Salary cap
Encyclopedia
In professional
sports, a salary cap (or wage cap) is a cartel
agreement between teams that places a limit on the amount of money that can be spent on player salaries. The limit exists as a per-player limit or a total limit for the team's roster, or both. Several sports leagues have implemented salary caps, both as a method of keeping overall costs down, and to ensure parity between teams so a wealthy team cannot entrench dominance by signing many more top players than their rivals. Salary caps can be a major issue in negotiations between league management and players' unions, and has been the focus point of several strikes
by players and lockouts
by owners and administrators.
Primarily, an effective salary cap prevents wealthy teams from certain destructive behaviours, such as signing a multitude of high-paid star players, preventing their rivals from accessing talented players and ensuring victory through superior economic power. With a salary cap each club has roughly the same economic power to attract players, which contributes to parity - roughly equal playing talent in each team in the league, which in turn brings economic benefits both to the league and to its individual teams.
Leagues need to ensure a degree of parity between teams so that games are exciting for the fans and not a foregone conclusion. The leagues that have adopted salary caps generally do so because they believe letting richer teams accumulate talent affects the quality of the sporting product they want to sell. If only a handful of dominant teams are able to win consistently and challenge for the championship, many of the contests will be blowouts by the superior team, reducing the sport's attractiveness for spectators both at the ground and viewing on television. Television revenue is an important part of the income of many sports around the world, and the more evenly matched and exciting the contests, the more interesting the television product, meaning the value of the television broadcast rights is higher. An unbalanced league also threatens the financial viability of the weaker teams, because if there is no long term hope of their club winning, patrons of the weaker clubs may gravitate to other sports and leagues.
The need for parity is more pronounced in leagues that use the franchise model, rather than the promotion and relegation
model, used in European football
. The structure of a promotion and relegation system means weaker teams struggle against the threat of relegation, adding importance and excitement to the matches of weaker teams. International club competitions such as the UEFA Champions League
also means that the top clubs always have something to play for, even in the most unbalanced of national leagues.
A salary cap can also help to control the costs of teams and prevent situations in which a club will sign high-cost contracts in order to reap the benefits of immediate popularity and success, only to later find themselves in financial difficulty because of those high costs. Without caps there is a risk that teams will overspend in order to win now at the expense of long term stability. Team owners who use the same risk-benefit analysis used in business may risk not just the fortunes of their own team but the reputation and viability of the whole league. Sporting consumers are generally looking to support a team for life, not just a product to purchase for the short term. If teams regularly go bankrupt or change markets the same way businesses do, then the whole sport looks unstable to the sporting consumers, who may lose interest and switch their support to a more stable sport where their team and their rivals are more likely to be playing in the long term.
, which was long a standard clause in professional sports player contracts in the United States. The clause forbade a player from negotiations with another team without the permission of the team holding that player's rights even after the contract's term was completed. This system began to unravel in the 1970s due largely to the activism of players' unions, and the threat of anti-trust legal actions. Although anti-trust actions were not a threat to baseball
, which has long been exempt
from anti-trust laws, that sport's reserve clause was struck down
by a United States
arbitrator as a violation of other labor laws.
By the 1990s most players with several years' professional experience became free agent
s upon the expiry of their contracts and were free to negotiate a new contract with their previous team or with any other team. This situation, called Restricted Free Agency, led to "bidding wars" for the best players—a situation which inherently gave an advantage in landing such players to more affluent teams in larger media markets.
(NHL). During the Great Depression
, the league was under financial pressure to lower its salary cap to $62,500 per team and $7,000 per player, forcing some teams to trade away well paid star players in order to fit the cap.
, revenue sharing
, salary cap, or salary floor.
Player salaries
did not become an issue until the 1970s, when Alan Eagleson
founded the NHL Players' Association (NHLPA) and the upstart World Hockey Association
began competing with the NHL for players. On the other hand, Harold Ballard
of the Toronto Maple Leafs
spent among the league minimum on rosters, making his team the most profitable.
The 1994–95 NHL lockout was fought over the issue of the salary cap. The 1994–95 season was only partially cancelled, with 48 games and the playoffs
eventually being played.
Eight NHL franchises were based in Canada
at the time of the lockout, but they suffered a revenue discrepancy. All NHL salaries must be paid in U.S. dollars, but the Canadian teams' revenues were in Canadian dollars. The financial difficulties and uncertainties of competing in smaller Canadian markets led to two clubs moving to the U.S.; the Quebec Nordiques
to Denver
, and the Winnipeg Jets to Phoenix
. NHL Commissioner
Gary Bettman
successfully persuaded the US-based teams to donate towards a pool to mitigate the negative effect of the exchange rate.
revolved primarily around players' salaries. The league contended that its clubs spent about 75% of revenues on salaries, a percentage far higher than existed in other North American sports; NHL Commissioner Gary Bettman demanded "cost certainty" and presented the NHLPA with several concepts that the Players' Association considered nothing more than euphemisms for a salary cap, which it had vowed it would never accept.
The previous CBA had expired on September 15, 2004, and a lockout
ensued, leading to the cancellation of the entire 2004–05 NHL season, the first time a major sports league in North America had lost an entire season to a labor dispute.
39 million per team, with a maximum of $7.8 million (20% of the team's cap) for a player.
Revenues for the six Canadian teams that were in the league at the time of the lockout have all increased significantly since then, and due to the fact the US dollar fell to relative parity with its Canadian counterpart, league-wide revenues measured in U.S. dollars have been inflated accordingly.
As a result of these factors, the cap has been raised each year to its current figure of $64.3 million for the 2011–12 season
, with a cap of $12.86 million for a player. The CBA also contains a salary floor which is formally titled the "Lower Limit of the Payroll Range", the minimum that each team must pay in player salaries. The lower limit was originally set at 55% of the cap, but is now defined to be $16 million below the cap, therefore the 2011–12 minimum is $48.3 million. The difference between the salary cap and a team's actual payroll is referred to as the team's "payroll room" or "cap room".
Each year of an NHL player contract, the salary earned contributes to the team's "cap hit". The basic cap hit of a contract for each year it is effective is the total money a player will earn in regular salary over the life of the contract divided by the number of years it is effective. This, in theory, prevents a team from paying a player different amounts each year in order to load his cap hit in years in which the team has more cap room. Teams still use this practice, however, for other reasons. Performance bonuses also count towards the cap, but there is a percentage a team is allowed to go over the cap in order to pay bonuses. A team must still factor in possible bonus payments, however, which could go over that percentage.
Salary for players sent to the minors, under most circumstances, do not count towards the cap while they are there. If a player has a legitimate long-term injury, his cap hit is still counted; however, the team is permitted to replace him with one or more players whose combined salary is equal to (or less than) that of the injured player, even if the additional players would put the team over the salary cap. If the team's cap room is larger than the injured player's cap hit, they may take on as much as their cap room; however, the injured player may not return to play until the team is again compliant with the original cap.
The NHL has become the first of the major North American leagues to implement a hard cap while retaining guaranteed player contracts. Guaranteed player contracts in the NHL differ from other sports, notably the NFL, where teams may opt out of a contract by waiving or cutting a player. NHL teams may buy out players' contracts, but must still pay a portion of the money still owed which is spread out over twice the remaining duration of the contract. This does not apply for players over 35 at the time of signing; in this case a team cannot buy out the player's contract to reduce salary. Any other player can be bought out for ⅓ of the remaining salary if the player is younger than 28 at the time of termination, or ⅔ of the remaining salary if the player is 28 or older. Trading cash for players or paying a player's remaining salary after trading him have been banned outright in order to prevent wealthier teams from evading the restrictions of the cap.
Players, agents or employees found to have violated the cap face fines of $250,000 - $1 million and/or suspension. Teams found to have violated the cap face fines of up to $5 million, cancellation of contracts, forfeiture of draft picks, deduction of points and/or forfeiture of game(s) determined to have been affected by the violation of the cap.
The cap was first introduced for the 1994 season and was initially $34.6 million. Both the cap and the floor were adjusted annually based on the league's revenues, and they increased each year. In , the final capped year under that agreement, the cap was $128 million per team, while the floor was 87.6% of the cap. Using the formula provided in the league's collective bargaining agreement, the floor in 2009 was $112.1 million. Under the NFL's agreement with the NFLPA, the effect on the salary cap of guaranteed payments (such as signing bonuses) are, with a few rare exceptions, prorated evenly over the term of the contract.
In transitions, if a player retires, is traded, or is cut before June 1, all remaining bonus is applied to the salary cap for the current season. If the payroll change occurs after June 1, the current season's bonus proration is unchanged, and the next year's cap must absorb the entire remaining bonus.
Because of this setup, NFL contracts almost always include the right to cut a player before the beginning of a season. If a player is cut, his salary for the remainder of his contract is neither paid nor counted against the salary cap for that team. A highly sought-after player signing a long term contract will usually receive a signing bonus, thus providing him with financial security even if he is cut before the end of his contract.
Incentive bonuses require a team to pay a player additional money if he achieves a certain goal. For the purposes of the salary cap, bonuses are classified as either "likely to be earned", which requires the amount of the bonus to count against the team's salary cap, or "not likely to be earned", which is not counted. A team's salary cap is adjusted downward for NLTBE bonuses that were earned in the previous year but not counted against that year's cap. It is adjusted upward for LTBE bonuses that were not earned in the previous year but were counted against that year's cap.
One effect of the salary cap was the release of many higher-salaried veteran players to other teams once their production started to decline from the elite level. On the other hand, many teams have made a practice of using free agents to restock with better personnel more suited to the team. The salary cap prevented teams with superior finances from the formerly widespread practice of stocking as much talent on the roster as possible by placing younger players on reserve lists with false injuries while they develop into NFL-capable players. In this respect, the cap functions as a supplement to the 53-man roster limit and practice squad limits.
Generally, the practice of retaining veteran players who had contributed to the team in the past, but whose abilities have declined, became less common in the era of the salary cap. A veteran's minimum salary was required to be higher than a player with lesser experience. This means teams tended to favor cheaper, less experienced prospects with growth potential, with an aim to having a group of players who quickly develop into their prime while still being on cheaper contracts than their peers. To offset this tendency which pushed out veteran players, even those who became fan favorites, the players' association accepted an arrangement where a veteran player who receives no bonuses in his contract may be paid the veteran minimum of up to $810,000, while only accounting for only $425,000 in salary-cap space.
The salary cap also served to limit the rate of increase of the cost of operating a team. This has accrued to the owners' benefit, and while the initial cap of $34.6 million has increased to $128 million, this is due to large growths of revenue, including merchandising revenues and web enterprises which ownership is sharing with players as well.
The owners opted out of the CBA in 2008, leading to an uncapped season in 2010.
Year by Year Salary Cap
For 2012, the cap number for international designated players will depend on the players' ages. Players under 20 will count $150,000 against the cap and those age 21 to 23 will count $200,000, with older players remaining at a cap number of $335,000.
The end of the NBA's collective bargaining agreement on July 1, 2011 and the subsequent lockout of players
from team facilities means that no salary cap technically exists in the NBA. The previous agreement included a salary cap that was similar to the NFL, in that the cap was calculated as a percentage of the league's revenues. The cap for the 2010-11 season was $58.04 million. Future financial arrangements between the NBA and its players are yet to be determined, but it is highly likely that a salary cap, with fewer loopholes, will be part of any future CBA.
Through 2010–11, the NBA's salary cap was a "soft" cap, meaning that teams were allowed to exceed the cap in order to retain the rights to a player who was already on the team. This provision was known as the ""Larry Bird" exception, named after the former Boston Celtics
great who was retained by that team until his retirement under the provisions of this rule. The purpose of this rule was to address fan unease over the frequent changing of teams by players under the free agency system, as fans became displeased over their favorite player on their favorite team suddenly bolting to another team. The "Larry Bird" provision of the salary cap gave the player's current team an advantage over other teams in free agent negotiations, thus increasing the chances that a player would stay with his current team.
The provision tended to result in most teams being over the cap at any given time. Teams that violated the cap rules faced fines of up to $5 million, cancellation of contracts and/or loss of draft picks, and are prohibited from signing free agents for more than the league minimum. The NBA also has a salary floor, but teams are not penalized as long as their total payroll exceeds the floor at the end of the season.
The NBA also had a luxury tax system which is triggered if the average team payroll exceeds a certain amount higher than the cap. In this case, the teams with payrolls exceeding a certain threshold had to pay a tax to the league which is divided amongst the teams with lower payrolls. However, this penalty was levied against teams in violation only if the league average also breached a separate threshold.
The NBA also implemented a maximum salary for individual players. This was done following a dramatic increase in player salaries, in spite of the salary cap, in the mid-1990s. Under the CBA, a player's maximum possible salary increased along with his time of service in the league. For a player of five years' experience, the maximum salary threshold began at 25% of the salary cap, with annual increases of up to 10.5% possible beyond that for players re-signed by their original team, or 8% annual increases for free agents that signed with new teams. For players of greater experience, the salary limit was higher - but the 10.5% limit on annual increases remained the same.
