Economics in Sport

        

    In class on March 17, 2015, we discussed sports and the economy. Some of the terms that we identified that had to do with this subject include gate revenue, media rights, sponsorship, and merchandising. We spent a lot of time discussing who benefits economically from sport. Athletes benefit greatly from sport because they are paid to play a certain sport. Another topic that we discussed in this section was salary caps. A salary cap can be defined as the limit a team can spend on players’ salaries. Some other terminology associated with salary caps includes hard cap, soft cap, salary floor, luxury tax, and cap room. Currently, there are salary caps in MLS, NBA, NFL, and NHL. Major League Baseball, however, does not have a salary cap.

            In his article, Maury Brown opined that the NBA, NFL, and NHL should get rid of the salary cap. One of the reasons why he believes that these leagues should do away with the salary cap is that the salary cap causes more work stoppages. He pointed out that owners in Major League Baseball have known that a salary cap would cause issues. Brown also stated that media rights deals create revenue to help a team compete. He also feels that it is not right for NFL teams to spend 89% of the salary cap and that the teams should make a percentage of players’ salaries guaranteed. Throughout this article, Maury Brown praised Major League Baseball for not using a salary cap. He feels that Major League Baseball will have no trouble agreeing to a new collective bargaining agreement and leagues like the NBA and NHL will have more difficulty agreeing to a new agreement. This article makes sense for this section because it outlines the details of the salary cap and it discusses economics within the Big-Four professional sports.

Link: http://www.forbes.com/sites/maurybrown/2015/03/10/its-time-to-blowup-the-salary-cap-systems-in-the-nfl-nba-and-nhl/