money or other assets. Clubs can acquire players from within the league via various mechanisms, such as the Re-Entry Draft, the Waiver Draft, or by negotiating directly with the player’s current team.

3. Trades between MLS teams

Trades are a unique aspect of North American sports, and they feature prominently in the MLS transfer system. During a trade, two or more clubs exchange players, Allocation Money, draft picks, or other assets to address specific needs or balance their rosters. Trades often involve complex negotiations, as clubs must consider various factors, such as salary cap implications, positional needs, and player valuations.

4. International transfers

International transfers involve the movement of players between MLS clubs and teams from foreign leagues. These transactions can include acquiring players from abroad or selling MLS players to clubs in other countries.

5. Acquiring players from foreign leagues

MLS clubs can sign players from foreign leagues by negotiating transfer deals with their current teams. In most cases, the acquiring club pays a transfer fee to the selling club, and the player signs a new contract with the MLS team. Acquiring international talent allows MLS clubs to enhance the quality of their rosters and attract exciting players from various soccer backgrounds.

6. Sending players to other leagues

MLS clubs can also sell their players to foreign teams. This process usually involves the negotiation of a transfer fee and other terms, such as sell-on clauses and performance-based incentives. Selling players abroad can generate revenue for MLS clubs, which can be used to invest in new signings, infrastructure, or youth development.

7. Loans

Loans are temporary player transactions that involve a player moving to another club for a specified period, usually ranging from a few months to a full season. Loans can occur between MLS clubs (intra-league loans) or with clubs from other leagues (international loans).

8. Intra-league loans

Intra-league loans allow MLS clubs to send players to other MLS teams temporarily. These loans can provide valuable playing time for young talents, offer a change of scenery for struggling players, or give clubs an opportunity to evaluate a player’s performance before committing to a permanent move.

9. International loans

International loans involve MLS players temporarily joining clubs from foreign leagues or vice versa. These loans can offer unique advantages for both the player and the clubs involved. Players can gain experience in a different soccer environment, while clubs can benefit from acquiring temporary reinforcements or developing their own players abroad.

In conclusion, the MLS transfer system encompasses various types of transactions that enable clubs to build and refine their rosters in line with the league’s unique regulations. Domestic transfers, international transfers, and loans all play a crucial role in shaping the landscape of Major League Soccer and contribute to the league’s growth and competitiveness. By understanding these different types of transfers, fans can better appreciate the nuances and complexities of the MLS transfer market and the strategic decisions clubs make to succeed on and off the field.

Transfer Rules and Regulations

The MLS transfer system operates under a set of rules and regulations designed to maintain competitive balance, promote financial sustainability, and ensure transparency in player transactions. These rules govern various aspects of transfers, such as transfer fees, the allocation order, the discovery process, and drafts. Understanding these regulations provides valuable insight into the unique nature of the MLS transfer market and the mechanisms teams use to build their rosters.

Transfer fees

Transfer fees represent the amount of money paid by the acquiring club to the selling club in exchange for a player’s registration rights. In the MLS, transfer fees are subject to league approval and must adhere to specific guidelines. A portion of the transfer fee, usually up to $1 million, can be converted into General Allocation Money (GAM), allowing clubs to offset player salaries or other acquisition costs. The remainder of the transfer fee can be used at the club’s discretion, often for investment in infrastructure or youth development.

Allocation Order

The Allocation Order is a mechanism used by the MLS to determine which team has the first right to sign specific players entering or returning to the league. The Allocation Order typically applies to:

  1. U.S. Men’s National Team players returning to the MLS after playing abroad.
  2. Elite youth U.S. National Team players who sign their first professional contract with the MLS.
  3. Former MLS players who return to the league after a transfer to a foreign club for a fee of $500,000 or more.

The Allocation Order is set at the beginning of each season based on the reverse order of the previous season’s standings, with expansion teams added to the top. Once a team uses its allocation spot, it moves to the bottom of the list. Teams can also trade their allocation rankings, allowing them to move up or down the order to acquire desired players.