In the NBA, the salary cap has not had the same effect of breaking up championship teams and movement of veteran players between teams that has occurred in the NFL. Repeat championship winners have been far more likely to occur in the NBA than in the NFL in the salary cap era. Also, the overall rate of salaries paid and the expense to operate a team rose more rapidly in the NBA than in the NFL. The average NBA salary in 2010–11 was $5.356 million, the highest of any major North American sports league. This is mitigated by the NBA roster size of 15 as opposed to 55 for NFL teams, 23 for NHL teams, and the varying 24-40 man rosters (24 or 25 after opening day, 24-40 beginning September 1) of Major League Baseball.
Instead of a salary cap, Major League Baseball
implements a luxury tax
, an arrangement in which teams whose total payroll exceeds a certain figure (determined annually) are taxed on the excess amount. The tax is paid to the league, which then puts the money into its industry-growth fund.
A team that goes over the luxury tax cap for the first time in a five-year period pays a penalty of 22.5% of the amount they were over the cap, second-time violators pay a 30% penalty, and teams that exceed the limit three or more times pay a 40% penalty. The cap limit for 2010 is $170 million, and the cap for 2011 is $178 million.
, only the Boston Red Sox
, the Los Angeles Angels of Anaheim
, the Detroit Tigers
, and the New York Yankees
have paid any luxury tax; the Yankees have contributed to over 95% ($164.1 million) of tax payments, and have been subject to six of the eleven occasions the tax has been implemented.
Money collected under the MLB luxury tax are apportioned as follows: The first $5m is held in reserve, to pay for possible luxury tax refunds. Once it is clear that there are no refunds to be issued, this money is then earmarked for the Industry Growth Fund (IGF). 50% of the remaining money is used to fund player benefits, 25% is used to fund baseball programs in developing countries with no high-school baseball, and 25% is put into the Industry Growth Fund (IGF).
Others pundits, such as Michael Lewis
, the author of the bestseller Moneyball, have argued that using World Series championships as an example of parity may be misleading, and playoff appearances may be a better indicator of relative team strength. The playoff system used in baseball comprises a small number of games compared to success over a long season, and has been described as a "crapshoot" by Oakland A's General Manager Billy Beane
. Teams with consistently high payrolls including the New York Yankees and Boston Red Sox have secured high numbers of playoff berths while teams with low payrolls such as the Pittsburgh Pirates and Tampa Bay Rays have only made the playoffs twice combined over the past decade.
Some teams, notably the Milwaukee Brewers, have called for the introduction of a salary cap, but any introduction is opposed by the MLB players' union
, and the Yankees' ownership group; the latter have threatened legal action. Although some saw the success of NHL owners in their 2004–05 lockout as an opportunity for MLB to reform its collective bargaining agreement, baseball owners agreed to a new five-year deal in October 2006 that did not include a salary cap. Unlike the other three major North American sports, MLB also has no team salary floor: the only minimum limits for team payrolls are based on the minimum salaries for individual players of various levels of experience that are written into MLB's collective bargaining agreement.
board of governors meeting in Winnipeg
, Manitoba
. http://www.cfl.ca/index.php?module=page&id=17 The CFL began enforcing strict salary cap regulation for the 2007 season
, which was set at $4.05 million with a salary floor of $3,746,250 (92.5% of the cap); the cap will be set at $4.25 million for the 2010 season, with a salary floor of $3,931,250. http://www.cfl.ca/index.php?module=newser&func=display&nid=12166
Penalties for teams found to have breached the salary cap or salary floor regulations are fines of the amount involved for the first $100,000, fines of double the amount involved and forfeiture of the first-round draft pick for the next $200,000, and fines of triple the amount involved and forfeiture of the first and second-round draft picks for any amount in excess of $300,000. http://www.cfl.ca/index.php?module=page&id=17.
The salary cap of the first Arena Football League
was $1.82 million per team in its final season in 2008. In 2005, the Tampa Bay Storm
were fined $125,000 for salary cap violations and their head coach Tim Marcum was suspended for four games (two in the 2005 season, two in 2006) and fined $25,250; Marcum was suspended for a fifth game the next day for criticizing the decision at a press conference.
When the Arena Football League returned in 2010, it instituted a standard salary of $400 per game and a salary cap of $1.5 million, considerably lower than that paid by teams in the previous AFL. Given that the new AFL had a 16-game season in 2010, this effectively means that its players are semi-professional.
, the leading Italian
football league and The Football League
in England
have also considered salary caps.
These measures would be implemented to ensure clubs spend responsibly rather than as a tool to create parity. Top executives in European football
have acknowledged that a number of challenges not present in North America would confront anyone who tried to implement an effective cap across European football or even across a single league with a view to creating competitive balance:
However, several European rugby
leagues, as well as ice hockey
leagues have successfully instituted salary caps. Rugby league's Super League
, mainly in England with a team also in France (and formerly one in Wales), is capped. Historically, Super League had used promotion and relegation, but changed in 2009 to a licensing system with some similarities to the North American franchising model. In rugby union, two of the continent's three main domestic/regional leagues—the Aviva Premiership in England
and the Top 14 in France—instituted caps despite both being at the top of extensive pyramid structures with promotion and relegation throughout. The most notable European ice hockey league with a salary cap is the Kontinental Hockey League
(which uses the franchising model), and that league implemented a cap despite currency issues.
, such as 2011–12
, gives teams a £30,000 credit for each player on the roster participating in the competition, helping them to manage their reduced rosters in the season's early weeks.
Through 2011–12, the cap remains at £4 million. However, academy credits were introduced that season. Teams now receive a £30,000 credit for each home-grown player in their senior squads, with a maximum of eight such credits. This increases the effective cap to a maximum of £4.24 million (not counting World Cup roster credits).
Two substantial changes are set for 2012–13. First, the cap will increase to £4.26 million before academy credits and up to £4.5 million with credits. The most significant change will be that teams will be allowed to designate one player whose salary will not count against the cap, similar to the Designated Player Rule in MLS.
. Previously, the only restrictions on team salaries were that wage bills were limited to 50% of turnover and that 10% of the salary budget had to be held in reserve. Along with the announcement of the cap, LNR also declared that the reserve requirement would be raised to 20%, with the previous limitation of 50% of turnover remaining in effect.
Before the introduction of the cap, it was widely speculated outside of France that some Top 14 clubs had wage bills of €20 million. As it turned out, the new cap was in fact higher (by 5%) than the highest official wage bill in the 2009–10 season
. Also, due to the complex nature of French club administration, clubs were seen as likely to find creative ways to skirt the cap—for example, one major overseas player was rumored to be receiving less than 40% of his total income from the club as on-the-books salary in the 2008–09 season.
was dissolved to make way to the modern-day KHL, the Kontinental Hockey League Players' Union (KHLPU) agreed to the implementation of a salary cap. When first implemented there was a salary cap, as well as a salary floor. As of the 2009-10 KHL season, the salary cap was 620 million rubles
($US18.3 million) and the salary floor was 200 million rubles ($US5.9 million). The KHL's cap operates despite the KHL's multinational nature, with teams in Belarus
, Kazakhstan
, Latvia
, and (as of 2011–12
) Slovakia
, in addition to its primary base of Russia
. The four non-Russian countries each use different currencies that currently float against the ruble. Kazakhstan has never sought to peg its currency
to any other. Belarus has in the recent past attempted to peg its currency
to the ruble and the US dollar
with limited success. Slovakia uses the euro, while Latvia's currency
is closely tied to the euro via the country's membership in ERM II
.
Also, starting in 2011-12, each team can sign up to two "designated players" whose salaries are not counted against the cap. The KHL salary cap is a soft cap, with a luxury tax amounting to 30% of the payroll that is over the cap, paid to the special stabilization account, which helps KHL teams facing financial hardship.
has implemented a salary cap on its clubs since 1987, when Brisbane and West Coast were admitted, as part of its equalization policy designed to neutralize the ability of its richest clubs, namely Hawthorn
, Essendon
, Collingwood
and Carlton
to perennially dominate the competition.
The cap was set at A$
1.25 million for 1987–1989 as per VFL agreement, with the salary floor set at 90% of the cap or $1.125 million. The salary floor was increased to 92.5% of the cap in 2001 due to increased revenues. Both the salary cap and salary floor has increased substantially since the competition was re-branded as the AFL in 1990 to assist in stemming the dominance of high membership clubs such as the West Coast Eagles
and Adelaide.
The salary cap, known officially as Total Player Payments, is A$8,212,500 for the 2011 season with a salary floor of $7,596,562.50, except for the Gold Coast expansion team, whose salary cap will be A$9,212,500 with a salary floor of A$8,596,562.50.
Certain payments are excluded from the cap, and concessions are available for some players, in particular, "veteran" players (those over the age of 30 and/or who have completed 10 seasons with their current club) and "nominated" rookie list
players, who are discounted by up to 50% for purposes of the cap. The AFL Players Association
negotiates for players with the AFL on the topic of average salary.
Penalties for players, club officials or agents include fines of up to one and one half times the amount involved and/or suspension. Penalties for clubs include fines of up to triple the amount involved ($10,000 for each document that is late or incorrectly lodged or lost), forfeiture of draft picks and/or (since 2003) deduction of premiership points; the latter penalty has never been implemented. As yet no club has been penalised for breaches of the salary floor regulations.
Documented breaches of the salary cap regulations are as follows:
The AFL has used the cap to pursue its policy of supporting clubs in non-traditional markets such as Sydney and Brisbane. Until the 2003 season, the Swans and the Brisbane Lions
were permitted a 15% higher cap. This advantage attracted criticism after the Lions won three consecutive premierships from 2001–2003, and as a result, the Sydney Swans
now have a 7% higher cap due to the increased cost of living in that city, and Brisbane's advantage has been eliminated. The AFL maintains that higher salary caps may be used in the future to support its expansion into rugby league
's heartland in New South Wales
and Queensland
.
There are a significantly higher number of AFL reserves in the Victorian Football League
due to affiliations with Victorian clubs, but player payments for these appearances is apparently not included in the VFL's salary cap.
adopted a hard salary cap model in its first season in 1998. The salary cap is A$4.6875 million in 2010 and AU $5 million in 2011, with a salary floor of A$4.21875 million in 2010 and A$4.5 million in 2011 (90% of the cap). The NRL's stated purposes for having a salary cap are "to assist in spreading the playing talent" and "ensure that clubs are not put into positions where they are forced to spend more money than they can afford in terms of player payments, just to be competitive." http://www.nrl.com.au/nrlhq/referencecentre/salarycap/tabid/10434/default.aspx
Penalties for players, club officials and agents include fines of the lesser of 10% of the amount involved or $100,000 and/or suspension. Penalties for clubs include fines of the lesser of half the amount involved or $500,000 ($2,500 for each document that is late or incorrectly lodged or lost) and/or deduction of premiership points.
The following breaches of the salary cap and salary floor have occurred:
In 2008, the departure of Mark Gasnier
and Sonny Bill Williams
, two elite stars, to play French rugby union prompted calls for the cap to be raised. Australian rugby league players had suffered a 27% decline in their wages since 1999, whereas other Australian sportsmen had experienced steady, and in some cases explosive growth. Some of the blame has been apportioned to the fact that the media company News Limited
is a 50% owner of the NRL, and would normally be expected to be a bidder for rugby league rights in Australia. Being an owner of the game means News can apportion rights to itself at a discount, reducing the overall income the league can make for itself through media rights. This has a flow-on effect reducing available income for players. Following the 2009–10 northern rugby union season, global exchange rate changes meant that payments in European currencies were not as attractive and Gasnier returned to the NRL, while Williams returned to his homeland of New Zealand in what proved a successful attempt to play rugby union with the All Blacks.
national association football (soccer) competition has set a salary cap of A$2.35 million for each squad in the 2010/2011 season, with a salary floor of $2.17375 million.
Each team can sign one "marquee player" and one "guest player", whose salaries are excluded from the team's salary cap. The A-League
has also introduced a "junior marquee" for eligible under 23 year old players with the aim of keeping young talented players in Australia for a longer period, similar to the Designated Player Rule in Major League Soccer
in North America.
Penalties for players, club officials or agents include fines of up to one and one half times the amount involved and/or suspension. Penalties for clubs include fines of up to triple the amount involved ($5,000 for each document that is late or incorrectly lodged or lost) and/or deduction of competition points.
In the 2006-07 season, Sydney FC
were fined $174,000 and deducted three competition points after it was found that they had exceeded the salary cap by $110,000 and failed to declare third-party payments during the 2005–06 season in which they were premiers.
has a salary cap of A$
1 million for each of its eight teams, for the 2009-10 season. In addition, since 2003-04, the NBL has used a "points cap" to encourage spread of talent: players are assigned points on a 1-10 basis each season "based on their performance in the NBL or based on the league they have participated in for the season just concluded", and each team's player roster (of between 10 and 12 players) must fall within a "Total Team Points" limit.
Professional
A professional is a person who is paid to undertake a specialised set of tasks and to complete them for a fee. The traditional professions were doctors, lawyers, clergymen, and commissioned military officers. Today, the term is applied to estate agents, surveyors , environmental scientists,...
sports, a salary cap (or wage cap) is a cartel
Cartel
A cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...
agreement between teams that places a limit on the amount of money that can be spent on player salaries. The limit exists as a per-player limit or a total limit for the team's roster, or both. Several sports leagues have implemented salary caps, both as a method of keeping overall costs down, and to ensure parity between teams so a wealthy team cannot entrench dominance by signing many more top players than their rivals. Salary caps can be a major issue in negotiations between league management and players' unions, and has been the focus point of several strikes
Strike action
Strike action, also called labour strike, on strike, greve , or simply strike, is a work stoppage caused by the mass refusal of employees to work. A strike usually takes place in response to employee grievances. Strikes became important during the industrial revolution, when mass labour became...
by players and lockouts
Lockout (industry)
A lockout is a work stoppage in which an employer prevents employees from working. This is different from a strike, in which employees refuse to work.- Causes :...
by owners and administrators.
