Bal;Ksdf Essay

1215 words - 5 pages

10 years after the fact, this court ruling has been detrimental to the NFL as it has worsened the competitive balance of the league, slowed the growth of player salaries, and hindered the growth of the league’s market capitalization
By abolishing the salary cap, the Department of Justice ruling has had a substantial impact on the competitive balance of the NFL. Because the salary cap was removed, over the past 10 years teams from big markets, or who have deep-pocketed owners, have been spending money rampantly. Small market teams have been marginalized to a point of having very little chance to win, as they cannot afford to spend freely on talent, as they do not have the income potential to make money. This progression is similar to what we have seen over the years in professional soccer, specifically in the UEFA champion’s league and Spain’s. In the UEFA Champions League, 12 teams have combined to win 48 out of the 58 championships, or 82.76% of championships. There has been such a lack of Competitive Balance in revenue splitting and salary cap free soccer that even among the best teams in the world there is great disparity. An even more extreme example can be found in Spain’s La Liga, where the top 2 teams have won 65.85% of the league’s 82 championships and the top 5 teams have won 93.9% of the league’s championships. This lack of competitive balance is certainly caused by a lack of salary cap, as the top 2 teams spend up to €190,000,000 per year on players while lower level teams spend up to €14,000,000 per year on players. The NFL’s continued revenue sharing, however, has made it so that disparity in the league isn’t quite as large as it is in professional soccer. Despite these effects of Revenue sharing, the lack of a salary cap has negatively affected the league’s competitive balance, which has created fewer viable markets, and therefore less potential for league growth for the NFL than that which a salary cap would have provided.
Though many would think that a lack of a salary cap would be beneficial for players, the truth is that average player salary growth per year has actually gone down. Over the past 10 years, NFL player salaries have become similar to those in the MLB. In the MLB from 2006-2011, average player salary grew by an average of 3% per year while average franchise value grew by an average of 7% per year. In the NFL, over a similar time period, before the salary cap was lifted, the average player salary grew by an average of 7% per year while the average franchise value grew by 3% per year. These numbers serve as an explanation for why NFL salaries have continued to rise, but not as much as they did when the league had a salary cap. When the NFL lifted its salary cap, players began to receive less, as their average percent salary growth per year grew closer to less than the percent growth of the leagues average franchise value. The ratio of player salary growth to team market capitalization growth, however, hasn’t...

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