The rules for acquiring players in Major League Soccer are famously byzantine, so much so that it can be hard for fans to know exactly how their club has acquired its players, how it has kept players around, or why it can't do either of those things. How, for example, were the LA Galaxy able to sign Joao Pedro as a Special Discovery Player? What even is a Special Discovery Player?
This flowchart, adapted from the league rulebook, may be a handy guide through the madness. Before starting, it may be helpful to remember that in MLS, all contracts are owned by the league, not its individual clubs (that's how they're able to have such a huge amount of control over player movement).
A glossary of bolded terms is available at the bottom.
Glossary of terms
Acquisition costs: Transfer or loan fees.
Allocation Ranking List: A list of players that must go through the Allocation Ranking Order in order to be acquired by an MLS club. According to the league, this list will include select U.S. men’s national team players, elite youth U.S. national team players, and former MLS players returning to MLS after joining a non-MLS club for a transfer fee greater than $500,000.
Allocation Ranking Order: A list of clubs that determines which clubs get first chance to sign a player on the Allocation Ranking List. The order is reset at the conclusion of each season in the reverse order of the club’s standings (taking playoff performance into account—so the MLS Cup winner is bottom of the ranking order, the MLS Cup runner-up is second-bottom, and so on).
Canadian Approved Youth Club: The type of club a Canadian player may have spent time at in order to qualify as a domestic player for U.S.-based MLS clubs. There are currently no public criteria on what constitutes a Canadian Approved Youth Club.
Designated Player: A player whose total cost—including transfer/loan fees, annual compensation, marketing/royalty bonus, signing bonus, agent’s fees, etc. exceeds that of the maximum Salary Budget Charge (in 2017: $480,625). Clubs bear responsibility for paying the remainder of the players’ cost above the maximum salary budget charge. Clubs may have up to three Designated Players on their roster.
Discovery List: A list of seven players or less kept by each club containing the names of players that the club could potentially sign as part of the Discovery Process. Teams may add or remove names from the list at any time and may sign as many players from that list as they like.
Discovery Process: A method by which clubs can sign players that are not under contract to MLS and not subject to another mechanism (Allocation, SuperDraft, etc.) In this process, clubs may sign players that they have placed on their Discovery List.
Draft-Eligible List: The list of players eligible for selection in the SuperDraft. Club technical staffs and the league nominate players to be placed on this list.
General Allocation Money (GAM): Money made available to MLS clubs as a way to buy down the Salary Budget Charge of any player on their roster, or to help offset the Acquisition Cost of signing a player from outside the league. Each club gets an allotment of GAM at the start of each year ($150,000 in 2016) and can also receive it for failure to make the playoffs, qualifying for the CONCACAF Champions League, and the transfer of a club’s player to a club outside of MLS. GAM is tradable between MLS clubs.
Generation Adidas: Known as Nike Project-40 in its early years, this partnership between MLS and the sports apparel brand selects a handful of college underclassmen and youth national team players and signs them to a contract with the league before placing them in the SuperDraft. The salaries of Generation Adidas players (or GAs, as they are often abbreviated) do not count against a club’s salary budget.
International Roster Spot: Roster spots to be used only by international players. There will be 176 total international roster spots across the league’s 22 clubs in 2017. These international spots can be traded and there is no limit to how many a single club can acquire.
MLS Free Agency: A mechanism by which players that reach certain age/service time requirements may negotiate with any MLS club while out of contract.
Primary Transfer Window: The transfer window that runs from prior to the MLS season and into the first third of the season (2017: Feb. 14-May 8). Trades involving players and any other signings may not be completed outside of this or the Secondary Transfer Window.
Re-Entry Draft: A draft of MLS players whose contract options were declined or are otherwise out-of-contract with the league, who also meet certain age/service time requirements (detailed in flowchart).
Salary Budget: The total amount each team has to spend on players. In 2017, each team has a salary budget of $3.845 million.
Salary Budget Charge: The amount a certain player counts against the team’s salary budget, minus any applications of General Allocation Money, Targeted Allocation Money, or other mechanisms.
Secondary Transfer Window: The transfer window that runs near the last third of the MLS regular season (2017: July 10-Aug. 9). Trades involving players and any other signings may not be completed outside of this or the Primary Transfer Window.
Special Discovery Player: A player for whom the club may amortize the player’s acquisition cost over the term of the players’ contract, instead of playing it all in the year of acquisition as in every other case. Each club may only have one Special Discovery Player on its roster, though they are tradable in some very highly-specific instances.
SuperDraft: The annual draft of young talent–largely from college but also including some young non-collegiate players. It is called “Super” because there used to be two MLS drafts–the College Draft and the Supplemental Draft. Those were combined in 2000 to become what we now know as the SuperDraft.
Targeted Allocation Money (TAM): Money made available to MLS clubs as a way to buy down the Salary Budget Charge of those making more than the league-maximum salary. TAM is tradable between MLS clubs.
Transfer fee: Money paid to a club for the right to negotiate a contract with the player.
Waivers: A method by which a team can remove a player from its roster, thereby making him available to all other teams.
Youth Academy: The youth development program of Major League Soccer teams. Every club in the league currently runs their own youth clubs, and may sign players directly from those clubs as “homegrown players.”