Adoption
Salary caps are used by the following major sports leagues around the world:- North America: The National Hockey LeagueNational Hockey LeagueThe National Hockey League is an unincorporated not-for-profit association which operates a major professional ice hockey league of 30 franchised member clubs, of which 7 are currently located in Canada and 23 in the United States...
, National Football LeagueNational Football LeagueThe National Football League is the highest level of professional American football in the United States, and is considered the top professional American football league in the world. It was formed by eleven teams in 1920 as the American Professional Football Association, with the league changing...
, Major League SoccerMajor League SoccerMajor League Soccer is a professional soccer league based in the United States and sanctioned by the United States Soccer Federation . The league is composed of 19 teams — 16 in the U.S. and 3 in Canada...
, National Lacrosse LeagueNational Lacrosse LeagueThe National Lacrosse League is a men's professional indoor lacrosse league in North America. It currently has nine teams; three in Canada and six in the United States. Unlike other lacrosse leagues which play in the summer, the NLL plays its games in the winter and spring. Each year, the playoff...
, Canadian Football LeagueCanadian Football LeagueThe Canadian Football League or CFL is a professional sports league located in Canada. The CFL is the highest level of competition in Canadian football, a form of gridiron football closely related to American football....
, National Basketball AssociationNational Basketball AssociationThe National Basketball Association is the pre-eminent men's professional basketball league in North America. It consists of thirty franchised member clubs, of which twenty-nine are located in the United States and one in Canada...
and minor leagueMinor leagueMinor leagues are professional sports leagues which are not regarded as the premier leagues in those sports. Minor league teams tend to play in smaller, less elaborate venues, often competing in smaller cities. This term is used in North America with regard to several organizations competing in...
s in various sports.
- EnglandEnglandEngland is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
: The top-level leagues in both rugbyRugby footballRugby football is a style of football named after Rugby School in the United Kingdom. It is seen most prominently in two current sports, rugby league and rugby union.-History:...
codes—the Aviva Premiership in rugby unionRugby unionRugby union, often simply referred to as rugby, is a full contact team sport which originated in England in the early 19th century. One of the two codes of rugby football, it is based on running with the ball in hand...
and the Super LeagueSuper LeagueSuper League is the top-level professional rugby league football club competition in Europe. As a result of sponsorship from engage Mutual Assurance the competition is currently officially known as the engage Super League. The League features fourteen teams: thirteen from England and one from...
in rugby leagueRugby leagueRugby league football, usually called rugby league, is a full contact sport played by two teams of thirteen players on a rectangular grass field. One of the two codes of rugby football, it originated in England in 1895 by a split from Rugby Football Union over paying players...
—have salary caps. Recently, several European association football leagues have also discussed introducing salary caps.
- AustraliaAustraliaAustralia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
: The Australian Football LeagueAustralian Football LeagueThe Australian Football League is both the governing body and the major professional competition in the sport of Australian rules football...
(Australian rules football), the National Rugby LeagueNational Rugby LeagueThe National Rugby League is the top league of professional rugby league football clubs in Australasia. The NRL's main competition, called the Telstra Premiership , is contested by sixteen teams, fifteen of which are based in Australia with one based in New Zealand...
(rugby league), and A-LeagueA-LeagueThe A-League is the top Australasian professional football league. Run by Australian governing body Football Federation Australia , it was founded in 2004 following the folding of the National Soccer League and staged its inaugural season in 2005–06. It is sponsored by Hyundai Motor Company...
(association football) all include salary cap provisions.
- EurasiaEurasiaEurasia is a continent or supercontinent comprising the traditional continents of Europe and Asia ; covering about 52,990,000 km2 or about 10.6% of the Earth's surface located primarily in the eastern and northern hemispheres...
: The Kontinental Hockey LeagueKontinental Hockey LeagueThe Kontinental Hockey League is an international professional ice hockey league in Eurasia founded in 2008. As of 2009, it is ranked as the strongest hockey league in Europe....
, based in RussiaRussiaRussia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
and also including teams in BelarusBelarusBelarus , officially the Republic of Belarus, is a landlocked country in Eastern Europe, bordered clockwise by Russia to the northeast, Ukraine to the south, Poland to the west, and Lithuania and Latvia to the northwest. Its capital is Minsk; other major cities include Brest, Grodno , Gomel ,...
, KazakhstanKazakhstanKazakhstan , officially the Republic of Kazakhstan, is a transcontinental country in Central Asia and Eastern Europe. Ranked as the ninth largest country in the world, it is also the world's largest landlocked country; its territory of is greater than Western Europe...
, LatviaLatviaLatvia , officially the Republic of Latvia , is a country in the Baltic region of Northern Europe. It is bordered to the north by Estonia , to the south by Lithuania , to the east by the Russian Federation , to the southeast by Belarus and shares maritime borders to the west with Sweden...
and SlovakiaSlovakiaThe Slovak Republic is a landlocked state in Central Europe. It has a population of over five million and an area of about . Slovakia is bordered by the Czech Republic and Austria to the west, Poland to the north, Ukraine to the east and Hungary to the south...
, has operated with a salary cap since its creation in 2008.
- FranceFranceThe French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
: The country's top-level rugby union league, Top 14, instituted a salary cap effective with the 2010–11 season2010–11 Top 14 seasonThe 2010–11 Top 14 competition was a French domestic rugby union club competition operated by the Ligue Nationale de Rugby . Home-and-away play began on August 13, 2010 and continued through April 2011. The regular season was followed by a three-round playoff starting in May that involved the top...
.
Benefits of salary caps
In theory, there are two main benefits derived from salary caps - promotion of parity between teams, and control of costs.Primarily, an effective salary cap prevents wealthy teams from certain destructive behaviours, such as signing a multitude of high-paid star players, preventing their rivals from accessing talented players and ensuring victory through superior economic power. With a salary cap each club has roughly the same economic power to attract players, which contributes to parity - roughly equal playing talent in each team in the league, which in turn brings economic benefits both to the league and to its individual teams.
Leagues need to ensure a degree of parity between teams so that games are exciting for the fans and not a foregone conclusion. The leagues that have adopted salary caps generally do so because they believe letting richer teams accumulate talent affects the quality of the sporting product they want to sell. If only a handful of dominant teams are able to win consistently and challenge for the championship, many of the contests will be blowouts by the superior team, reducing the sport's attractiveness for spectators both at the ground and viewing on television. Television revenue is an important part of the income of many sports around the world, and the more evenly matched and exciting the contests, the more interesting the television product, meaning the value of the television broadcast rights is higher. An unbalanced league also threatens the financial viability of the weaker teams, because if there is no long term hope of their club winning, patrons of the weaker clubs may gravitate to other sports and leagues.
The need for parity is more pronounced in leagues that use the franchise model, rather than the promotion and relegation
Promotion and relegation
In many sports leagues around the world, promotion and relegation is a process that takes place at the end of each season. Through it, teams are transferred between divisions based on their performance that season...
model, used in European football
European football
European football is a colloquial term referring to any international football club competition that is organised by UEFA. Any club that wishes to participate in European football must qualify through their respective domestic league or domestic cup competitions...
. The structure of a promotion and relegation system means weaker teams struggle against the threat of relegation, adding importance and excitement to the matches of weaker teams. International club competitions such as the UEFA Champions League
UEFA Champions League
The UEFA Champions League, known simply the Champions League and originally known as the European Champion Clubs' Cup or European Cup, is an annual international club football competition organised by the Union of European Football Associations since 1955 for the top football clubs in Europe. It...
also means that the top clubs always have something to play for, even in the most unbalanced of national leagues.
A salary cap can also help to control the costs of teams and prevent situations in which a club will sign high-cost contracts in order to reap the benefits of immediate popularity and success, only to later find themselves in financial difficulty because of those high costs. Without caps there is a risk that teams will overspend in order to win now at the expense of long term stability. Team owners who use the same risk-benefit analysis used in business may risk not just the fortunes of their own team but the reputation and viability of the whole league. Sporting consumers are generally looking to support a team for life, not just a product to purchase for the short term. If teams regularly go bankrupt or change markets the same way businesses do, then the whole sport looks unstable to the sporting consumers, who may lose interest and switch their support to a more stable sport where their team and their rivals are more likely to be playing in the long term.
Reserve clause
Before the implementation of salary caps, the economic influence of clubs on player markets was controlled by the reserve clauseReserve clause
The reserve clause is a term formerly employed in North American professional sports contracts. The reserve clause, contained in all standard player contracts, stated that, upon the contract's expiration the rights to the player were to be retained by the team to which he had been signed...
, which was long a standard clause in professional sports player contracts in the United States. The clause forbade a player from negotiations with another team without the permission of the team holding that player's rights even after the contract's term was completed. This system began to unravel in the 1970s due largely to the activism of players' unions, and the threat of anti-trust legal actions. Although anti-trust actions were not a threat to baseball
Baseball
Baseball is a bat-and-ball sport played between two teams of nine players each. The aim is to score runs by hitting a thrown ball with a bat and touching a series of four bases arranged at the corners of a ninety-foot diamond...
, which has long been exempt
Federal Baseball Club v. National League
Federal Baseball Club v. National League, , is a case in which the U.S. Supreme Court ruled that the Sherman Antitrust Act did not apply to Major League Baseball.-Background:...
from anti-trust laws, that sport's reserve clause was struck down
Seitz decision
The Seitz decision was a ruling by arbitrator Peter Seitz on December 23, 1975 which declared that Major League Baseball players became free agents upon playing one year for their team without a contract, effectively nullifying baseball's reserve clause...
by a United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
arbitrator as a violation of other labor laws.
By the 1990s most players with several years' professional experience became free agent
Free agent
In professional sports, a free agent is a player whose contract with a team has expired and who is thus eligible to sign with another club or franchise....
s upon the expiry of their contracts and were free to negotiate a new contract with their previous team or with any other team. This situation, called Restricted Free Agency, led to "bidding wars" for the best players—a situation which inherently gave an advantage in landing such players to more affluent teams in larger media markets.
Salary cap in the NHL
- For a more detailed discussion, see the article NHL salary capNHL Salary CapThe NHL Salary Cap is the limit to the total amount of money that National Hockey League teams are allowed to pay their players and uses a "hard" cap, meaning there are no luxury taxes or exemptions....
.
Early years
A salary cap existed in the early days of the National Hockey LeagueNational Hockey League
The National Hockey League is an unincorporated not-for-profit association which operates a major professional ice hockey league of 30 franchised member clubs, of which 7 are currently located in Canada and 23 in the United States...
(NHL). During the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
, the league was under financial pressure to lower its salary cap to $62,500 per team and $7,000 per player, forcing some teams to trade away well paid star players in order to fit the cap.
Pre-salary cap
Prior to the resolution of the 2004–05 lockout, the NHL was the only major North American professional sports league that had no luxury taxLuxury tax (sports)
A luxury tax in professional sports is a surcharge put on the aggregate payroll of a team to the extent to which it exceeds a predetermined guideline level set by the league...
, revenue sharing
Revenue sharing
Revenue sharing has multiple, related meanings depending on context.In business, revenue sharing refers to the sharing of profits and losses among different groups. One form shares between the general partner and limited partners in a limited partnership...
, salary cap, or salary floor.
Player salaries
Player salaries in the National Hockey League
Here are several lists of National Hockey League players' salaries since the 1989–90 NHL season. This list does not include income from corporate endorsements or salaries before ....
did not become an issue until the 1970s, when Alan Eagleson
Alan Eagleson
Robert Alan Eagleson is a disbarred Canadian lawyer, convicted felon in two countries, former politician, hockey agent and promoter...
founded the NHL Players' Association (NHLPA) and the upstart World Hockey Association
World Hockey Association
The World Hockey Association was a professional ice hockey league that operated in North America from 1972 to 1979. It was the first major competition for the National Hockey League since the collapse of the Western Hockey League in 1926...
began competing with the NHL for players. On the other hand, Harold Ballard
Harold Ballard
Harold E. Ballard was an owner of the Toronto Maple Leafs of the National Hockey League as well as their home arena, Maple Leaf Gardens. A member of the Leafs organization from 1940 and a senior executive from 1957, he became part-owner of the team in 1961 and was majority owner from February...
of the Toronto Maple Leafs
Toronto Maple Leafs
The Toronto Maple Leafs are a professional ice hockey team based in Toronto, Ontario, Canada. They are members of the Northeast Division of the Eastern Conference of the National Hockey League...
spent among the league minimum on rosters, making his team the most profitable.
The 1994–95 NHL lockout was fought over the issue of the salary cap. The 1994–95 season was only partially cancelled, with 48 games and the playoffs
1995 Stanley Cup Playoffs
The 1995 Stanley Cup playoffs, the championship of the National Hockey League was played between May 6 and June 24, 1995. In the Final, the New Jersey Devils swept the favored Detroit Red Wings in four games to win their first championship. The Quebec Nordiques played their last ever playoff series...
eventually being played.