Discovery process

The discovery process enables MLS clubs to express interest in players who are not under contract with any league team and are not subject to the Allocation Order or other acquisition mechanisms. Each club can submit a list of up to seven discovery prospects to the league, claiming priority rights to sign those players. If multiple clubs submit discovery claims for the same player, the team that submitted the claim first has the right to negotiate a contract with the player. However, the league may also impose discovery signing restrictions to prevent clubs from stockpiling talent or bypassing established acquisition mechanisms.

Re-entry draft

The Re-Entry Draft is an annual event that allows clubs to select players who are out of contract and meet specific age and service requirements. The draft consists of two stages:

  1. Stage One: Clubs can select and offer contracts to available players at their current salary or exercise any existing contract options.
  2. Stage Two: Clubs can select and negotiate new contracts with available players, typically at a reduced salary.

Players not selected in either stage become available for all clubs to sign on a first-come, first-served basis. The Re-Entry Draft provides teams with an opportunity to add experienced players to their rosters and offers out-of-contract players a chance to continue their careers in the league.

Waiver draft

The Waiver Draft occurs annually and allows clubs to select players who have been waived by their previous teams and do not meet the requirements for the Re-Entry Draft. The selection order is based on the reverse order of the previous season’s standings, with expansion teams added to the top. Players not selected in the Waiver Draft become available for all clubs to sign on a first-come, first-served basis.

In summary, the MLS transfer system is governed by a comprehensive set of rules and regulations that ensure fairness, competitiveness, and financial stability in the league. By mastering these guidelines, clubs can successfully navigate the transfer market and make strategic decisions to build their rosters and improve their on-field performance. These rules and regulations also provide a framework for fans to better understand the intricacies of the MLS transfer system and appreciate the unique challenges and opportunities that clubs face in the North American soccer landscape. As the league continues to grow and evolve, the transfer rules and regulations will remain a vital component in shaping the competitive balance and maintaining the financial sustainability of Major League Soccer.

Impact of Transfers on MLS Teams

Transfers play a pivotal role in the evolution and success of MLS teams, shaping their rosters, identity, and financial standing. The impact of transfers on MLS clubs can be analyzed from various perspectives, such as sporting performance, financial implications, and fan engagement.

Sporting performance

The primary goal of transfers is to enhance a team’s on-field performance by acquiring players who can contribute positively to the squad. Transfers can impact a club’s sporting performance in several ways:

  1. Strengthening weak areas: Transfers allow clubs to address deficiencies in their rosters by signing players who can fill specific roles or positions. This enables teams to maintain a balanced squad and improve their competitiveness on the field.
  2. Replacing departing players: Transfers provide clubs with the opportunity to replace key players who have left the team, either through sales or the expiration of their contracts. By identifying suitable replacements, clubs can minimize the impact of player departures and maintain their on-field performance.
  3. Developing youth talent: Transfers can also contribute to a team’s long-term success by promoting the development of young players. By investing in youth through the Homegrown Player rule or by signing promising youngsters, clubs can build a pipeline of talent that can sustain their success for years to come.

Financial implications

Transfers have significant financial implications for MLS clubs, influencing their budgets, revenue streams, and long-term financial stability.

  1. Generating revenue: The sale of players can generate substantial revenue for MLS clubs through transfer fees. This income can be reinvested into the squad, infrastructure, or youth development, helping clubs maintain financial stability and support their long-term ambitions.
  2. Balancing budgets: MLS teams must adhere to the league’s salary cap regulations, which requires careful management of player salaries and acquisitions. Transfers, particularly the use of Allocation Money, help clubs balance their budgets while maintaining a competitive roster.
  3. Attracting investment: High-profile signings, such as Designated Players, can raise a club’s profile and attract additional investment from sponsors, ticket sales, and merchandise. This increased revenue can further enhance a team’s financial position and support its on-field ambitions.

Fan engagement

Transfers can significantly impact fan engagement, shaping a team’s identity and cultivating a loyal fan base.

