In these economic times, everyone is working on reducing their expenses. Sporting teams are no exception. So there are a lot of talk (among fans and officials) on how to keep the amount of money being spent by sporting teams on players in check these days.
Many professional sporting leagues in North America have already adopted a salary cap in which the amount of money a team can spend on the players is capped. The cap is set to be a certain percentage of the combined revenue received by the teams within a league and the same cap applies to every team in the league. The goal is to keep one (or more) team from outspending the other teams in the league.
The problem is that, in theory, the amount a team can spend on players' salary is capped, a team is allowed to spend more on players than the amount stated by the cap. While there are measures, such as heavy fines or loss of opportunity to draft/sign players new to the league, to prevent teams from spending excessively, a team with deep pockets and vast revenue sources can still spend as much as it wishes, without worrying about the team's bottom line.
To close this loophole, some have suggested that leagues should adopt a hard cap, where no team can spend more than the amount set by the cap. Since the current penalties are not strong enough to deter some teams from overspending on players, more severe punishments may be required for the scheme to work.
One solution may be to punish a team that exceeds the cap by forcing the offending team to forfeit a number of games, where the number of forfeits is directly related to the amount of money a team spends above the cap. (A variant of this is to have the number of forfeits exponentially related to the amount a team spends above the cap.) If a team spends more than the amount prescribed by the cap, the games being forfeited would be those at the beginning of the season. This way, the team (and its players) would not have the opportunity to participate in the post-season tournament, in which the championship is being contested, being abruptly taken away at the end of the season.
Denying an offending team an opportunity to participate in the post-season tournament outright is another strong deterrent preventing teams from exceeding the salary cap. However, this may lead to the team's players, knowing the current season is a lost cause and there is no chance they can compete for a title, demanding to be shipped to another team. Many of the team's supporters may stop attending the team's games or following them on radio/television/on-line, which would heavily reduce the team's revenues.
There are also discussions on whether a salary cap should be adopted for leagues currently without one. The salary cap system works in North America because there is often no competing league whose quality of play is high enough to lure players of top quality away. Since the quality of play in a number of football leagues is similar, players may move from the leagues that adopts a salary cap to those without one or those with a higher cap if the salary cap is not applied evenly to every league. However, it is highly doubtful that leagues, the stronger ones in particular, would agree to a across-the-board salary cap.
One proposition is to have the maximum amount an individual team can spend on players be a set percentage of the team's revenues. Those who introduce the proposition and its supporters claim that the scheme can result in more teams being able to compete for high-quality players. The problem is that the teams that spend the most money on players often are those that earn the largest amount of revenue, so these teams can continue spending a larger amount on players than the teams whose revenue source is smaller. So the bigger-spending teams may actually be the strongest supporters of this plan, which is supposed to reduce the advantage they have over others in recruiting top-quality players.
A variant of the above plan is to set a limit on the amount of money each team can spend to sign players to new contracts during the period in which transfers of players between teams are allowed. Teams can renew their own players' contracts at any time and for any amount. This way, teams cannot sign a vast array of stars at once. Thus preventing a juggernaut from being built overnight. This may even strengthen the loyalty of the players, who many fans regard as mercenaries, towards their current team.
The problem with this plan is that it would help maintain the current pecking order within each league (as the powerhouses can retain their strong squads by signing their players during the period in which no one else can sign them) and teams currently outside the top echelon would find it more difficult to make a breakthrough (as it would be more difficult to acquire reinforcements).
From this one can see that coming up with a system that effectively deters teams from spending an excessive amount on players' salaries is a tough enough task (and this is before taking the resistance from players and agents into consideration). Perhaps that is why an army of lawyers are involved in the creation/refinement a salary cap.