Salary cap

Salary cap

In professional sports, a salary cap is a rule that limits how much money a team can spend on players' salaries. This limit can apply to each player, the whole team, or both. Many sports leagues use salary caps, especially closed leagues. The main reasons for having a salary cap are to control costs and keep the competition fair. This helps prevent richer teams from becoming too powerful by signing many more star players than other teams.

Salary caps often come up when league leaders talk with players' unions. Because of the cap, players and teams do not always agree on higher salaries, even when a team is making a lot of money. This has sometimes led to strikes by players and lockouts by team owners and managers, as both sides work to find a fair balance.

Adoption

Salary caps are rules that help control how much money teams can spend on players. Many sports leagues around the world use them. In North America, leagues like the National Basketball Association, National Football League, and National Hockey League use salary caps. Some leagues have a soft cap with extra rules for spending above it, while others, like Major League Baseball, use different methods.

In the United Kingdom, top rugby leagues in England and Wales have salary caps. In Australia and New Zealand, sports like Australian rules football, rugby league, and basketball also use salary caps. In Eurasia, the Kontinental Hockey League has had a salary cap since 2008. France and China have also introduced salary caps in their top football leagues. Some European football leagues have talked about adding salary caps to help control spending.

Benefits

Salary caps have two main benefits: they help teams stay close in skill, and they keep costs under control.

A salary cap stops richer teams from buying all the best players. This makes it easier for other teams to win, keeping the games exciting. If one team keeps winning easily, fans of other teams may lose interest.

Salary caps also help teams avoid spending too much money on players. Without limits, some teams might spend a lot to win quickly, but then struggle later. This can make the sport unstable, and fans may lose interest if teams go broke or move to new places.

Hard cap, soft cap and salary floor

A salary cap can be a hard cap or a soft cap. A hard cap is a strict limit that a team cannot go over. If a team breaks this rule, there can be serious penalties, like losing championships. A soft cap allows a team to go a little over the limit in some cases, but there will still be penalties, like fines.

Some leagues also have a salary floor, which is the minimum amount a team must spend on players. This helps make sure teams don’t spend too little money and keeps the league fair. When the salary cap and floor are the same, every player often gets paid a similar amount.

Reserve clause

Before salary caps, clubs used a rule called the reserve clause. This rule stopped players from joining other teams until their current contract ended, even if they wanted to. In the 1970s, players and their unions said this was not fair. A famous player named Curt Flood stood up for players' rights to try to end this rule. Over time, experienced players could become free agents after their contracts ended. They could then choose which team they wanted to play for next. This made teams compete for the best players, often helping richer teams in big cities.

In North American leagues

National Football League

The new agreement in 2011 started with a salary cap of $120 million. Each team must spend most of this money on players. The cap grows each year, except in 2021 when revenues dropped due to the COVID-19 pandemic. The NFL uses a strict cap that teams must follow. Breaking the rules can lead to big fines or losing draft picks. The cap helps keep costs down and makes the league more fair.

National Hockey League

The NHL once had a salary cap but it was very small. After a long fight about salaries, the NHL agreed to a strict cap in 2005. Now, each team has a limit on how much they can spend on players. The cap changes each year based on how much money the league makes. Teams must stay under this cap or face big penalties, including fines. This cap helps keep things fair.

National Basketball Association (soft cap + luxury tax)

The NBA tried a salary cap once but stopped using it. In 1985, they brought it back to make things fairer. Teams have a limit on what they can spend, but there's a special rule that lets teams spend more to keep their own star players. If teams spend too much over the cap, they have to pay extra money, called a luxury tax. This helps balance things out.

Major League Baseball (luxury tax)

Baseball doesn't use a salary cap. Instead, if teams spend too much, they pay a tax on the extra money. This tax goes to help the league. The idea is to stop very rich teams from spending way more than others.

Major League Soccer

MLS uses a salary cap. Each team has a limit on how much they can spend on players, except for a few special cases. Teams can also use extra money in special ways to pay for certain players. This cap helps keep things fair across all teams.

Canadian Football League

The CFL has a salary cap too. Teams can't spend more than a certain amount on players each season. If they do, they face fines. This cap helps make sure all teams have a fair chance.

Major League Rugby

Major League Rugby has a team salary cap of $500,000.

Other North American leagues

Many other leagues use salary caps too. For example, the Arena Football League had a cap, and the National Women's Soccer League also uses one. These caps help keep things fair and stop richer teams from dominating by spending much more on players.

In Europe

Salary caps are not used often in Europe. But some European sports competitions and leagues have added them.

For example, rugby league's Super League, mainly in England with a team also in France, has a salary cap. The league has used promotion and relegation for most of its history.

