Hours before the draft was set to take place in Baltimore, the Galaxy have traded the 12th overall selection in the 2016 MLS SuperDraft to the Colorado Rapids in exchange for Targeted Allocation Money.
Targeted Allocation Money, an initiative announced last year to allow teams to further invest in their roster outside the player budget, may be used in four ways:
Clubs may use the funds to sign a new player provided his salary and acquisition costs are more than the maximum salary budget. Clubs may re-sign an existing player provided he is earning more than the maximum salary budget. Clubs may buy down the budget charge of an existing Designated Player (no longer making that player a DP) provided the club concurrently signs a new Designated Player at an investment equal to or greater than the player he is replacing. Clubs may trade their Targeted Allocation Money to another club.
It was always a strong possibility the Galaxy would look to trade assets for TAM during the off-season. LA needs extra funds to help acquire the likes of Nigel de Jong, and conversely for teams who have TAM available but don't plan on using it this year, why not trade it away?
The MLS roster rules stipulate teams must spend their TAM from the previous season, so if you're the Colorado Rapids, you might as well get something for it, in this case, the 12th overall pick in the draft for basically nothing.
In all, the transaction is a win-win for both teams.