Salary Caps regulate finances not sporting fairness

I’m in the midst of reading the original version of Simon Kuper and Stefan Szymanski’s Soccernomics, which let me tell ya, is an absolutely fascinating read 10 years later.

Anyway, they dive into a chapter about whether it’s good or bad that Manchester United win every year (remember, it’s 2009). They remind us that back then UEFA president Michel Platini (before he was disgraced!) lamented the fact that the English teams were bigger than everyone else. He wanted to limit their spending power. He didn’t want the smaller clubs to feel like they had no chance.

It wasn’t long before Kuper and Szymanski began quoting arguments that compared the Premier League to the NFL. Naturally that focused around two things, the NFL’s model of revenue sharing and their salary cap.

Revenue sharing in sports is good. The Premier League has it and thanks to the massive TV deals, it’s made all their clubs insanely rich. That’s had a very positive effect on the overall competition.

But thank god the Premier League, or European soccer in general, never adopted the salary cap. That would have been a disaster.


Salary cap’s are sold to fans as a means of ensuring competitive balance. A cap provides a completely level playing field where every team has a chance to win. The biggest teams can’t simply buy up all the talent.

That of course is all a complete myth. Salary caps exist solely to regulate the economics of the league. They prevent owners from overspending beyond their means. That was a problem in the pre-lockout NHL and was a much bigger problem in Europe before the advent of Financial Fair Play laws.

What salary caps don’t do is create parity. Not even in the slightest.

The American sports that have salary caps are also the ones that have the most dynasties or the same teams popping up in the championship games year after year.

Let’s start with the NFL. Since the turn of the century only two Super Bowls haven’t featured Tom Brady, Peyton Manning, or Ben Roethlisberger. The Patriots have appeared in the last three consecutive Super Bowls, winning two. In the past 12 years we’ve had both a repeat matchup and two different teams made consecutive Super Bowls.

The NHL added a salary cap after the 2004-05 lockout. It only took four years for the league to have the Stanley Cup Finals matchup be a rematch of the previous year.

At the start of the decade the league was owned by the Chicago Blackhawks and Los Angeles Kings. The two teams alternated titles in six out of seven years. During that time, the Boston Bruins and Montreal Canadiens each went to the Eastern Conference Finals twice. The New York Rangers and Tampa Bay Lightning each went three times.

When the Blackhawks and Kings reign at the top ended, the Penguins immediately won two straight cups.

The best comparison to European soccer is probably to look at the same sport. Major League Soccer will try to sell you on the fact that 16 of the 28 teams have been in an MLS Cup final.

That’s a good PR line but the reality is the parity isn’t really there. Nine of the 22 cups have been won by either the Los Angeles Galaxy or DC United.

In the early years of the league, when things really were “even,” DC United went to the finals in four consecutive years, winning four of them. At the start of this decade the Galaxy won three titles in four years.

Twice in this decade alone the MLS Cup final has been a rematch of the previous year. That’s never happened in the history of the FA Cup (granted teams can be drawn against each other in earlier rounds as opposed to the MLS setup). Real Madrid and Atletico Madrid, Manchester United and Barcelona, and Liverpool and AC Milan all met in the Champions League final twice within three years but we’ve never had a repeat final during the Champions League era.

The NBA has the most regulation when it comes to salary. Not only do they cap how much teams can spend, but they put a max on player wages too. Of course they’re the league with the least parity.

The 90’s were dominated by Jordan’s Bulls. Then came the Shaq and Kobe Lakers. At the end of the oughts it was Boston and the Lakers back at the top. In between them all were Duncan’s Spurs.

This decade has been defined by Lebron and the Golden State Warriors. The Warriors are about to play in their fifth straight NBA Finals. The previous four were all against Lebron’s Cavs. Four years in a row! At the start of the decade it was Lebron’s Heat who went to four straight finals. The last two were against Duncan’s Spurs.

Now contrast all that with the uncapped baseball and Premier League. Major League Baseball hasn’t seen a team repeat since 2000. The Premier League just had their first repeat winner in 10 years!

Neither salary caps nor uncapped markets prevent good teams from rising up and having a sustained level of dominance. What a salary cap does is allow that to happen in any market, not just the big ones. If the NBA was uncapped San Antonio would never have a dynasty.

Leagues try to sell their fans on the idea that a cap allows any team to turn things around immediately (no league is better at this than the NFL). In the modern game, money talks. A cap prevents a rich guy from coming in and splashing money on their team.

Manchester City would never be able to become the club they are if FFP rules existed when they were bought (granted they don’t follow them anyway so bad example). That doesn’t mean just spending money on the best available players. It means spending money everywhere, coaching, scouting, player development.

The Red Sox and Cubs developed tremendous teams internally. When their young players were ready to compete that’s when they threw cash at free agents to supplement their stars. If baseball was capped, the Red Sox and Cubs never would have been able to turn things around.

The salary cap system rewards teams that are well run. The Patriots stay on top because Bill Belichick is that good. The Spurs had Gregg Popovich. Those coaches also benefit from something else; the overwhelming majority of sports clubs and franchises are run by people that aren’t competent enough to run a sports club or franchise.

Don’t believe me? Look at the NBA where owner routinely hand out max contracts to mid level players. The NBA even had to pass a rule disallowing teams to trade consecutive first round picks to prevent owners from digging themselves into holes they couldn’t get out of.

Deregulating how much money teams could spend on players wouldn’t change a thing from a sporting perspective. The well run teams would continue to spend smartly and stay at the top.

Unfortunately that’s only a very small minority of teams. The majority aren’t that frugal. There are far too many owners who would dream of an immediate turnaround and ruin their finances by overspending.

That’s why the salary cap exists. The salary cap prevents owners from themselves and keeps its leagues financially viable. It’s for them, not for you.

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