SuppliedWhenever I play General Manager mode in any iteration of an MLB or NHL video game, I choose to turn the salary cap off.
I choose to do this for many reasons. I like to suspend reality and not have to worry about player contracts constantly. I’m also a tiny bit of a poor sport when it comes to these type of games (especially when I’m playing with the Oilers, but that tends to happen with so many seasons of inadequacy), so I enjoy being able to stack my teams with as many good players as possible to ensure they come out on top at the end of the season.
Is it fair? Most certainly not, but it’s not real either. So it surprises me that this sort of practice happens in both the MLB and the NBA, leagues without hard salary caps.
In both these leagues, a luxury tax is implemented if a team spends over a certain amount of money, with the MLB exclusively using the luxury tax, and the NBA using it in conjunction with a soft salary cap.
The luxury tax is inherently flawed. Instead of forcing all teams to remain somewhat equal by at the very least conforming to the same salary, it simply fines teams for going over a certain amount of salary. If a team’s owner is rich, they’re more inclined to simply sign all the players they want and pay the penalty, because it’s a calculated risk. Rich teams will always have more than enough money to pay the fines levied by the luxury tax, as exemplified by the Yankees and Red Sox. Since the MLB instituted the luxury tax in 2003, the Red Sox have paid the penalty six times, and the Yankees haven’t missed a payment, finding themselves over the threshold every single year since 2003. As of December 2013, it has been estimated that the Yankees have paid 254 million dollars in luxury tax. If this is a deterrent for rich teams, it doesn’t seem to be working well at all. To be fair however, only six teams have actually incurred the luxury tax penalty since its inception, so it does seem to be discouraging most teams from dancing around on piles of money without a care in the world.
Where the luxury tax really seems to flopping however, is the NBA.
With its new TV deal set to infuse massive amounts of cash into the league starting in 2016-2017, and on the heels of probably the most spend happy free agency period in league history, the NBA may be set to lose what little parity it once had. The salary cap and luxury tax threshold is set to rise from $67.1 million and $81.6 million starting next season, to 108 million and 127 million respectively for the 2017-2018 season. This is all well and good for teams that are close to the cap, but what about the teams with already low payrolls? Will an increase in the salary cap actually compel them to spend more?
That’s how it’s supposed to work in theory, but if teams are still able to technically spend over the cap when retaining players (that’s how it works in the NBA), then how can the small market teams ever hope to truly compete? At this point, it’s becoming about which teams can simply throw enough money at the league to make their roster work, as opposed to trying to work within the constraints of the cap. As an example, the Brooklyn Nets incurred $90.6 million dollars worth of luxury tax fines in 2013-2014, but their owner happens to be Mikhail Prokorov, who just happens to be worth roughly $700 billion dollars, and clearly isn’t afraid to spend money on his team. A deep-pocketed owner is more likely to sign all the players he wants, knowing that they have the money to deal with any and all luxury tax related repercussions.
All in all, a hard cap is best. It encourages parity and shrewd management, as opposed to dealing out a light slap on the wrist every time a team spends a disproportionate amount of money.
