Kyle Hoffman
Issues in Sport Ethics
Salary Caps
Do you ever become tired of seeing the same teams qualify for postseason
play; and ask yourself when will my team get the opportunity to compete? Well this
is the case for most small market teams around professional sports. Salary caps in
sport would be beneficial to the small market teams by evening the competition as
well as the affordability for the consumer to attend the games. To set “a maximum
amount that a club can spend on player salaries” is coined as the definition in the
article, The Impact of Salary Caps in Professional Sports. Having the same amount of
money to spend for each club “is fixed year by year as a percentage of the total
league revue in the previous season, divided by the number of teams in the league”
(The Impact of Salary Caps in Professional Sports, Stefan Kesenne). Owners in
professional sport argue that lower player salary will reduce costs as well as ticket
prices. To note this statement is false, and a player’s salary would not affect the
merchandise or ticket pricing. The reasoning behind this false accusation is because
professional sports teams are monopolists and owners are allowed to set their
prices to maximize profit. Teams in professional sport already have an idea of what
they want to incur off ticket sales due to the demand of their team. A set price is
factored into the equation based off the demand figures of fans. This would allow
salaries to be cut and the installation of a salary cap for leagues that do not currently
hold a cap.
Salary caps would spark a competitive balance between oppositions in
professional leagues and would regulate salary distribution among players.
Kyle Hoffman
Issues in Sport Ethics
Although a salary cap can be a bloody mess between player and owner agreements;
it is a valuable resource to instill competitive balance between teams in professional
sports. To enable competitive balance there has to be an even playing field (salary
cap) to retain players. This is where some teams in uncapped leagues (i.e. MLB)
have a distinct advantage over other teams, and use money to buy championships.
For example, the Kansas City Royals will never be able to compete with the New
York Yankees in acquiring an elite player. The Yankees will buy that elite player off
because it has twice the spending money as the Royals do. Now, does that seem fair?
Hardly. Having a salary cap would allow the teams with less talent to engage in
acquiring elite players from teams with more talent simply because they would have
the same amount of money to work with. This would essentially level the playing
field for all teams, and allow teams who did not have much money the capability to
build a dominating franchise.
Holding a lockout can be very beneficial to a professional sport organization
due to the increase in fan attendance, a better chance for their team to succeed, and
incurred revenue gained. Lockouts are held because of salary caps and the inability
to come up with a deal between players and owners. Although salary caps favor
owners rather than players (income generated), it would make competition within
the league more plausible for a viewing audience. But sometimes the big shot
owners overlook the best interest of the league, and are so infatuated with
strengthening their team that they do not realize they are drawing fans away. The
fans are the number one priority, without fans leagues would not exist because
there wouldn’t be any profit. Owners need to introduce fans as an immense part of
Kyle Hoffman
Issues in Sport Ethics
the game. Personally, I do not like to see the same teams compete for championships
every year. As a sports fan, it is hard to watch similar types of championships year in
and year out. As a society we want to see the underdog teams arise and contend for
championships; so why not even the playing field if it means to cut player salaries.
As an athlete I know the pain and suffering players endure through out a season,
and they should be paid generously; but the immense amount of dollars they
complain about is absurd.
A profit was increased after the 2003-2004 NHL lockout; where owners were
spending between 66-76% of their revenue on player salaries. The league finally
came to a settlement and set a salary cap of 54% of league revenues. Income in the
NHL substantially increased the next five years and this was all due to establishing a
salary cap within the league. There are two types of salary caps in a professional
sports league, hard and soft; a soft cap is recognized as allowing a team to protect
their self from losing a star player. For example, in recent transaction the Miami
Heat acquired two more superstars to fill their squad. The NBA holds a soft salary
cap, which allowed the Miami Heat to do the most unthinkable obtainment in league
history. A move from a soft salary cap to a hard salary cap would disengage the
recruitment of league superstars to stacked teams. “In a hard salary cap, exceptions
would not be allowed and teams could not spend more than the cap” (Salary Caps in
Professional Team Sports, Paul D. Staudohar). A strict cap needs to be enforced
promptly before the league crumbles. Allowing superstars to pair up on teams is
becoming the demise of professional leagues. As a fan you do not want to see two
teams compete yearly for the championship.