Eight NHL franchises were based in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
at the time of the lockout, but they suffered a revenue discrepancy. All NHL salaries must be paid in U.S. dollars, but the Canadian teams' revenues were in Canadian dollars. The financial difficulties and uncertainties of competing in smaller Canadian markets led to two clubs moving to the U.S.; the Quebec Nordiques
Quebec Nordiques
The Quebec Nordiques were a professional ice hockey team based in Quebec City, Quebec, Canada. The Nordiques played in the World Hockey Association and the National Hockey League...
to Denver
Colorado Avalanche
The Colorado Avalanche are a professional ice hockey team based in Denver, Colorado, United States. They are members of the Northwest Division of the Western Conference of the National Hockey League . The Avalanche have won the Stanley Cup twice, in 1995–96 and 2000–01. The franchise...
, and the Winnipeg Jets to Phoenix
Phoenix Coyotes
The Phoenix Coyotes are a professional ice hockey team based in Glendale, Arizona. They are members of the Pacific Division of the Western Conference of the National Hockey League . They play their home games at Jobing.com Arena....
. NHL Commissioner
NHL Commissioner
The National Hockey League Commissioner is the highest-ranking executive officer in the National Hockey League . The position was created in 1993 with Gary Bettman as the first Commissioner...
Gary Bettman
Gary Bettman
Gary Bruce Bettman is the commissioner of the National Hockey League , a post he has held since February 1, 1993. Previously, Bettman was a senior vice-president and general counsel to the National Basketball Association...
successfully persuaded the US-based teams to donate towards a pool to mitigate the negative effect of the exchange rate.
Negotiations
The negotiations for the most recent NHL Collective Bargaining AgreementNHL Collective Bargaining Agreement
The NHL collective bargaining agreement is the basic contract between the National Hockey League team owners and the NHL Players Association , designed to be arrived at through the typical labor-management negotiations of collective bargaining...
revolved primarily around players' salaries. The league contended that its clubs spent about 75% of revenues on salaries, a percentage far higher than existed in other North American sports; NHL Commissioner Gary Bettman demanded "cost certainty" and presented the NHLPA with several concepts that the Players' Association considered nothing more than euphemisms for a salary cap, which it had vowed it would never accept.
The previous CBA had expired on September 15, 2004, and a lockout
Lockout (industry)
A lockout is a work stoppage in which an employer prevents employees from working. This is different from a strike, in which employees refuse to work.- Causes :...
ensued, leading to the cancellation of the entire 2004–05 NHL season, the first time a major sports league in North America had lost an entire season to a labor dispute.
Current salary cap
The lockout was resolved when the NHLPA agreed to a hard salary cap based on league revenues, with the NHL implementing revenue sharing to allow for a higher cap figure. The NHL salary cap is formally titled the "Upper Limit of the Payroll Range" in the new CBA. For the 2005–06 NHL season, the salary cap was set at US$United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
39 million per team, with a maximum of $7.8 million (20% of the team's cap) for a player.
Revenues for the six Canadian teams that were in the league at the time of the lockout have all increased significantly since then, and due to the fact the US dollar fell to relative parity with its Canadian counterpart, league-wide revenues measured in U.S. dollars have been inflated accordingly.
As a result of these factors, the cap has been raised each year to its current figure of $64.3 million for the 2011–12 season
2011–12 NHL season
The 2011–12 NHL season is the 95th season of operation of the National Hockey League . It is the fifth consecutive season that opens in Europe with NHL Premiere games. As with the previous season, three events are scheduled: two games will be held in Stockholm, Sweden; one game in Helsinki,...
, with a cap of $12.86 million for a player. The CBA also contains a salary floor which is formally titled the "Lower Limit of the Payroll Range", the minimum that each team must pay in player salaries. The lower limit was originally set at 55% of the cap, but is now defined to be $16 million below the cap, therefore the 2011–12 minimum is $48.3 million. The difference between the salary cap and a team's actual payroll is referred to as the team's "payroll room" or "cap room".
Each year of an NHL player contract, the salary earned contributes to the team's "cap hit". The basic cap hit of a contract for each year it is effective is the total money a player will earn in regular salary over the life of the contract divided by the number of years it is effective. This, in theory, prevents a team from paying a player different amounts each year in order to load his cap hit in years in which the team has more cap room. Teams still use this practice, however, for other reasons. Performance bonuses also count towards the cap, but there is a percentage a team is allowed to go over the cap in order to pay bonuses. A team must still factor in possible bonus payments, however, which could go over that percentage.
Salary for players sent to the minors, under most circumstances, do not count towards the cap while they are there. If a player has a legitimate long-term injury, his cap hit is still counted; however, the team is permitted to replace him with one or more players whose combined salary is equal to (or less than) that of the injured player, even if the additional players would put the team over the salary cap. If the team's cap room is larger than the injured player's cap hit, they may take on as much as their cap room; however, the injured player may not return to play until the team is again compliant with the original cap.
The NHL has become the first of the major North American leagues to implement a hard cap while retaining guaranteed player contracts. Guaranteed player contracts in the NHL differ from other sports, notably the NFL, where teams may opt out of a contract by waiving or cutting a player. NHL teams may buy out players' contracts, but must still pay a portion of the money still owed which is spread out over twice the remaining duration of the contract. This does not apply for players over 35 at the time of signing; in this case a team cannot buy out the player's contract to reduce salary. Any other player can be bought out for ⅓ of the remaining salary if the player is younger than 28 at the time of termination, or ⅔ of the remaining salary if the player is 28 or older. Trading cash for players or paying a player's remaining salary after trading him have been banned outright in order to prevent wealthier teams from evading the restrictions of the cap.
Players, agents or employees found to have violated the cap face fines of $250,000 - $1 million and/or suspension. Teams found to have violated the cap face fines of up to $5 million, cancellation of contracts, forfeiture of draft picks, deduction of points and/or forfeiture of game(s) determined to have been affected by the violation of the cap.
Salary cap in the NFL
The new collective bargaining agreement formulated in 2011 has a salary cap of $120 million and a salary floor of $108 million, representing 90% of the cap. The NFL's cap is a hard cap that the teams have to stay under at all times. Penalties for violating or circumventing the cap include fines of up to $5 million, cancellation of contracts and/or loss of draft picks.The cap was first introduced for the 1994 season and was initially $34.6 million. Both the cap and the floor were adjusted annually based on the league's revenues, and they increased each year. In , the final capped year under that agreement, the cap was $128 million per team, while the floor was 87.6% of the cap. Using the formula provided in the league's collective bargaining agreement, the floor in 2009 was $112.1 million. Under the NFL's agreement with the NFLPA, the effect on the salary cap of guaranteed payments (such as signing bonuses) are, with a few rare exceptions, prorated evenly over the term of the contract.
In transitions, if a player retires, is traded, or is cut before June 1, all remaining bonus is applied to the salary cap for the current season. If the payroll change occurs after June 1, the current season's bonus proration is unchanged, and the next year's cap must absorb the entire remaining bonus.
Because of this setup, NFL contracts almost always include the right to cut a player before the beginning of a season. If a player is cut, his salary for the remainder of his contract is neither paid nor counted against the salary cap for that team. A highly sought-after player signing a long term contract will usually receive a signing bonus, thus providing him with financial security even if he is cut before the end of his contract.
Incentive bonuses require a team to pay a player additional money if he achieves a certain goal. For the purposes of the salary cap, bonuses are classified as either "likely to be earned", which requires the amount of the bonus to count against the team's salary cap, or "not likely to be earned", which is not counted. A team's salary cap is adjusted downward for NLTBE bonuses that were earned in the previous year but not counted against that year's cap. It is adjusted upward for LTBE bonuses that were not earned in the previous year but were counted against that year's cap.
One effect of the salary cap was the release of many higher-salaried veteran players to other teams once their production started to decline from the elite level. On the other hand, many teams have made a practice of using free agents to restock with better personnel more suited to the team. The salary cap prevented teams with superior finances from the formerly widespread practice of stocking as much talent on the roster as possible by placing younger players on reserve lists with false injuries while they develop into NFL-capable players. In this respect, the cap functions as a supplement to the 53-man roster limit and practice squad limits.
Generally, the practice of retaining veteran players who had contributed to the team in the past, but whose abilities have declined, became less common in the era of the salary cap. A veteran's minimum salary was required to be higher than a player with lesser experience. This means teams tended to favor cheaper, less experienced prospects with growth potential, with an aim to having a group of players who quickly develop into their prime while still being on cheaper contracts than their peers. To offset this tendency which pushed out veteran players, even those who became fan favorites, the players' association accepted an arrangement where a veteran player who receives no bonuses in his contract may be paid the veteran minimum of up to $810,000, while only accounting for only $425,000 in salary-cap space.
The salary cap also served to limit the rate of increase of the cost of operating a team. This has accrued to the owners' benefit, and while the initial cap of $34.6 million has increased to $128 million, this is due to large growths of revenue, including merchandising revenues and web enterprises which ownership is sharing with players as well.
The owners opted out of the CBA in 2008, leading to an uncapped season in 2010.
| Year | Maximum Team Salary |
|---|---|
| 2011 | $120 million |
| 2010 | Uncapped |
| 2009 | $128 million |
| 2008 | $116 million |
| 2007 | $109 million |
| 2006 | $102 million |
| 2005 | $85.5 million |
| 2004 | $80.582 million |
| 2003 | $75.007 million |
| 2002 | $71.101 million |
| 2001 | $67.405 million |
| 2000 | $62.172 million |
| 1999 | $57.288 million |
| 1998 | $52.388 million |
| 1997 | $41.454 million |
| 1996 | $40.753 million |
| 1995 | $37.1 million |
| 1994 | $34.608 million |
Year by Year Salary Cap
Salary cap in MLS
Here are some highlights of the new MLS rules and regulations for the 2011 season.- A team's roster can be made up to 30 players. They are eligible to be selected to the 18-player team for each game
- The salary cap will be $2,675,000 per team, not counting the extra salary of designated players. Players in the first 20 roster spots will count against the cap.
- The maximum budget charge for any one player is $335,000.
- A designated player counts $335,000 against a team's cap. However, if a player joins his team in the middle of the season, the charge against the budget will be $167,500.
- Players who are in the roster spots from 21-30 will not count against a team's cap. They will be known as off-budget players. Generation adidas players are off-budget players and not counted against the cap.
For 2012, the cap number for international designated players will depend on the players' ages. Players under 20 will count $150,000 against the cap and those age 21 to 23 will count $200,000, with older players remaining at a cap number of $335,000.
Salary cap in the NBA
- For a more detailed discussion, see the article NBA salary capNBA Salary CapThe NBA salary cap is the limit to the total amount of money that National Basketball Association teams are allowed to pay their players. This limit is subject to a complex system of rules and exceptions and as such is considered a "soft" cap....
.
The end of the NBA's collective bargaining agreement on July 1, 2011 and the subsequent lockout of players
2011 NBA lockout
The 2011 NBA lockout is the fourth lockout in the history of the National Basketball Association . The owners began the work stoppage at 12:01 am EDT on July 1, 2011. The main issues dividing the owners and the players are revenue sharing and the structure of the salary cap...
from team facilities means that no salary cap technically exists in the NBA. The previous agreement included a salary cap that was similar to the NFL, in that the cap was calculated as a percentage of the league's revenues. The cap for the 2010-11 season was $58.04 million. Future financial arrangements between the NBA and its players are yet to be determined, but it is highly likely that a salary cap, with fewer loopholes, will be part of any future CBA.
Through 2010–11, the NBA's salary cap was a "soft" cap, meaning that teams were allowed to exceed the cap in order to retain the rights to a player who was already on the team. This provision was known as the ""Larry Bird" exception, named after the former Boston Celtics
Boston Celtics
The Boston Celtics are a National Basketball Association team based in Boston, Massachusetts. They play in the Atlantic Division of the Eastern Conference. Founded in 1946, the team is currently owned by Boston Basketball Partners LLC. The Celtics play their home games at the TD Garden, which...
great who was retained by that team until his retirement under the provisions of this rule. The purpose of this rule was to address fan unease over the frequent changing of teams by players under the free agency system, as fans became displeased over their favorite player on their favorite team suddenly bolting to another team. The "Larry Bird" provision of the salary cap gave the player's current team an advantage over other teams in free agent negotiations, thus increasing the chances that a player would stay with his current team.
The provision tended to result in most teams being over the cap at any given time. Teams that violated the cap rules faced fines of up to $5 million, cancellation of contracts and/or loss of draft picks, and are prohibited from signing free agents for more than the league minimum. The NBA also has a salary floor, but teams are not penalized as long as their total payroll exceeds the floor at the end of the season.
The NBA also had a luxury tax system which is triggered if the average team payroll exceeds a certain amount higher than the cap. In this case, the teams with payrolls exceeding a certain threshold had to pay a tax to the league which is divided amongst the teams with lower payrolls. However, this penalty was levied against teams in violation only if the league average also breached a separate threshold.
The NBA also implemented a maximum salary for individual players. This was done following a dramatic increase in player salaries, in spite of the salary cap, in the mid-1990s. Under the CBA, a player's maximum possible salary increased along with his time of service in the league. For a player of five years' experience, the maximum salary threshold began at 25% of the salary cap, with annual increases of up to 10.5% possible beyond that for players re-signed by their original team, or 8% annual increases for free agents that signed with new teams. For players of greater experience, the salary limit was higher - but the 10.5% limit on annual increases remained the same.
