Salary Caps, Luxury Taxes, and Revenus Sharing

Topics: Major League Baseball, Boston Red Sox, New York Yankees Pages: 4 (1498 words) Published: October 16, 2007
Salary Caps, Luxury Taxes, and Revenue Sharing
Professional sports, as enjoyable as they may be, are plagued with constant disagreements over money. Money, not necessarily in terms the exchange between players and management, but over how money should be distributed throughout the teams. In this disagreement there is talk about revenue sharing, luxury taxes, and salary caps, which all tie into the issue of competitive balance. To come to a conclusion on this issue both sides need to be investigated. Salary cap, luxury taxes, and revenue sharing are all schemes designed to promote competitive balance, different sports apply different schemes in order to do so. A salary cap as it is defined by the NFL is the maximum amount each club may pay or provide to a player on the club's roster during the course of a league year (NFLCBA). A salary cap is used in the National Football League (NFL), and a luxury tax is used in Major League Baseball (MLB). A luxury tax is a tax paid by an MLB club determined by how much a club goes over a set amount of money each year. That amount is set by the collective bargaining agreement and agreed upon the by the players association, owners, and commissioner (MLBCBA). Revenue sharing, as it is an issue in the NFL, is the even distribution of revenue to all clubs (Marburger). These three terms create a lot of chaos among league officials, owners, players, and even fans, but all supposedly are to help create a better competitive balance in each league.

Revenue sharing is a hot topic among baseball's elite- the commissioner's office and team officials. "There's an argument that both teams playing in a baseball game should share equally in the revenues generated by that game, as each is half the attraction" (Sheehan Jan).This argument is looked upon angrily by the MLB Players Association, as keeping only a percentage of your revenue would greatly drag down salaries. The MLBPA has a say in the amount of revenue sharing that the owners can...

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