The advent of revenue sharing and salary caps has revolutionized the business of professional sports. The National Football League implemented these concepts in order to promote competitive balance. Theoretically, revenue sharing is supposed to encourage equal distribution of wealth so as to not concentrate top-talent players to the teams with the most resources. In so doing, its practice should work to ensure that there is equal competition among small and large market teams. Also, by enacting a salary cap, larger market teams are prevented from monopolizing talent. Through a series of collective bargaining agreements and lawsuits, there has been a movement in the NFL toward benefiting both the players and owners.
The NFL is the most successful professional sports league in the country. This is in large part due to its ability to run efficiently as a business and promote competition as a sport. In this paper, we examine the historical significance of the progressive collective bargaining agreements and how its changes have effected players and owners of teams in the league. We also examine the components of revenue-sharing and the salary cap implemented through the NFL’s CBA and their significance in promoting competitive balance.
Historical Analysis of the Salary Cap and CBA
The National Football League has undergone many changes since its inception in the 1920s. Early in the development of the National Football League, there was competition among teams in choosing players for their roster. As a result, teams agreed to an option clause which allowed them to continually renew player contracts, thus restricting trade. After one of the players from the Detroit Lions requested to be transferred to another team, and subsequently was denied the request, a lawsuit led to the incorporation of the “Rozelle Rule,” whereby, a team which decided to recruit a...