Studies summed up at Wages of Wins show that salary caps in major American sports do little if anything to aid competitive balance. The NBA has insisted that a hard or harder salary cap (termed a “flex cap” by league officials) be a part of a new collective bargaining agreement, and have said that and lower salaries across the board will help the league’s always-struggling competitive balance.
Study: NBA Salary Cap Strengthening Hasn’t Improved Competitive Balance In Past
But WoW’s David Berri writes that in the past, salary caps haven’t helped parity in the NBA or other leagues.
Martin Schmidt and I presented research this past summer that looked at the impact of various institutions (i.e. salary caps, luxury taxes, etc...) the NBA, NHL, NFL, and Major League Baseball have created to alter competitive balance. We found that none of these institutions had any statistically significant impact on balance in any of these leagues.
What instead hurts the NBA’s parity, Berri says, is the relatively limited set of dominant players available. Teams that have those players tend to win many games; those without do not.
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