  1. Excitement and anticipation: The arrival of new players, particularly high-profile signings or promising young talents, can generate excitement and anticipation among fans. This enthusiasm can translate into increased ticket sales, merchandise revenue, and overall fan engagement.
  2. Club identity: Transfers contribute to the formation of a club’s identity, as the players a team acquires often reflect its philosophy, style of play, and ambitions. By signing players who embody these values, clubs can foster a sense of pride and belonging among their supporters.
  3. Rivalries and narratives: Transfers can also create engaging storylines and fuel rivalries between MLS clubs. High-profile player moves, trades between rivals, or the emergence of Homegrown Players can add intrigue to the league and capture the imagination of fans.

In conclusion, transfers have a profound impact on MLS teams, influencing their sporting performance, financial health, and fan engagement. By navigating the transfer market effectively, clubs can build competitive rosters, maintain financial sustainability, and foster a passionate and dedicated fan base. As the MLS continues to grow and evolve, the transfer system will remain an essential tool for teams seeking to achieve success both on and off the field.

Notable MLS Transfers

Throughout the history of Major League Soccer, several notable transfers have had a significant impact on the league’s growth, competitiveness, and global reputation. These transfers have not only shaped the fortunes of individual clubs but also contributed to the broader development of soccer in North America. Below, we highlight a few of these landmark transfers that have left a lasting impression on the MLS landscape.

1. David Beckham to LA Galaxy (2007)

Undoubtedly one of the most high-profile signings in MLS history, David Beckham’s arrival at the LA Galaxy in 2007 marked a turning point for the league. The former Manchester United and Real Madrid star signed a five-year deal with the Galaxy, becoming the first Designated Player in MLS. Beckham’s signing generated widespread media attention and raised the league’s profile globally. His presence also played a crucial role in attracting other international stars to MLS in the years that followed.

2. Thierry Henry to New York Red Bulls (2010)

French legend Thierry Henry joined the New York Red Bulls in 2010 after a successful career at clubs such as Arsenal and Barcelona. His arrival signaled the league’s growing appeal to world-class players nearing the end of their careers. Henry’s skill, professionalism, and charisma helped elevate the Red Bulls’ status and contributed to the league’s rising quality of play.

3. Zlatan Ibrahimovic to LA Galaxy (2018)

Swedish superstar Zlatan Ibrahimovic joined the LA Galaxy in 2018 after a successful stint at Manchester United. Known for his incredible skill, athleticism, and larger-than-life personality, Ibrahimovic’s arrival in MLS generated significant excitement and media attention. He made an immediate impact, scoring a stunning goal on his debut and quickly became one of the league’s most prolific goal-scorers. During his two seasons with the Galaxy, Ibrahimovic scored 52 goals in 56 appearances, further solidifying his status as one of the world’s most talented and charismatic players.

4. Sebastian Giovinco to Toronto FC (2015)

In a landmark move, Italian forward Sebastian Giovinco signed with Toronto FC in 2015, joining the club from European giants Juventus. Unlike many high-profile signings before him, Giovinco was in his prime when he joined the MLS, making his transfer a significant coup for the league. During his time with Toronto FC, Giovinco established himself as one of the league’s most exciting and prolific players, winning the MLS MVP award in 2015 and leading Toronto FC to their first-ever MLS Cup in 2017.

5. Carlos Vela to Los Angeles FC (2018)

Mexican international Carlos Vela signed with Los Angeles FC as their first Designated Player in 2018. Vela’s arrival was a significant coup for the expansion team, and he quickly established himself as one of the league’s most outstanding players. In 2019, Vela set a new single-season goal-scoring record with 34 goals, earning him the MLS MVP award and further solidifying his status as one of the league’s top talents.

These notable transfers are just a few examples of the transformative impact that player acquisitions can have on MLS clubs and the league as a whole. By attracting top talent from around the world, the MLS has continued to grow in stature, competitiveness, and global appeal, paving the way for an even brighter future for soccer in North America.

