The NFL without a Salary Cap?

The upcoming 2009 season could be the last year of the NFL salary cap. The current collective bargaining agreement expires following the 2010 season, but the agreement states that the final year of the agreement will not have a salary cap and there will be substantial limitations to free-agency. This might be the last year before the league returns to the pre-1994 days of dynasties, doormats, and mismatches.

What could we expect without a salary cap? In this article, I'll compare the 1978-1993 pre-salary cap NFL to the modern 1995-2008 league to get an idea of how things might change. Specifically, I'll compare parity levels from the era before the salary cap and after it.

When we're talking about parity, we're talking about at least two different ideas. This excellent series from PFR outlines the concepts as well as anywhere I've seen. The first kind of parity is within-season parity, meaning within any given year teams would be relatively close together in talent levels. There would be few teams with extreme records such as 15-1 or 2-14 and more teams with records close to .500. The second idea is year-to-year parity. This means teams would recover quickly from poor seasons while the teams at the top of the league would not stay on top very long. There would be fewer dynasties and fewer perennial doormats.

I'll look at within-season parity first. How does the pre-cap era compare with the current era in terms of relative team strength? Season win totals should be a good place to start. After all, winning is the bottom line. Below is a histogram (frequency plot) of team win totals for both eras. The pre-cap era is in blue and the current era is in red.


The wider and flatter the distribution, the less parity there would be. More within-season parity would produce fewer extreme win totals and more records close to .500, resulting in a taller narrower distribution. Here we see very little difference between the two eras. It would be impossible for anyone to distinguish the difference between eras just by looking at win totals. In fact, the standard deviation in win totals for the current era is nearly identical to that of the pre-cap era, (both at 3.0 wins).

Here is another look at within-season parity. The next graph charts each season's standard deviation in wins(excluding the strike years of 1982 and 1987). When the cap was instituted in 1994, we'd expect to see some sort of effect.


But we really don't see any change. The salary cap doesn't appear to have had a detectable effect on within-season parity, at least in terms of team wins.

What about other measures? The next graph charts the standard deviation of team net point differentials. Net points (points scored minus points allowed) are known to be less random than win totals. If the cap had an effect on parity, we would see fewer blow outs, more close games, and accordingly smaller net point differences for each team.


Again, there doesn't appear to be an effect on within-season parity.

We can't necessarily conclude that the salary cap had absolutely no effect on within-season parity, but we can say that whatever effect it did have was not noticable in terms of the things that matter to fans--wins and competitiveness. So if the salary cap is not extended past 2009, we probably won't be able to notice a difference in 2010.

In the next post, I'll look at year-to-year parity. Has the salary cap helped poor teams improve quicker and made it harder for great teams to stay on top?

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19 Responses to “The NFL without a Salary Cap?”

  1. Ian says:

    If you are able to show that the salary cap has had no obvious effect on W-L records, it seems perfectly reasonable to ask what the point of the salary cap was. What was the goal of the league when they introduced the cap?

    Are the fears of fans about single team dominance in a post-salary cap era based on a misconception of what the NFL was like pre-1994, and in fact all the talk of how the Patriots dynasty was all the more impressive because it occured under a salary cap is completely false and the Patriots would have found it no more difficult than Dallas or Pittsburgh did?

    Interesting stuff.

  2. Brian Burke says:

    I think the biggest reason the owners really wanted the cap was to have some sane limit to rapidly escalating free-agent salaries. Any benefit to on-field competitiveness would have been nice, but it was not the primary factor.

    Also, note that I'm only halfway done the analysis. I still haven't posted the results on year-to-year parity. That will help answer the question about the Patriots vs. Dallas/Pittsburgh.

  3. Newhouse says:

    At any point are you going to present info on the distribution/standard deviation of the actual team spends for each era?

    I'm wondering if the 'pre-cap' era didn't show any noticeable differences in parity because the team salaries were relatively close.

    Of course we know that wouldn't be the case without a cap these days (Cowboys).

  4. JMM says:

    A couple of years ago, I looked at the '94 to present ('07) % wins distribution and compared it to baseball. There was no real difference. I also looked to see if one league had more movement among the top, middle 2, and bottom quartiles of winning %. I don't recall a large difference there either.

    My conclusion was parity was more of a marketing strategy than a fact.

  5. Steve H says:

    I think the NFL did have a goal of parity, in addition to controlling labor costs. The fact that we see large amounts of revenue sharing across franchises combined with a salary minimum encourages the teams to field competitive teams, instead of profitable teams which are not competitive, a la KC or Pitt in MLB.

    One other consideration might be that the workaround for the salary cap used to be big signing bonuses and very long term deals, and that has only recently been reduced. The boom-bust cycle caused by salary cap manipulation might have pushed the SD of wins up at the same time the salary cap itself was decreasing the SD of wins.

  6. Jon says:

    When the NFL went to 16 games in 1978, they also went to a schedule where last year's Davids played other Davids and last year's Goliaths played other Goliaths. Only two games are determined by where a team finished nowadays. I would be interested to see if the spread of schedule strengths has narrowed in recent years. Not sure if anyone has Sagarin Ratings or something similar going all the way back to 1978.

    Thanks to Tom at Residual Prolixity for introducing me to this site. Interesting stuff.

  7. Steve H says:

    Instead of salary minimum, I should have said team salary minimum. It's the most forgotten fact about the economics of the NFL. I teach sports economics, and only about 5% of the students (which are generally football fans) know about the minimum. It's set at 75% of the salary cap by the current CBA.

