28 February 2013
Salary Caps: Financial & Competitive Stabilizers
Professional sport leagues have many restrictions within their organization to prevent the downfall of their leagues. There is one restriction in particular which prevents the leagues from financially collapsing. This restriction is known as a salary cap. A salary cap is the amount a team can spend on their player roster and coaching staff. Salary caps help the league maintain an equal competition within the season. Although it may help maintain a level playing field, salary caps have their cons. They can make the owners of the sport franchise wealthier at the expense of their athletes. If salary caps were not enforced, players could receive an unlimited amount of money as a salary. This gives athletes some leverage in the contract negotiation process. Several players would then ask for enormous contracts which would leave other players with salaries that are minimal. Teams would also offer superstar players an unlimited amount of money to outbid the other teams that were interested. This would result in a bunch of overpaid athletes throughout the league. These outcomes would lead to the financial downfall of the league. Salary caps are essential within professional sport leagues to maintain stability. Furthermore, salary caps are necessary because they keep an even competition throughout the league, prevent teams from having an overpaid superstar filled roster, and restrict teams from offering superstar players an unlimited amount of money to outbid other teams ultimately leading to the downfall of the league’s financial stability. Salary caps within professional sport leagues keep an equal level of competition when all factors are considered. The absence of a salary cap would result in a team full of overpaid all stars. Superstar players would sign to a team with a huge market and salary cap. An abundance of superstar players on one team would disrupt the balance of competition within the league. Brendan McSharry gives an example of what a professional team does in the absence of a salary cap: New York Yankees third baseman Alex Rodriguez makes more money than the president of the United States—a lot more. Rodriguez now rakes in $33 million a year. (President Barack Obama takes home $400,000.) In fact, the New York Yankees recently spent nearly a half-billion dollars recruiting all-star players. The team is able to do that because in Major League Baseball (MLB), there is no rule banning spending over a certain amount on players' salaries. Teams just have to pay a luxury tax if they do so. (7)
It is likely that the superstar-filled team would win against everyone else in the league with ease. However, the enforcement of a salary cap would even out the playing field. Teams may not be able to afford several superstars on their payroll due to the limitation placed upon them. “Wealthier teams tend to get the better players. That gives them an edge to compete, while teams with less money struggle to play a good season. That isn't fair” (McSharry 7). If a professional baseball team isn’t surrounded by a good market, it isn’t given an enormous salary cap. This would lead to a quite unfair competition within the baseball league. I concede that the presence of a salary cap can be harmful as well. The owners of the sport franchise would become wealthier at the player’s expense. The pay cut the athletes are taking would go right into the pockets of the owners. Perhaps the owners enforce salary caps for this purpose. Furthermore, the enforcement of a salary cap within a league is essential to keep the balance of competition.
A league with a salary cap leaves each sport franchise with enough room to have a successful roster. It is likely that teams with this kind of roster have a balanced payroll that is evenly distributed among the players based on talent. However, if there was not a salary cap...