In the NBA, the salary cap has not had the same effect of breaking up championship teams and movement of veteran players between teams that has occurred in the NFL. Repeat championship winners have been far more likely to occur in the NBA than in the NFL in the salary cap era. Also, the overall rate of salaries paid and the expense to operate a team rose more rapidly in the NBA than in the NFL. The average NBA salary in 2010–11 was $5.356 million, the highest of any major North American sports league. This is mitigated by the NBA roster size of 15 as opposed to 55 for NFL teams, 23 for NHL teams, and the varying 24-40 man rosters (24 or 25 after opening day, 24-40 beginning September 1) of Major League Baseball.
Luxury tax in Major League Baseball
- for reference please see List of Major League Baseball teams by payroll
Instead of a salary cap, Major League Baseball
Major League Baseball
Major League Baseball is the highest level of professional baseball in the United States and Canada, consisting of teams that play in the National League and the American League...
implements a luxury tax
Luxury tax (sports)
A luxury tax in professional sports is a surcharge put on the aggregate payroll of a team to the extent to which it exceeds a predetermined guideline level set by the league...
, an arrangement in which teams whose total payroll exceeds a certain figure (determined annually) are taxed on the excess amount. The tax is paid to the league, which then puts the money into its industry-growth fund.
A team that goes over the luxury tax cap for the first time in a five-year period pays a penalty of 22.5% of the amount they were over the cap, second-time violators pay a 30% penalty, and teams that exceed the limit three or more times pay a 40% penalty. The cap limit for 2010 is $170 million, and the cap for 2011 is $178 million.
, only the Boston Red Sox
Boston Red Sox
The Boston Red Sox are a professional baseball team based in Boston, Massachusetts, and a member of Major League Baseball’s American League Eastern Division. Founded in as one of the American League's eight charter franchises, the Red Sox's home ballpark has been Fenway Park since . The "Red Sox"...
, the Los Angeles Angels of Anaheim
Los Angeles Angels of Anaheim
The Los Angeles Angels of Anaheim are a professional baseball team based in Anaheim, California, United States. The Angels are a member of the Western Division of Major League Baseball's American League. The "Angels" name originates from the city in which the team started, Los Angeles...
, the Detroit Tigers
Detroit Tigers
The Detroit Tigers are a Major League Baseball team located in Detroit, Michigan. One of the American League's eight charter franchises, the club was founded in Detroit in as part of the Western League. The Tigers have won four World Series championships and have won the American League pennant...
, and the New York Yankees
New York Yankees
The New York Yankees are a professional baseball team based in the The Bronx, New York. They compete in Major League Baseball in the American League's East Division...
have paid any luxury tax; the Yankees have contributed to over 95% ($164.1 million) of tax payments, and have been subject to six of the eleven occasions the tax has been implemented.
Money collected under the MLB luxury tax are apportioned as follows: The first $5m is held in reserve, to pay for possible luxury tax refunds. Once it is clear that there are no refunds to be issued, this money is then earmarked for the Industry Growth Fund (IGF). 50% of the remaining money is used to fund player benefits, 25% is used to fund baseball programs in developing countries with no high-school baseball, and 25% is put into the Industry Growth Fund (IGF).
Criticism of the luxury tax
Measuring the success of the luxury tax in bringing the benefits of parity has brought mixed results. A team with a $100 million plus payroll has won the World Series three times: the 2009 Yankees, and the 2004 and 2007 Red Sox; however, $100 million plus payrolls have only existed since 2000. In the past 30 years, 20 different teams have won World Series titles, compared to 14 different teams winning the NFL Super Bowl, 13 winning the NHL Stanley Cup and 9 winning the NBA championship. While a top tier payroll increases a team's chances of making the playoffs, it does not guarantee they will consistently win championships. Others disagree, citing the New York Yankees having consistently the highest salary in baseball and have won approximately a quarter of all world series.Others pundits, such as Michael Lewis
Michael Lewis (author)
Michael Lewis is an American non-fiction author and financial journalist. His bestselling books include The Big Short: Inside the Doomsday Machine, Liar's Poker, The New New Thing, Moneyball: The Art of Winning an Unfair Game, The Blind Side: Evolution of a Game, Panic and Home Game: An...
, the author of the bestseller Moneyball, have argued that using World Series championships as an example of parity may be misleading, and playoff appearances may be a better indicator of relative team strength. The playoff system used in baseball comprises a small number of games compared to success over a long season, and has been described as a "crapshoot" by Oakland A's General Manager Billy Beane
Billy Beane
William Lamar "Billy" Beane III is a former Major League Baseball player and the current general manager and minority owner of the Oakland Athletics...
. Teams with consistently high payrolls including the New York Yankees and Boston Red Sox have secured high numbers of playoff berths while teams with low payrolls such as the Pittsburgh Pirates and Tampa Bay Rays have only made the playoffs twice combined over the past decade.
Some teams, notably the Milwaukee Brewers, have called for the introduction of a salary cap, but any introduction is opposed by the MLB players' union
Major League Baseball Players Association
The Major League Baseball Players Association is the union of professional major-league baseball players.-History of MLBPA:The MLBPA was not the first attempt to unionize baseball players...
, and the Yankees' ownership group; the latter have threatened legal action. Although some saw the success of NHL owners in their 2004–05 lockout as an opportunity for MLB to reform its collective bargaining agreement, baseball owners agreed to a new five-year deal in October 2006 that did not include a salary cap. Unlike the other three major North American sports, MLB also has no team salary floor: the only minimum limits for team payrolls are based on the minimum salaries for individual players of various levels of experience that are written into MLB's collective bargaining agreement.
Salary cap in the Canadian Football League
On June 13, 2006, a proposed salary management system featuring a Maximum Salary Expenditure Cap (SEC) was ratified at the Canadian Football LeagueCanadian Football League
The Canadian Football League or CFL is a professional sports league located in Canada. The CFL is the highest level of competition in Canadian football, a form of gridiron football closely related to American football....
board of governors meeting in Winnipeg
Winnipeg
Winnipeg is the capital and largest city of Manitoba, Canada, and is the primary municipality of the Winnipeg Capital Region, with more than half of Manitoba's population. It is located near the longitudinal centre of North America, at the confluence of the Red and Assiniboine Rivers .The name...
, Manitoba
Manitoba
Manitoba is a Canadian prairie province with an area of . The province has over 110,000 lakes and has a largely continental climate because of its flat topography. Agriculture, mostly concentrated in the fertile southern and western parts of the province, is vital to the province's economy; other...
. http://www.cfl.ca/index.php?module=page&id=17 The CFL began enforcing strict salary cap regulation for the 2007 season
2007 CFL season
The 2007 CFL season was the 54th season of modern Canadian professional football. Officially, it was the 50th season of the league, and many special events were held to commemorate the event. Regular-season play began on June 28, 2007 at the Rogers Centre in Toronto, Ontario and concluded on...
, which was set at $4.05 million with a salary floor of $3,746,250 (92.5% of the cap); the cap will be set at $4.25 million for the 2010 season, with a salary floor of $3,931,250. http://www.cfl.ca/index.php?module=newser&func=display&nid=12166
Penalties for teams found to have breached the salary cap or salary floor regulations are fines of the amount involved for the first $100,000, fines of double the amount involved and forfeiture of the first-round draft pick for the next $200,000, and fines of triple the amount involved and forfeiture of the first and second-round draft picks for any amount in excess of $300,000. http://www.cfl.ca/index.php?module=page&id=17.
Breaches
The following breaches of the salary cap have occurred (no team has yet been penalized for violating salary floor regulations):- In 2007, the Montreal AlouettesMontreal AlouettesThe Montreal Alouettes are a Canadian Football League team based in Montreal, Quebec.The current franchise named the Alouettes moved to Montreal from Baltimore, Maryland, in 1996 where they had been known as the Baltimore Stallions...
were fined $116,570 and forfeited a first-round draft pick after a CFL investigation found that they had exceeded the salary cap by $108,285 during the season. - The Saskatchewan RoughridersSaskatchewan RoughridersThe Saskatchewan Roughriders are a Canadian Football League team based in Regina, Saskatchewan. They were founded in 1910. They play their home games at 2940 10th Avenue in Regina, which has been the team's home base for its entire history, even prior to the construction of Mosaic Stadium at Taylor...
were also fined in 2007 ($76,552) for a string of minor breaches in relation to benefit payments to injured players. - In 2008, the Saskatchewan Roughriders were fined $87,147 for exceeding the salary cap by that amount.
- In 2009, the Winnipeg Blue BombersWinnipeg Blue BombersThe Winnipeg Blue Bombers are a Canadian football team based in Winnipeg, Manitoba. They are currently members of the East Division of the Canadian Football League . They play their home games at Canad Inns Stadium, and plan to move to a new stadium for the 2012 season.The Blue Bombers were founded...
were fined $44,687 for minor breaches in relation to player bonuses. - In 2010, the Saskatchewan Roughriders were fined $26,677 for exceeding the salary cap by that amount.
Salary caps in other North American leagues
Salary caps are common in other leagues.The salary cap of the first Arena Football League
Arena Football League
The Arena Football League is the highest level of professional indoor American football in the United States. It is currently the second longest running professional football league in the United States, after the National Football League. It was founded in 1987 by Jim Foster...
was $1.82 million per team in its final season in 2008. In 2005, the Tampa Bay Storm
Tampa Bay Storm
The Tampa Bay Storm are an Arena Football League team based in the Tampa Bay Area of Florida. They play their home games in the St. Pete Times Forum in Tampa....
were fined $125,000 for salary cap violations and their head coach Tim Marcum was suspended for four games (two in the 2005 season, two in 2006) and fined $25,250; Marcum was suspended for a fifth game the next day for criticizing the decision at a press conference.
When the Arena Football League returned in 2010, it instituted a standard salary of $400 per game and a salary cap of $1.5 million, considerably lower than that paid by teams in the previous AFL. Given that the new AFL had a 16-game season in 2010, this effectively means that its players are semi-professional.
Salary caps in Europe
Salary caps are little used in Europe. However several European association football leagues have considered introducing them in the early 21st century. In 2002, BBC reported http://news.bbc.co.uk/sport1/hi/football/europe/2402329.stm that the G14 group of 18 leading European football teams would cap their payrolls at 70% of team's income, starting from the 2005/2006 season - however, this did not eventually occur. Serie ASerie A
Serie A , now called Serie A TIM due to sponsorship by Telecom Italia, is a professional league competition for football clubs located at the top of the Italian football league system and has been operating for over eighty years since 1929. It had been organized by Lega Calcio until 2010, but a new...
, the leading Italian
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
football league and The Football League
The Football League
The Football League, also known as the npower Football League for sponsorship reasons, is a league competition featuring professional association football clubs from England and Wales. Founded in 1888, it is the oldest such competition in world football...
in England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
have also considered salary caps.
These measures would be implemented to ensure clubs spend responsibly rather than as a tool to create parity. Top executives in European football
European football
European football is a colloquial term referring to any international football club competition that is organised by UEFA. Any club that wishes to participate in European football must qualify through their respective domestic league or domestic cup competitions...
have acknowledged that a number of challenges not present in North America would confront anyone who tried to implement an effective cap across European football or even across a single league with a view to creating competitive balance:
- The various national leagues are in competition with each other for the best players because there is free movement of players between the leagues. Football leagues in European UnionEuropean UnionThe European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
countries have been forbiddenBosman rulingUnion Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman is a 1995 European Court of Justice decision concerning freedom of movement for workers, freedom of association, and direct effect of article 39 of the EC Treaty...
from prohibiting the signing of EU players from other nations, or even from limiting their numbers. Therefore, if one league imposed a strict cap on its teams, the best players from the country in question would still be free to move to uncapped rival leagues.
- The existence of lucrative and prestigious international club competitions encourage clubs to ensure dominance of their national leagues in order to play in the higher-level European leagues. For many top clubs, the domestic league is little more than a stepping stone to the European league. Success in European club competitions is not only a matter of national pride, as the number of places allocatedUEFA coefficientsIn European football, the UEFA coefficients are statistics used for ranking and seeding teams in club and international competitions.The coefficients are calculated by UEFA, who administer football within Europe...
to each country for these competitions is determined by that country's teams' past performances in Europe. Salary capped clubs in franchise leagues do not have to compete with teams in rival leagues where there is no salary cap.
- Different governing bodies have authority over domestic and international competitions. For example, UEFAUEFAThe Union of European Football Associations , almost always referred to by its acronym UEFA is the administrative and controlling body for European association football, futsal and beach soccer....
governs European football and organizes the prestigious Champions LeagueUEFA Champions LeagueThe UEFA Champions League, known simply the Champions League and originally known as the European Champion Clubs' Cup or European Cup, is an annual international club football competition organised by the Union of European Football Associations since 1955 for the top football clubs in Europe. It...
and Europa League, but its authority over the domestic leagues is very limited. Although UEFA could, in theory, impose a salary cap, it would only apply to UEFA's club competitions and to the portion of each team's payroll paid to players registered with UEFA. A wealthy Champions League team could then sign players who would play exclusively in domestic competitions. In other major sports, there is generally only a single league which oversees a single premier competition.
