Reflections on Salary Shares and Salary Caps

Abstract

This article takes a closer look at salary and revenue figures for the four major professional sports in the United States. It shows that the reporting typically offered in the popular media and often picked up in academic work can be rather misleading. The article first considers the conundrums in defining player compensation and then those connected to revenue. On the basis of adjusted data, the article proceeds to look at salary shares in revenue across the four leagues and considers the irony that the salary share in Major League Baseball (MLB) appears to be lower than the three leagues with a salary cap, the National Football League (NFL), National Basketball Association (NBA), and National Hockey League (NHL). It concludes with some analysis of the impact of salary caps and other mechanisms on controlling player costs.