Kyle Hoffman
Issues in Sport Ethics
Salary caps were first introduced to gain reasonable profit for owners due to
the extermination of the reserve clause. The reserve clause gave exclusive rights to
the owner in allowing them to do what they pleased with the drafter player (sell,
trade, put on waiver). A salary cap is set to avert high-paying teams the ability to
sign quality free agents from other teams. This increases the chances of low-paying
teams to compete and win games because they are significantly under the cap and
would be able to sign free agents. Imagine the unrestricted free agents that are
available in leagues all over; if a salary cap were to disappear from leagues like the
NFL and NBA it would result in mayhem. You have to wonder what would happen if
restricted free agents did not exist either? A restricted free agent is a player who
still belongs to their team under contract, only if that team does not give a one-year
tender offer to sign. A player cannot pack his bags and take off to other teams that
want to offer him. If a team gives an offer to a player, then the team that the player is
currently with has the ability to match the offer or compensate in draft picks. With
unrestricted free agents and no salary cap, all-star teams would be formed and
would exclude lower tier teams from playoff contention. Small market franchises
cannot compete with the big bucks that big market teams shell out. There is
absolutely no end to meeting a cap, and leagues without caps will soon collapse if
league organizations do not step in immediately.
In reference to the NFL free agency market, which was in its last year of the
collective bargaining agreement (2010) was set to create a “Wild West” premiere.
Owners never have had the chance in knowing what an uncapped season feels like;
so many NFL owners were skeptical of how this would play out. The league became
Kyle Hoffman
Issues in Sport Ethics
a wait and see match in witnessing who will dabble in the market first. “I think
everybody's waiting to see what everybody else does. There's been no precedent.
And there are guys who own teams who have never not had a salary cap. There are
guys in my business that don't know anything about an uncapped year. There are
general managers who have always lived under a cap” (USA Today, Agent Gary
Wichard). This will eventually spiral into frenzy, where fans will not appreciate
multiple starred free agents to one team. Owners were able to express freedom and
power over the smaller and weaker markets within the NFL; if you have money, now
is the time to let loose. Those with a sizeable bank account took this into
consideration and bought every Tom, Dick, and Harry. Art Rooney II (President,
Pittsburgh Steelers) knows what it takes to win championships, and according to
him you do not need a big pay roll. This uncapped salary excursion did not phase
Rooney, and this is the leadership other NFL owners need to take note of. “ I’ve
looked around the league at guys who have done that (pay off players), and there
aren’t too many success stories. I think the way we’ve done it has proven to be
successful” (Art Rooney II). I feel this is a great quote because he expresses his belief
that even if the league wants to have an uncapped year, he does not want to be apart
of it. Salary caps should be set into place and every team should abide by them
because a franchise should be built through the draft.
There are numerous instances through out all professional leagues that face
this burden. The more recent one that is currently happening is the signing of Albert
Pujols and C.J. Wilson to the Anaheim Angels. A contract that exceeds 250 million
dollars over a 10-year span (for one player) is absolutely ludicrous. Even if you are
Kyle Hoffman
Issues in Sport Ethics
one of the best players in the game, there should be a limit in disabling the amount
of money a team can spend on one person. Do you think the Kansas City Royals or
the Tampa Bay Rays were even considered in the Albert Pujols sweepstakes? No.
They were negated from the discussion as soon as it was brought up. A salary cap
has to be in order to even out the competitiveness of the league because even if the
Royals sign an outstanding player from their farm system he will eventually leave
for better money. The Royals do not have the money to give infinite contracts like
the Yankees do; so that outstanding player who was in your farm system will
eventually flee to higher grounds.
In conclusion, salary caps are just another factor to the game of sports, and
for the game to evolve and grow worldwide a limit needs to be set to disclaim the
hazard of stacking teams. A salary cap would initially negate teams from buying
their championships, helping small market firms, and creating more of an incentive
to compete.
http://www.bls.gov/opub/cwc/archive/spring1998art1.pdf
http://financialedge.investopedia.com/financial-edge/0910/how-salary-capschanged-sports.aspx?partner=worldnow#axzz1a8sy3ySe
http://onlinelibrary.wiley.com/doi/10.1111/1467-9485.00171/pdf
http://www.usatoday.com/sports/football/nfl/2010-03-03-free-agency-with-nosalary-cap-awaits_N.htm
http://espn.go.com/los-angeles/mlb/story/_/id/7330066/st-louis-cardinals-albert-pujolsjoin-los-angeles-angels
Kyle Hoffman
Issues in Sport Ethics