- The pyramid structure of European leagues means the number of small clubs in the various lower divisions can run into the thousands. The promotion and relegationPromotion and relegationIn many sports leagues around the world, promotion and relegation is a process that takes place at the end of each season. Through it, teams are transferred between divisions based on their performance that season...
system which allows transfers between these divisions presents challenges to a cap system. A club that is demoted to a lower league may find themselves significantly over the second division cap; similarly, a promoted club might have to face the challenge of hastily finding players who it could then pay under a higher cap. A salary cap exacerbates the problem of players switching clubs along with the clubs' movement between tiers.
- European tax systems and rates vary greatly from country to country. One prominent club, AS MonacoAS Monaco FCAssociation Sportive de Monaco Football Club are a French football club based in Fontvieille, Monaco. The club was founded in 1924 and currently play in Ligue 2, the second tier of French football. The team plays its home matches at the Stade Louis II located within Fontvieille...
, plays in a principalityMonacoMonaco , officially the Principality of Monaco , is a sovereign city state on the French Riviera. It is bordered on three sides by its neighbour, France, and its centre is about from Italy. Its area is with a population of 35,986 as of 2011 and is the most densely populated country in the...
with no income taxIncome taxAn income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
at all. A flat payroll limit would therefore equate to aggregate take home pay that varied greatly from one club to the next, which would make it difficult for teams in countries with higher taxation to attract the best players. By comparison, the differences between the tax systems and tax rates of Canada, the U.S. and between their respective provinces and states are not nearly as great.
- Europeans use multiple currenciesCurrencyIn economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
and football wages are usually paid in the local currency. Although the countries hosting all but one of the most prominent European leagues now use the EuroEuroThe euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
, the one exception, England, has the richest league. Even if a hypothetical UEFAUEFAThe Union of European Football Associations , almost always referred to by its acronym UEFA is the administrative and controlling body for European association football, futsal and beach soccer....
-wide cap were denominated in Euros, fluctuating exchange rateExchange rateIn finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
s would make it difficult for the cap to be fairly administered in the United KingdomUnited KingdomThe United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
since its salaries are paid in pounds sterlingPound sterlingThe pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
. By comparison, most player salaries paid to players on Canadian major sports teams are paid in U.S. dollars, in fact this is now mandated in the NHL to ensure that payrolls do not fluctuate with exchange rates. On the other hand, trying to force British clubs to pay wages in Euros so that their payrolls could not exceed a cap would meet with opposition from clubs since their revenues are collected in pounds, and might even provoke political opposition from Britons determined to prevent the Euro from replacing the pound.
However, several European rugby
Rugby football
Rugby football is a style of football named after Rugby School in the United Kingdom. It is seen most prominently in two current sports, rugby league and rugby union.-History:...
leagues, as well as ice hockey
Ice hockey
Ice hockey, often referred to as hockey, is a team sport played on ice, in which skaters use wooden or composite sticks to shoot a hard rubber puck into their opponent's net. The game is played between two teams of six players each. Five members of each team skate up and down the ice trying to take...
leagues have successfully instituted salary caps. Rugby league's Super League
Super League
Super League is the top-level professional rugby league football club competition in Europe. As a result of sponsorship from engage Mutual Assurance the competition is currently officially known as the engage Super League. The League features fourteen teams: thirteen from England and one from...
, mainly in England with a team also in France (and formerly one in Wales), is capped. Historically, Super League had used promotion and relegation, but changed in 2009 to a licensing system with some similarities to the North American franchising model. In rugby union, two of the continent's three main domestic/regional leagues—the Aviva Premiership in England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
and the Top 14 in France—instituted caps despite both being at the top of extensive pyramid structures with promotion and relegation throughout. The most notable European ice hockey league with a salary cap is the Kontinental Hockey League
Kontinental Hockey League
The Kontinental Hockey League is an international professional ice hockey league in Eurasia founded in 2008. As of 2009, it is ranked as the strongest hockey league in Europe....
(which uses the franchising model), and that league implemented a cap despite currency issues.
Aviva Premiership
The Premiership's salary cap has been in place since the late 1990s. The most recent increase to the cap was before the 2008–09 season, when it nearly doubled from £2.2 million to £4 million; the cap has remained at that amount ever since. A provision applicable only in seasons that run up against the quadrennial Rugby World CupRugby World Cup
The Rugby World Cup is an international rugby union competition organised by the International Rugby Board and held every four years since 1987....
, such as 2011–12
2011–12 English Premiership (rugby union)
-References:...
, gives teams a £30,000 credit for each player on the roster participating in the competition, helping them to manage their reduced rosters in the season's early weeks.
Through 2011–12, the cap remains at £4 million. However, academy credits were introduced that season. Teams now receive a £30,000 credit for each home-grown player in their senior squads, with a maximum of eight such credits. This increases the effective cap to a maximum of £4.24 million (not counting World Cup roster credits).
Two substantial changes are set for 2012–13. First, the cap will increase to £4.26 million before academy credits and up to £4.5 million with credits. The most significant change will be that teams will be allowed to designate one player whose salary will not count against the cap, similar to the Designated Player Rule in MLS.
Top 14
In December 2009, Ligue nationale de rugby (LNR), operator of the Top 14, announced it would impose a cap of €8 million, effective with the 2010–11 season2010–11 Top 14 season
The 2010–11 Top 14 competition was a French domestic rugby union club competition operated by the Ligue Nationale de Rugby . Home-and-away play began on August 13, 2010 and continued through April 2011. The regular season was followed by a three-round playoff starting in May that involved the top...
. Previously, the only restrictions on team salaries were that wage bills were limited to 50% of turnover and that 10% of the salary budget had to be held in reserve. Along with the announcement of the cap, LNR also declared that the reserve requirement would be raised to 20%, with the previous limitation of 50% of turnover remaining in effect.
Before the introduction of the cap, it was widely speculated outside of France that some Top 14 clubs had wage bills of €20 million. As it turned out, the new cap was in fact higher (by 5%) than the highest official wage bill in the 2009–10 season
2009–10 Top 14 season
Stade de France was listed as an alternate home for Stade Français because the club hosted five of their 13 home matches this season at the national stadium. Similarly, Stadium Municipal was listed as an alternate home for Toulouse, who normally play two Top 14 matches a year at that facility...
. Also, due to the complex nature of French club administration, clubs were seen as likely to find creative ways to skirt the cap—for example, one major overseas player was rumored to be receiving less than 40% of his total income from the club as on-the-books salary in the 2008–09 season.
Kontinental Hockey League
When the Russian SuperleagueRussian Superleague
The Russian Superleague , commonly abbreviated as RSL, was the highest division of the main professional ice hockey league in Russia. It was considered the second best league in the world, after the National Hockey League of North America...
was dissolved to make way to the modern-day KHL, the Kontinental Hockey League Players' Union (KHLPU) agreed to the implementation of a salary cap. When first implemented there was a salary cap, as well as a salary floor. As of the 2009-10 KHL season, the salary cap was 620 million rubles
Russian ruble
The ruble or rouble is the currency of the Russian Federation and the two partially recognized republics of Abkhazia and South Ossetia. Formerly, the ruble was also the currency of the Russian Empire and the Soviet Union prior to their breakups. Belarus and Transnistria also use currencies with...
($US18.3 million) and the salary floor was 200 million rubles ($US5.9 million). The KHL's cap operates despite the KHL's multinational nature, with teams in Belarus
Belarus
Belarus , officially the Republic of Belarus, is a landlocked country in Eastern Europe, bordered clockwise by Russia to the northeast, Ukraine to the south, Poland to the west, and Lithuania and Latvia to the northwest. Its capital is Minsk; other major cities include Brest, Grodno , Gomel ,...
, Kazakhstan
Kazakhstan
Kazakhstan , officially the Republic of Kazakhstan, is a transcontinental country in Central Asia and Eastern Europe. Ranked as the ninth largest country in the world, it is also the world's largest landlocked country; its territory of is greater than Western Europe...
, Latvia
Latvia
Latvia , officially the Republic of Latvia , is a country in the Baltic region of Northern Europe. It is bordered to the north by Estonia , to the south by Lithuania , to the east by the Russian Federation , to the southeast by Belarus and shares maritime borders to the west with Sweden...
, and (as of 2011–12
2011–12 KHL season
The 2011–12 KHL season is the fourth season of the Kontinental Hockey League. The regular season originally began on 7 September 2011 with the Opening Cup game, but because of the Lokomotiv Yaroslavl plane crash, which killed all but one member of the Lokomotiv Yaroslavl team, the start of the...
) Slovakia
Slovakia
The Slovak Republic is a landlocked state in Central Europe. It has a population of over five million and an area of about . Slovakia is bordered by the Czech Republic and Austria to the west, Poland to the north, Ukraine to the east and Hungary to the south...
, in addition to its primary base of Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
. The four non-Russian countries each use different currencies that currently float against the ruble. Kazakhstan has never sought to peg its currency
Kazakhstani tenge
The tenge is the currency of Kazakhstan. It is divided into 100 tïın . It was introduced on 15th of November 1993 to replace the Soviet ruble at a rate of 1 tenge = 500 rubles...
to any other. Belarus has in the recent past attempted to peg its currency
Belarusian ruble
The ruble is the currency of Belarus. The symbol for the ruble is Br and the ISO 4217 code is BYR.-First ruble, 1992–2000:The breakup of supply chain in the former Soviet enterprises demanded that goods be bought and sold on the market, often requiring cash settlement...
to the ruble and the US dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
with limited success. Slovakia uses the euro, while Latvia's currency
Latvian lats
The lats is the currency of Latvia. It is abbreviated as Ls. The lats is sub-divided into 100 santīmi ....
is closely tied to the euro via the country's membership in ERM II
European Exchange Rate Mechanism
The European Exchange Rate Mechanism, ERM, was a system introduced by the European Community in March 1979, as part of the European Monetary System , to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of...
.
Also, starting in 2011-12, each team can sign up to two "designated players" whose salaries are not counted against the cap. The KHL salary cap is a soft cap, with a luxury tax amounting to 30% of the payroll that is over the cap, paid to the special stabilization account, which helps KHL teams facing financial hardship.
Australian rules football
The Australian Football LeagueAustralian Football League
The Australian Football League is both the governing body and the major professional competition in the sport of Australian rules football...
has implemented a salary cap on its clubs since 1987, when Brisbane and West Coast were admitted, as part of its equalization policy designed to neutralize the ability of its richest clubs, namely Hawthorn
Hawthorn Football Club
The Hawthorn Football Club, nicknamed the Hawks, is a professional Australian rules football club in the Australian Football League . The club, founded in 1902, is the youngest of the Victorian-based teams in the AFL. The team play in Brown & Gold vertically striped guernseys...
, Essendon
Essendon Football Club
The Essendon Football Club, nicknamed The Bombers, is an Australian rules football club which plays in the Australian Football League...
, Collingwood
Collingwood Football Club
The Collingwood Football Club, nicknamed The Magpies, is an Australian rules football club which plays in the Australian Football League...
and Carlton
Carlton Football Club
The Carlton Football Club is a professional Australian rules football club based in Melbourne, Victoria. The club competes in the Australian Football League, and was one of the eight founding members of that competition in 1897...
to perennially dominate the competition.
The cap was set at A$
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
1.25 million for 1987–1989 as per VFL agreement, with the salary floor set at 90% of the cap or $1.125 million. The salary floor was increased to 92.5% of the cap in 2001 due to increased revenues. Both the salary cap and salary floor has increased substantially since the competition was re-branded as the AFL in 1990 to assist in stemming the dominance of high membership clubs such as the West Coast Eagles
West Coast Eagles
The West Coast Eagles are an Australian rules football club which plays in the Australian Football League. The club is based in Perth, Western Australia. The club was founded in 1986 and played its first games in the 1987 season. Its current home ground is Subiaco Oval...
and Adelaide.
The salary cap, known officially as Total Player Payments, is A$8,212,500 for the 2011 season with a salary floor of $7,596,562.50, except for the Gold Coast expansion team, whose salary cap will be A$9,212,500 with a salary floor of A$8,596,562.50.
Certain payments are excluded from the cap, and concessions are available for some players, in particular, "veteran" players (those over the age of 30 and/or who have completed 10 seasons with their current club) and "nominated" rookie list
Rookie list
The Rookie List is a means for Australian Football League clubs to maintain additional players outside of the 38-man primary or senior list. Rookie listed players are not eligibile to play in AFL home and away or finals matches unless they are elevated to the senior list, either to replace a...
players, who are discounted by up to 50% for purposes of the cap. The AFL Players Association
AFL Players Association
The AFL Players Association, or AFLPA, is the representative body for all current and past professional Australian Football League players....
negotiates for players with the AFL on the topic of average salary.
Breaches
The breaches of the salary cap and salary floor regulations outlined by the AFL are exceeding the TPP, falling below the salary floor, not informing the AFL of payments, late or incorrect lodgement or loss of documents relating to player financial and contract details, or engaging in draft tampering. Trading cash for players and playing coaches, formerly common practices, are also prohibited in order to prevent wealthier clubs from evading the salary cap and salary floor regulations.Penalties for players, club officials or agents include fines of up to one and one half times the amount involved and/or suspension. Penalties for clubs include fines of up to triple the amount involved ($10,000 for each document that is late or incorrectly lodged or lost), forfeiture of draft picks and/or (since 2003) deduction of premiership points; the latter penalty has never been implemented. As yet no club has been penalised for breaches of the salary floor regulations.