6. Miguel Almiron to Atlanta United (2017)

Paraguayan midfielder Miguel Almiron joined Atlanta United in 2017 as a young Designated Player from Argentine club Lanús. Almiron quickly became a star in the league, playing a pivotal role in Atlanta United’s 2018 MLS Cup-winning campaign. His performances caught the attention of English Premier League side Newcastle United, which signed him for a then-record MLS transfer fee of around $27 million in 2019. Almiron’s transfer demonstrated the potential for MLS clubs to develop and sell talent to top European leagues, highlighting the league’s growing stature in the global soccer market.

7. Josef Martinez to Atlanta United (2017)

Venezuelan forward Josef Martinez joined Atlanta United in 2017 on loan from Italian side Torino, before making the move permanent later that year. Martinez quickly became a goal-scoring sensation, breaking the MLS single-season goal record in 2018 with 31 goals and earning the league MVP award. His performances played a crucial role in Atlanta United’s 2018 MLS Cup triumph, showcasing the impact of shrewd transfer dealings on a team’s success.

8. Alphonso Davies to Vancouver Whitecaps (2016)

Canadian prodigy Alphonso Davies joined the Vancouver Whitecaps as a Homegrown Player in 2016 at the age of 15, making him the youngest player to sign a professional contract in MLS history. Davies quickly gained attention for his speed, skill, and maturity on the field, drawing interest from European clubs. In 2018, German powerhouse Bayern Munich signed Davies for an MLS-record transfer fee that could reach up to $22 million with performance-based add-ons. Davies’ move to Bayern demonstrated the potential for MLS to develop and showcase young talent on the world stage, further enhancing the league’s credibility and appeal.

These additional transfers, including the arrival of Zlatan Ibrahimovic, further illustrate the substantial impact that high-profile signings and strategic acquisitions can have on MLS clubs and the league as a whole. As MLS continues to grow and attract top talent from around the world, the league’s competitiveness, visibility, and influence within the global soccer landscape are poised to reach even greater heights.


As Major League Soccer continues to evolve and mature, the importance of understanding the transfer system and its impact on clubs, players, and the league as a whole cannot be overstated. Transfers play a pivotal role in shaping the competitive landscape, driving financial stability, and engaging fans with exciting storylines and rivalries.

Throughout this article, we have explored the intricacies of the MLS transfer system, highlighting its unique rules and regulations, such as the salary cap, Designated Players, Allocation Order, and Homegrown Players, which collectively work to maintain competitive balance and financial sustainability. These mechanisms are essential in ensuring that MLS remains an attractive destination for top talent while fostering a level playing field for all clubs.

We have also discussed the various types of transfers, including domestic and international moves, loans, trades, and drafts, which provide clubs with a diverse array of options to build and improve their rosters. By strategically navigating these different avenues, MLS clubs can assemble competitive squads capable of achieving success both domestically and internationally.

The impact of transfers on MLS clubs is multifaceted, encompassing sporting performance, financial implications, and fan engagement. Transfers can transform a team’s fortunes on the field, strengthen weak areas, replace departing players, and develop youth talent. Financially, transfers can generate revenue, balance budgets, and attract investment, while also driving fan excitement, shaping club identity, and fueling rivalries.

Throughout MLS history, several landmark transfers, such as David Beckham, Thierry Henry, Zlatan Ibrahimovic, and Alphonso Davies, have left an indelible mark on the league’s growth and global reputation. These notable signings showcase the potential for MLS to attract world-class talent and develop promising youngsters, paving the way for a brighter future for soccer in North America.

In conclusion, the MLS transfer system is a complex and fascinating aspect of the league that significantly influences its development, competitiveness, and appeal. By understanding and mastering this system, clubs can successfully build and strengthen their rosters while engaging fans and fostering long-term success. As the league continues to grow and capture the imagination of soccer fans worldwide, transfers will remain an integral component of Major League Soccer’s ongoing evolution and progress.