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NFL Salary Cap Essay

713 Words3 Pages

The NFL is not only a sport that grosses millions of dollars a year in this country, it has blossomed into an industry in and of itself. Due to this large amount of revenue, players are naturally compensated very well however, there are policies in place to regulate this money. This is where the salary cap comes into play. A salary cap is basically an agreement between the league and players that does not allow the league to pay a player more once they reach the maximum. The NFL uses a hard cap which means the cap limit cannot be exceeded no matter the reason. The cap was introduced to the NFL in 1994, with a set cap of $34.6 million. The amount of revenue that the league produces each year determines if this number is adjusted or not. Before …show more content…

It has a “competitive balance tax” instead of a salary cap to even out the money that a team can spend on their roster. The reason this was enacted is because if a team that has money but no salary cap or luxury tax, they can spend any amount they wish in their players and in turn, teams who do not have as much money will not be able to keep up and will not be able to afford the most talented players, putting them at a severe disadvantage. Without this, competitiveness would not be evenly spread across the league and this is the reason Major League Baseball decided to install a competitive tax and implemented it in 1997 and has since had several changes. The system today is based on changes made to the 2002 collective bargaining agreement. From 2000-2002, there was no luxury tax in place, but the MLB reinstated it with the addition of a new change. They implemented a fee that a team would have to pay if they passed a certain threshold rather than placing a level between the 5th and 6th team. This gave teams the opportunity to command their own destiny and not rival with other teams. This meant they would only get chastised if they exceeded the specified

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