Connor Schultz
5/18/17
ECON 205
Professor Huffer
The Salary Cap in Professional Team Sports
The professional sports industry is one of the largest and most lucrative industries in the
United States. The industry only grows each year getting larger and larger and reaching more
people across America and the world. An article written in the Contemporary Economic Policy
in 2015 projected the professional sports industry to continue to go through 2019, it stated
“The sports market in North America was worth $60.5 billion in 2014. It is expected to reach
$73.5 billion by 2019.” (Heitner, p.1). This increase in value in profitability is largely coming
from the growing media market. Media is more prevalent in our society than it ever has been
due to the advancements we are making in the field. New forms of media like social media and
streaming services have only just recently been introduced to the media world and are
increasing in popularity by the day. Revenue from media deals is expected to become the main
driver in creating revenue for professional sports teams by 2019 surpassing gate revenues. This
media market is expected to grow by 6% during this timeframe as stated: “Sports media rights
are projected to go from $14.6 billion in 2014 to $20.6 billion by 2019.” (Heitner, p.1). This
industry will continue to grow as technology does because professional sports will become
more and more accessible to all kinds of citizens across the United States. In recent years, the
notion of salary caps has been under fire by many sports analysts and fans alike due to
concerns in revenue equality amongst professional teams. The salary cap was implemented to
avoid this issue yet in many cases does the exact opposite and creates new problems across
sports.
The concept of a salary cap is a recently implemented rule in professional sports that
enforces a limit on how much a professional team is allowed to spend on athlete’s salaries each
season. Salary caps work differently across professional sports following different sets of rules
and exceptions respectively. The original implementation of a salary cap was aimed to keep
parity across the league as stated in my first journal article, “Since the 1990s, however, sports
leagues have grown increasingly concerned over the increase in player salaries, not only in
terms of the absolute cost required to field a competitive team, but also in terms of parity, or
the extent to which teams in a league are fairly evenly matched.” (Salary caps, p.1). Parity is the
concept of allocating revenue evenly across an organization to its different franchises to make