  8. Jim Glass says:

    I'll make a prediction of what your "Part 2" will find: That year-to-year, regression to the mean has become a much more powerful influence on very good (and very bad) teams, leading to a lot more parity.

    Some numbers I looked up recently for a discussion elsewhere...

    Of the 1970s Super Bowl teams, all 20 of 20 had winning records the next season, with a W-L of 218-74 total, 74% wins, an average of 12-4 in a 16 game season.

    Of the 1998-2007 Super Bowl teams, only 11 of 20 had winning records the next season (one had a .500 season and 8 had losing seasons), with a W-L of 177-143 total, 55% wins, an average of 9-7 (rounding up).

    That's a pretty big difference.

    Regression to the mean has become such a force in the NFL that most likely W-L record for a Super Bowl team the following season is almost down to 8-8.

  9. Ian says:

    Jim

    Although I don't have them to hand, I do know that the numbers tend to be that the side that loses in the Super Bowl tends to miss the playoffs the following year, whereas the team that wins it continues to do well.

    I wouldn't expect the same amount of success next year if I were a Cardinals fan (although, that goes without saying doesn't it?) :)

  10. JDTapp says:

    Did you run a T-test of independent means on these? I know there isn't visibly a difference between the means and standard deviations, but what is the difference exactly?

  11. Anonymous says:

    Brian,

    Are you sure its the salary cap that promotes parity? Couldn't it be free agency in general that is the cause?

    I ask this because I contend the NBA salary cap has actually DESTROYED parity in the NBA (mainly because of the way its limited true free agent movement and distorted player values).

    If you use the parity measurement used in the Wages of Wins (the number of teams who are .500 or are within the square root of the total number of games played to .500), the NBA experienced its only moment of parity in the years between the Oscar Robertson settlement (that created free agency) and the initiation of the salary cap.

    Since the last collective bargaining agreement, the one that placed even weirder rules into the salary cap system, NBA competitive disparaties have grown even wider still. I think only around 50% of the NBA's teams fall within the "parity zone".

    I think a state of pure revenue sharing and pure free agency would do alot to end that situation.

    Ty

  12. Brian Burke says:

    Ty--Good point. First, keep in mind we're only talking about within-season parity, or the closeness of team strength in any given year. Free agency started in '87 and there doesn't appear to be any effect on parity, either then or after '94 when the current revenue sharing and the salary cap arrangement started.

    One other point--it could be that the salary cap/free agency did have significant effects on parity but there were equal countervailing forces that weakened parity. I can't rule that out, but I'd think that's highly unlikely.

  13. Ian says:

    Just a thought. Would a reasonable measure of parity be the correlation strength between year X wins and year X+1 wins? If year X wins turns out to be a poor predictor of year X+1 wins then we could say a league has a high degree of parity.

    I'd suggest this because parity doesn't necessarily mean that good teams become bad and bad teams come good - it would mean that a bad team in year X is just as likely to reach the playoffs in year X+1 as a good team in year X is to reach the year X+1 playoffs.

  14. Anonymous says:

    Were you plagiarized? See:

    http://www.bigcatcountry.com/2009/3/10/787605/the-nfl-salary-cap-facts-m

  15. Anonymous says:

    The NFL was aiming for a different sort of parity, one closer to this definition found at dictionary.com (with parentheses instead of strikethroughs) [and additions for clarity] to make it specific to the NFL): A system of regulating prices of (farm) NFL commodities, usually by (government price supports) NFL revenue sharing, to provide (farmers) franchise owners with the same purchasing power [of talent] they had in a selected base period.

    The cap and floor figures were calculated as %s of total and/or shared revenue so that every team must spend at least the lower figure on payroll and, most importantly, that EVERY TEAM HAD SUFFICIENT INCOME TO FIELD A PAYROLL AT THE CAP. That kind of parity will be sorely missed.

    It wasn't about the distribution of wins and losses anyway, although it is interesting that the first 16-0 team and the first 0-16 team existed during the cap/floor years (even as outliers).

  16. Anonymous says:

    this is absolutely hilarious to me. Anybody who knows anything about statistics knows that the inferences you are trying to make from this data are GARBAGE. In order to statistically determine parody in the NFL, you don't look at how many teams have great records over a period, you look at WHICH teams. imbeciles. Would that first graph look any different if it were the same teams with winning records every year? no. And that scenario is the very opposite of parity. Get real.

  17. Brian Burke says:

    WORST comment EVER. Why do people with personality disorders seem to find their way to my site?

    Anonymous-You evidently didn't read the second part of the article, which discusses exactly what you mention. Boy, I bet you feel dumb. Well, probably not, but you should.

    This snippet might have clued you in: "In the next post, I'll look at year-to-year parity. Has the salary cap helped poor teams improve quicker and made it harder for great teams to stay on top?"

    The link.

    Even so, your hostility is unwarranted. Here's what someone without 3rd-stage rabies might write: "I read your post and noticed it only deals with in-season parity, and doesn't address the possibility that, regardless of the spread between good and bad teams, the same teams are the good and bad ones from year to year. I think that's the more important part of parity."

  18. James says:

    I enjoy Brian and this site more and more.

  19. Anonymous says:

    my fear is that there will be "superbowls bought" liek the yankees did in MLB insaine payroll with a dominating team, takes the fun outta the game,

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