Expert Article
Cheating or Competing?
How professional sports teams can use salary cap loopholes to their advantage in hopes of winning it all.
You’ve been living in a constant state of sports fan despair for most of your life. None of your teams have won anything and you are in desperate need of a victory parade around your city. How far do you want your teams to go to ensure a spot in the playoffs or--even better--a trophy? Are you okay with them exploiting loopholes in their salary structure? Are you okay with having accusations of cheating slung at you, or people trying to tarnish the reputation of your beloved team? And how would you feel if another team was using these tactics while yours suffered even further?
The salary cap can be exploited differently in each of the leagues it’s used in. Let’s look at some of the different ways salary caps can be worked around in three major leagues in the United States and how they might have worked in practice.
What is the Salary Cap?
Salary caps are used in every major league in the US, except the MLB. The cap exists for the purpose of “limiting how much teams can pay their players” (Staudohar 3). This creates a fairer playing field to ensure that no one team is able to create a super-roster of players that will dominate the rest of the league.
However, there are still some ways around the cap, and teams can use it to their advantage to put themselves in the best position to win.
In the NHL: You Miss 100% of the Loopholes You Don’t Look For
Nikita Kucherov. From: NBCSports
The Lightning were good last year. Not spectacular. They weren’t even first place in their own division. But, since the salary cap does not apply in the NHL during playoffs, Nikita Kucherov “was back for Game 1 against the Florida Panthers in the Stanley Cup First Round” (Rosen). He led the playoffs in points--and his team to hoisting the cup.
This also happened years prior in Chicago with Patrick Kane. Chicago won the Stanley Cup that year, as well.
But there are also two other common ways to beat the salary cap in the NHL.
If your team desperately needs to clear up some space, and a player can no longer play out his contract for the foreseeable future, your team can ship them off to a small market. This is made possible because small market teams often pay smaller salaries and must reach the salary cap floor--intended to create a competitive league--for the season. So, if a team really wants to clear out some cap space, they can throw an aging player to a small market. For example, multiple big market teams such as the Flyers and Red Wings have sent aging players to the Arizona Coyotes (Doyle).
There are also injury specific loopholes, similar to the Kucherov situation. Rather than return for the playoffs, teams can encourage players that get injured to take as much time as they need to recover from injuries. This places the players on Long Term Injured Reserve and clears up their cap space. Often, this is done with veteran players that sign larger contracts. This allows teams to tank their season and have higher odds of winning the draft lottery, a move attempted by the Toronto Maple Leafs in 2016 (Doyle).
The NHL seems to be the easiest league to be in when you want to work around the salary cap. In practice, teams can utilize their Injured Reserve to create a playoff-contender superteam. They can also clear up some much needed cap space to work deals with new players by throwing their old leftovers to smaller teams.
In the NBA: It’s the Media Money
The NBA has a prime time for exploiting the salary cap coming up in the next few years. With their current broadcasting rights deal set to expire for the 2024-25 season, teams can look forward to an unprecedented salary cap spike.
The NBA’s salary cap is set each year based off of the projected revenue the league expects to make in the coming season (Quinn). Therefore, a new media contract greatly increases the projected revenue for the impending season and teams experience a dramatic increase in their salary cap.
This has happened once before in 2016, when the existing media contract was signed. It caused the cap to jump up by 32% and allowed the Golden State Warriors to sign Kevin Durant, while retaining their already elite core. After the signing, the Warriors were able to win two championships (Quinn).
2016-17 Warriors. From: Bleacher Report
The league may look at trying to stop such a cap spike since it can also result in players being overpaid to meet the cap floor. However, “the union rejected the NBA’s proposal to smooth the cap in 2016,” so it is unlikely that they approve action to prevent the spike this time (Quinn).
The 2024-25 season is the optimal time for teams to use the salary cap to put themselves in a position to be contenders. Teams can sign big players in free agency with their additional money and begin to work towards building a starting five projected to dominate well into the postseason.
In the NFL: The Math Can be a Little Tricky
The NFL’s salary cap is regularly reworked by teams. Contract restructuring is a common move in the league as teams attempt to sign and retain star players that can help them get to the Super Bowl.
This can be done by creating signing bonuses.
If a player is set to have a large cap hit, teams can turn their salary into a signing bonus that will be distributed over multiple years of a contract. The proration can greatly diminish the amount of money that goes against the cap in a given year and allows room to pay to retain or sign other players.
Julio Jones. From: Tennessee Titans
In the offseason, when fans are desperately begging their teams’ GM to sign a major player to help them become Super Bowl Champions, they really have to look no further than how a team can rearrange the money for the next few upcoming seasons. While the money may catch up to them later, they can get that star player that will make them feel elated for the time being.
It Could Be Your Year After All
The salary cap is a common off-season topic. Sports journalists and fans alike stress the importance of clearing space to sign the best players on the market as they hopelessly claim that it is finally their year to win it all.
But really, there are so many ways around the salary cap, maybe your team’s championship parade isn’t too far from sight.
Works Cited
Cosentino, Dom. “The NFL Salary Cap Has Lots of Loopholes, but the Bill Always Comes Due.” TheScore.com, TheScore, https://www.thescore.com/nfl/news/2182218.
Doyle, Diane. “A Review of Common Strategies for Dodging the NHL's Salary Cap.” NoVa Caps, 6 Sept. 2021, https://novacapsfans.com/2021/09/05/a-review-of-common-strategies-for-dodging-the-nhls-salary-cap/.
Quinn, Sam. “Cap Smoothing 101: How the NBA Can Prevent Another 2016-like Spike with a New Television Deal Looming.” CBSSports.com, 20 Sept. 2021, https://www.cbssports.com/nba/news/cap-smoothing-101-how-the-nba-can-prevent-another-2016-like-spike-with-a-new-television-deal-looming/.
Razo, Eduardo. “Toronto Maple Leafs History of Robidas Island.” Editor In Leaf, FanSided, 1 Sept. 2016, https://editorinleaf.com/2016/09/01/toronto-maple-leafs-robidas-island/.
Rosen, Dan. “Kucherov Leading Lightning in Playoffs after Recovery from Hip Surgery.” NHL.com, NHL.com, 16 June 2021, https://www.nhl.com/news/nikita-kucherov-leading-tampa-bay-in-playoffs/c-325357766.
Staudohar, Paul. “Compensation and Working Conditions.” Google Books, Google, https://books.google.com/books? hl=en&lr=&id=EbW58yWFY2QC&oi=fnd&pg=PP12&dq=salary%2Bcaps%2Bin%2Bprofessional%2Bteam%2Bsports&ots=PCaezsx5_S&sig=o5h3Fro64zgMLTSroNs1l6MLTSs#v=onepage&q=salary%20caps%20in%20professional%20team%20sports&f=true.
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