Salary caps may or may not be real. Let’s get that out of the way first. My understanding is that the NHL cap is mostly real, the NFL cap is fake in the short term and real in the long term, the MLB cap is just collusion by a different name (“luxury tax”) until Steve Cohen ruins everybody’s fun, and only God and Shams know what’s happening with the NBA.
These figures all come from Spotrac, and the NFL/NHL/NBA ones are cap spending, not cash spending, and I think that only makes a big difference with the NFL but because of the real–in–the–long–term nature of that one, it should be ok for our purposes. We don’t care so much about the size of each payroll in each league. What we care about is the differences in payrolls within leagues.
This graph shows every total payroll for every Big Four team for the season which began in the 2022 calendar year. That is, 2022 for MLB and 2022-23 for everyone else. Every number is supposed to be a dot, and if you feel like there aren’t enough dots, you’re right: Excel is filtering some out because they’re too close together. Ignoring the dots, then, each shaded box represents the range between which half the payrolls in each league lie, and each set of “whiskers” and dots extends out to the maximum payroll and minimum payroll.
Let’s quantify this a different way:
| League: | NFL | NBA | NHL | MLB |
| St. Dev.: | $7,399,750 | $26,207,273 | $4,939,617 | $63,724,415 |
| St. Dev. as % of Avg.: | 4% | 17% | 6% | 42% |
This bottom number—standard deviation as a percentage of average payroll—is our best friend here. That’s what we’re interested in knowing, because that’s what tells us the most about how spending really relates between these four leagues. The NFL has the most tightly-bunched payroll totals, followed closely by the NHL, with the NBA a ways behind and Major League Baseball on an island even further out.
How much does this matter? It’s complicated. We talked a week ago about how efficient some MLB franchises are with their money compared to their opponents. At a high, high level, though, what this does point to is how the relationship between the salary cap and revenue has led to the existence of large-market and small-market teams in the NBA and MLB to an extent that doesn’t exist in the NFL or, really, the NHL. There’s a big gap between the Yankees and the Twins. There’s a medium gap between the Knicks and the Timberwolves. The gaps between the Rangers & Wild and Giants & Vikings aren’t as noteworthy.
If you want a competitive league, do you need a tight salary cap? I would argue no. The Rays make the playoffs quite a bit, the Coyotes don’t, the Knicks are a mess and the Giants are often medium. But these differences between approaches are noteworthy, and either a reflection or an impact on the nature of each sport as we know it. They’re kind of just how each sport functions in the United States at the professional level.
