NBA Salary Cap

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Does Salary Cap and Revenue Sharing improve competitive balance in NBA? Introduction Over the past two decades, National Basketball Association (NBA), the youngest but the most popular professional sports leagues in the Unite States, preserve competitive balance as a high priority and the persistent purpose of collective bargaining. Obviously, for a multi-billion enterprise like NBA, the most important factor in any bargaining situation is the money spent. In order to prevent NBA from internal imbalance and external competition, competitive balance enhancers, such as revenue sharing model and salary cap, was created by the NBA’s player union and the league's collective bargaining agreement (CBA). However, research demonstrated that the competitive…show more content…
One of the reason was the fact that NBA still implements soft cap that allowed the team to hold the right of a player and sign a salary amount exceed the salary cap. (Mark, 2014) One famous clause related to the oft cap was named “Larry Bird Exception”, which was first used by Boston Celtics to hold onto their star players Larry Bird in 1983 (Jim, 2014). In order to resign Larry without breaking up the whole popular team, the league changed the hard cap to soft cap, and permitted Celtics to maintain the team as a whole. However, Celtics used this rule routinely, and retained Larry for his entire career. Currently, if a player consecutively played three seasons with his current team as a “Qualifying Veteran Free Agents”, the player could be signed with the maximum allowable player salary without regard to the salary cap with the current team (Kaplan, 2004). Therefore, the soft cap is not a competitive balance enhancer, because it restricted the movement of the players. If Kobe Bryant and Shaquille O’Neal go to different teams, they could make two good teams rather than make one team the champion three…show more content…
Nonetheless, research showed that revenue sharing did not change the competitive landscape in basketball league. Revenue sharing is more like a profit equalizer that could help small-market team to make some profits, but it will not lead to the competitive balance change. (Tom, 2011) Also, some star players, such as Chris Paul, left New Orleans Hornets and joined Los Angeles Clippers simply because he wanted to, and there was nothing about if Hornets could afford him or not (Dave, 2012). Furthermore, if a high-revenue team is forced to donate to the low-revenue team, it will ended up with little or no incentives for the low-revenue team to generate revenue as a receiver, and they will not try to better allocate their finance as well. There are not research illustrate that small-market teams cannot thrive and compete without the support from big-market

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