Documented breaches of the salary cap regulations are as follows:
- In 1987, Sydney were fined the maximum of $60,000 and forfeited their first round pick in the National Draft after a VFL investigation found that they had exceeded the salary cap by $1.15 million during the season.
- In 1992, Sydney were fined $50,000 after it was found that they had failed to disclose payments made to former player Greg Williams during the 1990 season; Williams was suspended for six matches and fined the maximum of $25,000 for accepting the payments.
- Hawthorn was fined $28,500 in 1992 for a minor breach in relation to benefit payments.
- Three clubs were fined for minor breaches in 1993: Melbourne ($13,450), Carlton ($9,750) and Footscray ($2,700).
- In 1994, Carlton were fined $50,000 after it was found that they had exceeded the salary cap by $85,000 during the 1993 season.
- In 1995, Sydney were fined $20,000 after key documents relating to player financial details and star full-forward Tony LockettTony LockettAnthony Howard "Tony" Lockett is a former Australian rules football player. Lockett is the highest goal scorer in the history of the VFL/AFL with 1,360 goals in a career of 281 games, that commenced in 1983 with the St Kilda Football Club, and finished in 2002 with the Sydney Swans...
's contract details were lost in the post by club officials, forcing the club, who had won the last three wooden spoons, to scratch from the 1995 pre-season draft and play the season two players short. The club officials responsible were fired by the Swans one week later. - In 1996, Essendon were fined a record $638,250 ($250,000 in back tax and penalties, $112,000 for draft tampering and $276,250 for breaching the salary cap regulations), forfeited their first, second and third round picks in the National Draft and were excluded from the 1997 rookie and pre-season drafts after a joint Australian Tax Office and AFL investigation found that they had committed serious and systematic breaches of the salary cap regulations totalling $514,500 between 1991 and 1996.
- Ten other clubs were fined in 1996 for minor breaches in a crackdown following the Sydney incident the year before: Fitzroy, St Kilda and North Melbourne ($30,000 each), Richmond ($20,000), and Brisbane, Collingwood, the Western Bulldogs, Fremantle, Hawthorn and the West Coast Eagles ($10,000 each).
- In 1997, Port Adelaide was fined $50,000 for late lodgement of documents relating to the contract and financial details of five players.
- In 1998, the West Coast Eagles were fined $100,000 and forfeited their third round pick in the National Draft after it was found that they had exceeded the salary cap by a total of $165,000 during the 1997 and 1998 seasons.
- Geelong were fined $77,000 in 1998 and excluded from the 1999 pre-season draft after it was found that they had exceeded the salary cap by $154,000 during the 1997 season.
- Four other clubs were fined in 1998 for minor breaches after an AFL investigation: Collingwood ($47,500), Hawthorn ($45,000), Richmond ($21,000) and the Western Bulldogs ($5,300). Collingwood and Richmond were also excluded from the 1999 pre-season draft.
- In 1999, Melbourne were fined $600,000 and forfeited their first, second and third round picks in the National Draft for two years after it was found that they had committed serious and systematic breaches of the salary cap regulations totalling $810,000 between 1995 and 1998. Fremantle were handed Melbourne's first round pick for the 1999 National Draft as compensation for losing ruckman Jeff WhiteJeff WhiteJeffrey Newman "Jeff" White is an Australian rules footballer who had a distinguished career in the Australian Football League spanning 14 years. He played most recently and notably for the Melbourne Football Club, following a move from the Fremantle Dockers at the end of 1997...
to Melbourne. - Two other clubs were fined in 1999 for minor breaches: Carlton ($43,800) and Geelong ($20,000); Carlton were also excluded from the 2000 pre-season draft.
- In 2000, Fremantle were fined $54,400 and excluded from the 2001 pre-season draft for a string of minor breaches. Fremantle's poor 2001 season2001 AFL seasonResults and statistics for the Australian Football League season of 2001.See List of Australian Football League premiers for a complete list.-National Cup:Port Adelaide defeated Brisbane Lions 17.9 to 3.8 in the Final....
(in which it won the wooden spoon) has been put down to this penalty. - Four other clubs were fined in 2000 for minor breaches: North Melbourne ($35,000), Richmond ($10,000), Brisbane ($7,500), and Melbourne ($5,000).
- In 2001, Carlton were fined $125,150, forfeited their second and third round picks in the 2001 National Draft and were excluded from the 2002 pre-season draft after it was found that they had failed to disclose payments totaling $239,900 to captain Craig BradleyCraig BradleyCraig Edwin "Braddles" Bradley is a former South Australian Australian rules footballer and first class cricketer. He is currently a part-time assistant coach at the Carlton Football Club, the club he represented 375 times in the VFL/AFL....
and incorrectly lodged an additional services agreement document during the 1998 and 1999 seasons. - Three other clubs were fined in 2001 for minor breaches: Richmond and North Melbourne ($20,000 each) and Melbourne ($5,000).
- In 2002, Carlton were fined a record $987,500 and forfeited their priority picks in the National Draft, their first and second round picks in the National Draft for two years and were excluded from the 2003 pre-season draft after an AFL investigation found that they had committed serious and systematic breaches of the salary cap regulations totaling $1.37 million between 1998 and 2001; ruckman Matthew Allan was suspended for five matches and fined $10,000 for accepting undisclosed payments from club officials. Carlton struggled for seven years as it recovered both on and off the field from these significant penalties, finishing no higher than 11th in 2004 and winning their first-ever wooden spoons in 2002, 2005 and 2006. After the draft ban expired, Carlton received a multitude of priority and first round draft picks.
- Fremantle were fined $80,000 in 2002 for late and incorrect lodgement of documents relating to the financial and contract details of four players.
- In 2003, Brisbane were fined $260,000 for late lodgement of documents relating to the contract and financial details of 26 players, and the Western Bulldogs were fined $30,000 for late lodgement of documents relating to the contract and financial details of three players after a crackdown in light of the Carlton scandal the year before.
- Essendon were fined $85,000 in 2003 but did not have any points deducted after it was found that they had exceeded the salary cap by $106,000 during the 2002 season.
- In 2004, Melbourne were fined $30,000 for incorrect lodgement of documents relating to the contract and financial details of three players.
- In 2005, St Kilda were fined $40,000 for a minor breach in regards to minor sponsor XboxXboxThe Xbox is a sixth-generation video game console manufactured by Microsoft. It was released on November 15, 2001 in North America, February 22, 2002 in Japan, and March 14, 2002 in Australia and Europe and is the predecessor to the Xbox 360. It was Microsoft's first foray into the gaming console...
providing players with the game machines. Brian Waldron, Matt Hanson and Cameron Vale, the club's CEO, CFO and Financial Officer at the time, are currently under investigation by ASIC, the Australian Tax Office, and the Victorian State Revenue Office in relation to the Melbourne Storm salary cap scandal in the NRL. - In 2006, St Kilda were fined $40,000 for late lodgement of documents relating to the contract and financial details of four players.
- Richmond was fined $10,000 in 2007 for late lodgement of a document relating to the contract and financial details of a player.
- Two clubs were fined in 2008 for minor breaches: Adelaide ($20,000) and St Kilda ($10,000).
Criticism of the cap
The AFL salary cap is occasionally controversial, as the cap is a "soft" cap and therefore can sometimes be slightly different for each club. Clubs in poor financial circumstances do not always use their full cap, in some circumstances not even reaching the salary floor, to ensure they reduce costs.The AFL has used the cap to pursue its policy of supporting clubs in non-traditional markets such as Sydney and Brisbane. Until the 2003 season, the Swans and the Brisbane Lions
Brisbane Lions
The Brisbane Lions is an Australian rules football club which plays in the Australian Football League . The club is based in Brisbane, Queensland. The club was formed from the merger of the Brisbane Bears and the Fitzroy Lions in 1996...
were permitted a 15% higher cap. This advantage attracted criticism after the Lions won three consecutive premierships from 2001–2003, and as a result, the Sydney Swans
Sydney Swans
The Sydney Swans Football Club is an Australian rules football club which plays in the Australian Football League . The club is based in Sydney, New South Wales. The club, founded in 1874, was known as the South Melbourne Football Club until it relocated to Sydney in 1982 to become the Sydney...
now have a 7% higher cap due to the increased cost of living in that city, and Brisbane's advantage has been eliminated. The AFL maintains that higher salary caps may be used in the future to support its expansion into rugby league
Rugby league
Rugby league football, usually called rugby league, is a full contact sport played by two teams of thirteen players on a rectangular grass field. One of the two codes of rugby football, it originated in England in 1895 by a split from Rugby Football Union over paying players...
's heartland in New South Wales
New South Wales
New South Wales is a state of :Australia, located in the east of the country. It is bordered by Queensland, Victoria and South Australia to the north, south and west respectively. To the east, the state is bordered by the Tasman Sea, which forms part of the Pacific Ocean. New South Wales...
and Queensland
Queensland
Queensland is a state of Australia, occupying the north-eastern section of the mainland continent. It is bordered by the Northern Territory, South Australia and New South Wales to the west, south-west and south respectively. To the east, Queensland is bordered by the Coral Sea and Pacific Ocean...
.
State and regional leagues
Apart from the AFL, several regional leagues also have salary caps which although widening between them and the AFL and overall less than national competitions, are substantial enough to dictate the movement of semi-professional and professional players between states and the overall playing quality and spectator attendance of the state leagues.There are a significantly higher number of AFL reserves in the Victorian Football League
Victorian Football League
The Victorian Football League which evolved from the former Victorian Football Association , taking its new name as from the 1996 season, is the premier Australian rules football league in Victoria The Victorian Football League (VFL) which evolved from the former Victorian Football Association...
due to affiliations with Victorian clubs, but player payments for these appearances is apparently not included in the VFL's salary cap.
Rugby League
The National Rugby LeagueNational Rugby League
The National Rugby League is the top league of professional rugby league football clubs in Australasia. The NRL's main competition, called the Telstra Premiership , is contested by sixteen teams, fifteen of which are based in Australia with one based in New Zealand...
adopted a hard salary cap model in its first season in 1998. The salary cap is A$4.6875 million in 2010 and AU $5 million in 2011, with a salary floor of A$4.21875 million in 2010 and A$4.5 million in 2011 (90% of the cap). The NRL's stated purposes for having a salary cap are "to assist in spreading the playing talent" and "ensure that clubs are not put into positions where they are forced to spend more money than they can afford in terms of player payments, just to be competitive." http://www.nrl.com.au/nrlhq/referencecentre/salarycap/tabid/10434/default.aspx
| League | Region | Salary Cap | Service payments excluded | Average player annual salary | Average salary per game | Highest paid (per year approx) |
|---|---|---|---|---|---|---|
| National Rugby League National Rugby League The National Rugby League is the top league of professional rugby league football clubs in Australasia. The NRL's main competition, called the Telstra Premiership , is contested by sixteen teams, fifteen of which are based in Australia with one based in New Zealand... |
Australasia Australasia Australasia is a region of Oceania comprising Australia, New Zealand, the island of New Guinea, and neighbouring islands in the Pacific Ocean. The term was coined by Charles de Brosses in Histoire des navigations aux terres australes... (transnational) |
A$ Australian dollar The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu... 4,687,500 |
Yes | A$187,500 | A$7,500 | A$562,500 |
| Super League Super League Super League is the top-level professional rugby league football club competition in Europe. As a result of sponsorship from engage Mutual Assurance the competition is currently officially known as the engage Super League. The League features fourteen teams: thirteen from England and one from... |
Europe Europe Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting... (transnational) |
£ Pound sterling The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence... 1,700,000 |
||||
Breaches
The breaches of the salary cap and salary floor regulations outlined by the NRL are exceeding the salary cap, falling below the salary floor, not informing the NRL of payments, late or incorrect lodgement or loss of documents relating to player financial and contract details or engaging in contract tampering. Trading cash for players is also prohibited to prevent wealthier clubs from evading the salary cap and salary floor regulations.Penalties for players, club officials and agents include fines of the lesser of 10% of the amount involved or $100,000 and/or suspension. Penalties for clubs include fines of the lesser of half the amount involved or $500,000 ($2,500 for each document that is late or incorrectly lodged or lost) and/or deduction of premiership points.
The following breaches of the salary cap and salary floor have occurred:
- In 2000, the Newcastle KnightsNewcastle KnightsThe Newcastle Knights are an Australian professional rugby league football club based in Newcastle, New South Wales. They compete in Australasia's premier rugby league competition, the National Rugby League premiership...
were fined $158,800 but did not have any points deducted after club officials revealed that they had exceeded the salary cap by a total of $454,100 and failed to disclose third-party payments during the 1998 and 1999 seasons. - The New Zealand WarriorsNew Zealand WarriorsThe New Zealand Warriors are a professional rugby league football club based in Auckland, New Zealand. They compete in the National Rugby League premiership and are the League's only team from outside Australia...
were fined $100,000 in 2000 for failing to disclose third-party payments made during the 1998 and 1999 seasons. - Six other clubs were fined in 2000: Penrith ($80,900), Canterbury ($50,000), Parramatta ($40,000), Melbourne ($24,300), the Sydney Roosters ($12,800) and Cronulla ($6,900).
