Rooting For The Salary Cap

The National Football League is a gigantic sports organization with a revenue of over $9 billion in the 2013 season (Burke, 2013). The NFL established a hard salary cap two decades ago and it has been an essential part of the finance in American football ever since (Brooke, 2013).  The cap which is based on a collective agreement between the League and the Players’ Association has successfully prevented player salaries from sky-rocketing (CBA, 2011). To my mind, the salary cap has turned out to be one of the best tools to create fan interest and to increase the League’s revenues.

First off, it’s astonishingly hard to find another league with a wider base of title contenders than the NFL. The Super Bowl race is exciting and full of surprises year in year out. There’s no doubt that the salary cap is a key factor. Teams have a strict limit in the amount of money that they invest in players annually, so the most talented individuals are spread quite evenly throughout the league. During its two decades of capped seasons the NFL has had 13 different Super Bowl champions (NFL, 2014). Compared to the MLB (which doesn’t have a salary cap) this is significant. The Yankees with the highest payroll in the big leagues has won The World Series five times during the same span.

It’s not just about the victors of the past. The current football season has a significant surplus of serious contenders. That’s what makes it so fun for us fans to watch. Thanks to the salary cap, the league is filled with highly competitive teams. It’s sweet for fans nationwide in the US. Your local team has a fair chance to succeed whether you lived in Wisconsin, Texas or Florida.  Every match has the potential to become a nail-biter so you can’t really watch a dull game on Sunday (unless you’re rooting for the Jets). The salary cap forces the National Football League to financial equality which makes it more a competition of playing football than spending money.

Naturally the salary cap wasn’t established just to please the fans. Sure, an even contest between a vast majority of football teams has lead to an increased fan interest. But ultimately for the NFL it means higher revenues. Excited fans are poised to spend more money on tickets, subscriptions and fan gear. Even the preseason home opener in bankrupt Detroit was sold out (Rothstein, 2014). Teams are also getting their shares of the NFL’s success of course. Ticket and merchandise sales are their bread and butter naturally, but on top of that the salary cap is tied to league revenues (Brooke, 2013). So it seems that the salary cap in the NFL has been a roaring success in creating value to both fans and league executives.

 

 

 

Sources:

Monte Burke, 2013. How The National Football League Can Reach $25 Billion In Annu-al Revenues. http://www.forbes.com/sites/monteburke/2013/08/17/how-the-national-football-league-can-reach-25-billion-in-annual-revenues/

Tyler Brooke, 2013. How Does the Salary Cap Work in the NFL? http://bleacherreport.com/articles/1665623-how-does-the-salary-cap-work-in-the-nfl

NFL, NFLPA, 2011. Collective Bargaining Agreement. http://nfllabor.files.wordpress.com/2010/01/collective-bargaining-agreement-2011-2020.pdf

NFL, Accessed 2014. Super Bowl History. http://www.nfl.com/superbowl/history

Michael Rothstein, 2014. Lions game against Browns sold out. http://espn.go.com/blog/detroit-lions/post/_/id/9638/lions-game-against-cleveland-sold-out

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5 Responses to Rooting For The Salary Cap

  1. joonatans says:

    Hey jaakkos! Great post. Do you think that the current salary cap is right size? Or should it be smaller or higher?

  2. jaakkos says:

    Thank you for your comment. I think that the cap is currently just fine because there are a lot of competitive teams out there this season. In addition the cap is tied to league revenues so it keeps up with the growth of the League 🙂

  3. rasmusla says:

    Interesting post and great views. Keep it up!

  4. jakevirtanen says:

    I disagree with you despite the good points. There shouldn’t be any salary caps in any sport and we should allow teams to get bigger and great huge dynasties!

  5. joonatans says:

    #GoGiants

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