TheImpact of NFL Salary Cap Concentration on Team SuccessThis article by Timothy E. Zimmer (2016)examines how a team distributes their salary cap, and how that affects theirsuccess.
Addressing how the NFL allows money to be spent with their regulations,and if these effect winning percentages, margin of victory, and offensive yardranks. Zimmer looks at a 10-year spanfrom 1999-2009 to collect the data. Zimmer found that how they concentratesalary is important, and that you must spend to the cap to succeed. Teams whounderspend are usually less successful.
However, Zimmer says it is important tounderstand that pay doesn’t represent ability (Zimmer, pg. 55). So, where theteams distribute the money they spend is important too. Bigger market areas seemto attract better talent. So, Pittsburgh for instance is a nice city and bigmarket.
Thus, players are more likely to come in to play there no matter thecontract. Teams must find the right balance of elite performers and balance ofpay. Teams can’t overpay one player and under pay for the rest and expect tosucceed. On the other side of that coin, teams cannot ignore having eliteplayers at all and expect to succeed either. Teams must find a way to properlyallocate their cap space. Theimpact of salary dispersion and performance bonuses in NFL organizations In this article, Maxcy and Mondello(2009) aimed to see if how money is distributed effects how teams perform.
Notonly was on-field performance covered, but team revenue as well. So, the focuswas on if want for higher compensation will drive higher performance. This especiallycounts in the NFL, where due to salary cap money must be distributed indifferent ways. So, teams must throw more money at “superstar” talent, and thisarticle addresses if that is worth it. These players create a higher salary caphit, and demand more incentives on the contract. Maxcy and Mondello found thatsalary dispersion is better for revenue than on-field performance.
When itcomes to players, the team plays better when the salaries of players are atleast pretty comparable and relatively close in amount. However, when it comesto revenue on the business side of the NFL, dispersion is good. This confirmsthe assumption that effort at a business level is driven by possibility ofhigher compensation for success. So, managing on-field salary cap is extremelyimportant.
While paying some elite talent more is okay, dispersion of salariesevenly over most of the roster is ideal. Allocation of scarce resources: Insight from the NFLsalary cap Thisarticle by Richard Borghesi (2008) covered how the salary cap effects howplayers are paid at different stages in their careers, and how that effectsproduction. It took a look at a 10-year period from 1994-2004. This is because1994 is when free agency began in the NFL, and that’s when salary took aforefront to players and when the salary cap became hard to work around. Thestudies found that payment typically is based on talent that is perceived ratherthan proven. So, more money is given to young players with potential, leavingless cap for more proven and experienced players. Also, it showed that theveterans know what they are worth and are less likely to accept less than whatthey should get.
With the salary cap it is hard to then pay the more provenplayers, so it effects on field performance by the team. The article went overhow salary cap dispersion affected offense and defense individual performance. Whenit comes to starters, they aren’t discouraged by how much other starters make. However,both offensive and defensive production goes down when starters feel thatback-ups are paid too much. So, players morale and performance are based onwhat they feel they deserve compared to others. PlayerCompensation and Team Performance: Salary Cap Allocation Strategies across theNFL In this article by Max Winsberg(2016), a more in-depth look was taken to see how pay by position affectsperformance and team success. Also, it examined how the salary cap madeallocating the wealth harder and made decisions more complex. A little over oneextra win was seen for every 10% more spent on the cap (Winsberg, 2014).
ReferencesBorghesi, R. (2008). Allocation ofscarce resources: Insight from the NFL salary cap. Journal Of Economics& Business, 60(6), 536-550. Mondello, M., & Maxcy, J.(2009). The impact of salary dispersion and performance bonuses in NFLorganizations.
Management Decision,47(1), 110-123. Zimmer, T. E. (2016). The Impact ofNFL Salary Cap Concentration on Team Success. Choregia, 12(1), 53-66.