Salary Cap Creates Profitability Gap Among Teams

Daniel Snyder Washington RedskinsDaniel Snyder, the free-spending owner of the Washington Reskins

Photo: AP

The gap between the value of the most profitable and least profitable teams has been widening across the sports world, and Mike Ozanian of Forbes believes salary caps are to blame.Since cap numbers are generally derived by total league-wide revenue, it is set at a proportional level that treats every team the same.

For high-revenue teams like the Redskins or Lakers, that keeps payroll low relative to their income, which only makes it easier to reap huge gains.

That’s why just three teams account for 64% of the NBA’s profit.

Meanwhile, for the less-valuable teams, the salary cap is set too high, forcing them to pay more in salaries then they otherwise might and cutting into their profit.

So in the NHL, for example, which employs a salary cap, all the teams spend close to the same amount on players, whether they are selling out every game (like the Maple Leafs) or playing in front of empty seats (like the Coyotes.)

But in a sport without a salary cap like baseball, the Yankees can spend an exuberant amount on players, while the Pirates pinch pennies.

So while the salary cap may even the playing field on the field, the rich get richer at the expense of the (relative) poor.

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