In rugby union, two major leagues—the English Premiership and the French Top 14—have also added salary caps. The Premiership's cap has been in place since the late 1990s and has grown over time. Special rules help teams manage their squads during important tournaments.

The most notable ice hockey league with a salary cap in Europe is the Kontinental Hockey League. Despite challenges like different currencies, the league added a cap to control costs and keep things fair.

Several European football leagues have thought about adding salary caps to help clubs spend wisely. But challenges such as players moving freely between leagues, international competitions, and different tax systems make it hard to add a cap across European football.

In Australia and New Zealand

Australian rules football

Main article: AFL salary cap

The Australian Football League has a rule that limits how much money clubs can spend on player salaries. This started in 1987 and helps make sure richer teams cannot win just by paying more.

The limit was A$1.25 million in 1987 and grew to A$13,165,950 by 2020. There are also rules to make sure teams do not spend too little on players.

Some players, like experienced ones or new rookies, may have special arrangements that change how much they count toward the team's spending.

The AFL Players Association talks with the league about player salaries.

Success of the cap

Since 1987, many different teams have had a chance to compete at the top. This has kept the competition fair and exciting for fans.

Football department cap

The rule at first only covered player payments. Now, there are talks about also limiting how much teams can spend on their football departments. Some teams have spent much more on these areas, which could give them an unfair advantage.

In 2014, a new rule was added to tax teams that spend too much on their football departments. This helps keep spending balanced across the league.

State and regional leagues

Other regional leagues also have rules to limit spending, though these are usually less strict than the main national league.

AFL Women's

In 2017, the AFL started a women's league. This league also has rules to limit how much teams can spend on player salaries, and these limits have increased over the years to support the players better.

Rugby league

Main article: NRL salary cap

The National Rugby League has a rule that limits how much money clubs can spend on player salaries. This started in 1998 and helps spread talent more evenly.

The limit was A$9.6 million in 2018, with a minimum spending requirement as well. This rule helps keep the competition fair so that every team has a chance to win.

There have been times when some teams have won multiple titles in a row, showing that clever coaching and player recruitment can still lead to success.

Rugby union

Australia: Super Rugby

Australian teams in rugby's Super Rugby competition had a limit on how much they could spend on player salaries until 2018. This was to manage financial pressures and make it harder for some teams to win titles.

The limit started at A$4.1 million and was adjusted over time. There were also some special rules for certain players.

Eventually, a new agreement changed these rules, removing some special cases and adding a minimum spending requirement.

New Zealand: NPC

New Zealand's top rugby competition also had a rule limiting how much teams could spend on player salaries. This started in 2006 to ensure fair competition.

The limit was reduced over time because some teams were struggling financially. The purpose was to keep the competition balanced and sustainable.

Association football

A-League

Both the men's and women's association football leagues in Australia, known as the A-League Men and A-League Women, have rules limiting how much clubs can spend on player salaries.

The men's league had a limit of A$2.5 million in the 2021–22 season, which was adjusted over time. There are special rules for certain players, like "marquee players" whose salaries do not count toward the team's total limit.

The women's league had a limit of $450,000 in the 2021–22 season, with plans to increase this over time.

National Basketball League

The National Basketball League has a rule limiting how much each team can spend on player salaries. This limit was A$1.1 million as of the 2016–17 season.

There were also rules to spread talent more evenly. Over time, these rules changed. The limit became softer, meaning teams could spend a little over the limit but would have to pay extra. There were also special rules for certain players.

Netball

The old trans-Tasman netball competition had a limit on how much each team could spend on player salaries. After 2016, Australia and New Zealand started their own separate leagues, each with their own spending limits.

Australia's new league started with a limit of A$675,000 per team, which has increased slightly over time. There are also minimum salaries for players to ensure they are fairly compensated.

Chinese Super League

After facing money problems in 2020 because of COVID-19, the Chinese Super League had some tough times. In early 2021, one of the top teams, Jiangsu F.C., stopped playing, and another team, Shandong Taishan, was not allowed to play in an important tournament because they owed money.

To help fix these money problems, the Chinese Football Association set rules in December 2020 to limit how much money teams could spend on player salaries. Starting in 2021, teams could only spend a certain amount on all their players' salaries. There were also special limits for foreign players and for how much any one player could earn.

In rugby union

Salary caps are rules that limit how much money a team can spend on players' salaries in rugby union. These rules help keep costs down and make sure teams stay fair, so richer teams cannot just buy all the best players. The limits shown here were accurate as of July 2020.

In cricket

Salary caps and currency conversions accurate as of January 2018.

2026 season