- In 2001, the North Queensland CowboysNorth Queensland CowboysThe North Queensland Cowboys are an Australian professional rugby league football club based in Townsville, Queensland. They compete in Australasia's elite rugby league competition, the National Rugby League premiership...
were fined $100,000 but did not have any points deducted after it was found that they had exceeded the salary cap by $210,000 and failed to disclose third-party payments during the 2000 season. - The Melbourne StormMelbourne StormThe Melbourne Storm are an Australian professional rugby league club based in the city of Melbourne. They are the first fully professional rugby league team based in the Australian rules football-dominated state of Victoria....
were fined $89,900 in 2000 but did not have any points deducted after it was found that they had exceeded the salary cap by $177,400 during the season. - The Brisbane Broncos were fined $84,150 in 2000 but did not have any points deducted after it was found that they had exceeded the salary cap by $118,300 and were late in lodging documents relating to financial and contract details of 10 players during the season.
- In 2002, the Canterbury BulldogsCanterbury BulldogsThe Canterbury-Bankstown Bulldogs are an Australian professional rugby league football club based in Belmore, a suburb in the Canterbury-Bankstown region of Sydney. They compete in the National Rugby League premiership, as well as New South Wales Rugby League junior competitions...
were fined the maximum of $500,000 and deducted all 37 premiership points received during the season after it was found that they had committed serious and systematic breaches of the salary cap regulations described by NRL Chief Executive David GallopDavid GallopDavid Gallop is an Australian sports administrator who has been the Chief Executive Officer of the National Rugby League since February 2002. He has also been the Secretary of the Rugby League International Federation since its inception in 1998.-Early life:...
as "exceptional in both its size and its deliberate and ongoing nature" totaling $2.13 million between 2000 and 2002, including $750,000 in 2001 and $920,000 in 2002. The points penalty meant that the club won the 2002 wooden spoonWooden spoon (award)A wooden spoon is a mock or real award, usually given to an individual or team which has come last in a competition, but sometimes also to runners-up. Examples range from the academic to sporting and more frivolous events...
. - The Sydney RoostersSydney RoostersThe Sydney Roosters are an Australian professional rugby league football club based in the Eastern Suburbs of Sydney. The club competes in the National Rugby League and is one of the oldest and most successful clubs in Australian rugby league history, having won twelve New South Wales Rugby League...
were fined $149,150 in 2002 for failing to disclose or incorrect disclosure of third-party payments made during the 2001 and 2002 seasons. - The Newcastle KnightsNewcastle KnightsThe Newcastle Knights are an Australian professional rugby league football club based in Newcastle, New South Wales. They compete in Australasia's premier rugby league competition, the National Rugby League premiership...
were fined $85,000 in 2002 but did not have any points deducted after it was found that they had exceeded the salary cap by $170,000 during the season. - Three other clubs were fined in 2002: Melbourne ($66,700), the Wests Tigers ($58,550) and Brisbane ($57,550).
- In 2003, the Melbourne Storm were fined $130,950 but did not have any points deducted it was found that they had exceeded the salary cap by $261,900 during the season.
- Seven other clubs were fined in 2003 after a crackdown in light of the Canterbury scandal the year before: Penrith ($60,000), Newcastle ($40,000), Brisbane ($20,000), South Sydney ($15,250), the New Zealand Warriors ($15,000), and Cronulla and Canterbury ($10,000 each).
- In 2004, the Melbourne Storm were fined $120,000 after club officials revealed that their former management had failed to disclose third-party payments made between 2001 and 2004.
- In 2004, the Canterbury BulldogsCanterbury BulldogsThe Canterbury-Bankstown Bulldogs are an Australian professional rugby league football club based in Belmore, a suburb in the Canterbury-Bankstown region of Sydney. They compete in the National Rugby League premiership, as well as New South Wales Rugby League junior competitions...
were fined $82,300 but did not have any points deducted after club officials revealed that they had fallen below the salary floor by $159,600 and were late in lodging documents relating to financial and contract details of a player during the 2003 and 2004 seasons. - Four other clubs were fined in 2004: St George Illawarra ($32,300), Penrith and the Sydney Roosters ($25,000 each), and Canberra ($5,000).
- In 2005, the New Zealand Warriors were fined $430,000 and were ordered to start the 2006 season with a four premiership point deficit and cut their payroll by $450,000 after club officials revealed that their former management had exceeded the salary cap by a total of $1.1 million during the 2004 and 2005 seasons. The points penalty meant that the Warriors missed a finals berth in 2006.
- Four other clubs were fined for minor breaches in 2005: St George Illawarra ($20,000), Newcastle ($11,100), Canterbury ($8,500) and Canberra ($6,350).
- In 2006, the Canberra RaidersCanberra RaidersThe Canberra Raiders are an Australian professional rugby league football club based in the national capital city of Canberra, Australian Capital Territory. They have competed in Australasia's elite rugby league competition, the National Rugby League premiership since 1982...
were fined $173,200 but did not have any points deducted after it was found that they had exceeded the salary cap by $286,400 and incorrectly lodged documents relating to financial and contract details of 12 players during the 2005 season. - Seven other clubs were fined in 2006: Melbourne ($63,250), St George Illawarra ($62,400), Brisbane ($30,000), South Sydney ($28,600), Wests Tigers ($21,250), Newcastle ($19,250), and Cronulla ($5,000).
- Six clubs were fined for minor breaches in 2007: South Sydney ($70,150), Wests Tigers ($46,800), Canberra ($45,800), Canterbury ($25,000), Melbourne ($13,900) and Brisbane ($10,000).
- Five clubs were fined for minor breaches in 2008: St George Illawarra ($15,200), South Sydney ($12,500), Gold Coast ($5,450), Canterbury ($4,650) and Wests Tigers ($3,650).
- Seven clubs were fined for minor breaches in 2009: Melbourne ($15,000), Brisbane ($5,000), Canterbury ($3,750), and the Wests Tigers, Penrith, Sydney and the Gold Coast ($2,500 each).
- In 2010, the Melbourne Storm were strippedMelbourne Storm salary cap breachThe Melbourne Storm salary cap breach was a major breach of the National Rugby League's strictly enforced salary cap by the Melbourne Storm club over a period of five years...
of the 2007 and 2009 premierships, 2006–2008 minor premierships and the 2010 World Club Challenge trophy, fined a record $1.689 million ($1.1 million in NRL prize money which will be equally distributed between the remaining 15 clubs, $89,000 in prize money from the World Club ChallengeWorld Club ChallengeThe World Club Challenge is an annual rugby league football match held between the champions of the Australasian National Rugby League and the European Super League competitions to determine the world's best rugby league club...
which will be distributed to the Leeds RhinosLeeds RhinosLeeds Rhinos is an English professional rugby league football club based in Leeds, West Yorkshire. The club won the 2011 Super League and became the most successful club in the Super League era, beating St Helens 32-16 on 8th October 2011. Formed in 1890, Leeds competes in Europe's Super League...
, and the maximum of $500,000 for breaching the salary cap regulations), ordered to cut their payroll by $1.0125 million, deducted all eight premiership points received during the season and barred from receiving premiership points for the remainder of the season after Storm officials revealed that the club had committed serious and systematic breaches of the salary cap regulations between 2006 and 2010Melbourne Storm salary cap breachThe Melbourne Storm salary cap breach was a major breach of the National Rugby League's strictly enforced salary cap by the Melbourne Storm club over a period of five years...
by running a well-organized dual contract and bookkeeping system that concealed a total of $3.78 million in payments made to players outside of the salary cap from the NRL, including $303,000 in 2006, $459,000 in 2007, $957,000 in 2008, $1.021 million in 2009 and $1.04 million in 2010. The points penalty meant that the club won the 2010 wooden spoon. Legal action by the former directors of the club against the penalties collapsed, and the matter has been referred to ASIC, the Australian Tax Office, the Victorian State Revenue Office, and the Victoria Police. The club's former CEO Brian Waldron and financial officers Matt Hanson, Paul Gregory and Cameron Vale are all facing lifetime suspensions. - Five other clubs were fined for minor breaches in 2010: Parramatta ($25,000), St George Illawarra ($22,500), Brisbane ($17,000), Sydney ($7,250) and Canberra ($2,000).
Criticism of the cap
The NRL is one of the few major leagues to implement a salary cap in a sport that has competing leagues in other countries where there is either no salary cap or a much higher cap per club. As a result, there is a constant drain of players from Australia to Europe where salaries for the elite, and even for average players, are considerably higher. The NRL has chosen to continue with the cap, believing that any reduction in quality of the sporting product due to the loss of these players is less than allowing richer clubs to dominate. In practice, the goal of parity has been quite successful, with nine different clubs winning the premiership between 1998 and 2010. Since the NRL's inception in 1998, only the Brisbane Broncos have won the premiership more than once.In 2008, the departure of Mark Gasnier
Mark Gasnier
Mark Gasnier is an Australian former rugby league player, a state and national representative centre three-quarter. He played eleven top-grade seasons with the St. George Illawarra Dragons in the NRL, interrupted by two seasons of rugby union played with the French club Stade Français. He was a...
and Sonny Bill Williams
Sonny Bill Williams
Sonny William 'Sonny Bill' Williams is a New Zealand rugby union player and former rugby league player. He is only the second person to represent New Zealand in rugby union after first playing for the country in rugby league. In rugby union he usually plays as a centre...
, two elite stars, to play French rugby union prompted calls for the cap to be raised. Australian rugby league players had suffered a 27% decline in their wages since 1999, whereas other Australian sportsmen had experienced steady, and in some cases explosive growth. Some of the blame has been apportioned to the fact that the media company News Limited
News Limited
News Limited is one of Australia's largest diversified media companies. The publicly listed company's interests span newspaper and magazine publishing, Internet, Pay TV, National Rugby League, market research, DVD and film distribution, and film and television production trading assets.News Limited...
is a 50% owner of the NRL, and would normally be expected to be a bidder for rugby league rights in Australia. Being an owner of the game means News can apportion rights to itself at a discount, reducing the overall income the league can make for itself through media rights. This has a flow-on effect reducing available income for players. Following the 2009–10 northern rugby union season, global exchange rate changes meant that payments in European currencies were not as attractive and Gasnier returned to the NRL, while Williams returned to his homeland of New Zealand in what proved a successful attempt to play rugby union with the All Blacks.
Association football (soccer)
The A-LeagueA-League
The A-League is the top Australasian professional football league. Run by Australian governing body Football Federation Australia , it was founded in 2004 following the folding of the National Soccer League and staged its inaugural season in 2005–06. It is sponsored by Hyundai Motor Company...
national association football (soccer) competition has set a salary cap of A$2.35 million for each squad in the 2010/2011 season, with a salary floor of $2.17375 million.
Each team can sign one "marquee player" and one "guest player", whose salaries are excluded from the team's salary cap. The A-League
A-League
The A-League is the top Australasian professional football league. Run by Australian governing body Football Federation Australia , it was founded in 2004 following the folding of the National Soccer League and staged its inaugural season in 2005–06. It is sponsored by Hyundai Motor Company...
has also introduced a "junior marquee" for eligible under 23 year old players with the aim of keeping young talented players in Australia for a longer period, similar to the Designated Player Rule in Major League Soccer
Major League Soccer
Major League Soccer is a professional soccer league based in the United States and sanctioned by the United States Soccer Federation . The league is composed of 19 teams — 16 in the U.S. and 3 in Canada...
in North America.
Breaches
The breaches of the salary cap and salary floor regulations outlined by the A-League are exceeding the salary cap, falling below the salary floor, not informing the A-League of payments, late or incorrect lodgement or loss of documents relating to player financial and contract details or engaging in contract tampering.Penalties for players, club officials or agents include fines of up to one and one half times the amount involved and/or suspension. Penalties for clubs include fines of up to triple the amount involved ($5,000 for each document that is late or incorrectly lodged or lost) and/or deduction of competition points.
In the 2006-07 season, Sydney FC
Sydney FC
Sydney FC is a professional football club based in Sydney, New South Wales, Australia and competes in the country's premier football competition, the A-League...
were fined $174,000 and deducted three competition points after it was found that they had exceeded the salary cap by $110,000 and failed to declare third-party payments during the 2005–06 season in which they were premiers.
National Basketball League
The National Basketball LeagueNational Basketball League (Australia)
The National Basketball League, also known as the iiNet NBL Championship for sponsorship reasons, is the pre-eminent men's professional basketball league in Australasia....
has a salary cap of A$
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
1 million for each of its eight teams, for the 2009-10 season. In addition, since 2003-04, the NBL has used a "points cap" to encourage spread of talent: players are assigned points on a 1-10 basis each season "based on their performance in the NBL or based on the league they have participated in for the season just concluded", and each team's player roster (of between 10 and 12 players) must fall within a "Total Team Points" limit.
External links
- http://www.washingtonhockey.com/200203/features/sc2.htm salary caps 101 CapGeek.com - NHL salary cap calculator, buyout calculator, org charts, free agents, and more!
- The Hockey GM - Up to date salary cap information for NHL teams
- Overview of salary caps in US professional leagues
- Ask the Commish NFL Salary Cap FAQ, up to date with current (2006) labor deal
- NBA salary cap FAQ
- Salary Cap Spreadsheets for the Washington Redskins from TheWarpath.net
- 49ers Salary Cap site
- NRL salary cap page
- Sports' salary cap discussed in detail
- 2010/2011 Toronto Maple Leafs Salary Cap