Casey explores the impact of a salary cap (or lack thereof).
by Casey Jacobsen
Last year, I wrote an article on this website explaining some of the differences between European basketball and the NBA. It is easily the most frequent question I get from fans and friends, both in Germany and back home in the US.
The answer to the question cannot possibly be covered adequately in one short conversation or internet column—it deserves some real exploration. To that end, I’ve decided to start a “mini-series” of articles over the next couple of months where I dive more in-depth into the differences between the NBA and European leagues that I believe American basketball fans might be interested to know more about, as well as other topics regarding the best overseas players and teams.
Let me begin with a topic that, on the surface, seems rather boring, but it’s something that might create the biggest difference of all: salary cap.
I don’t want to get too technical because I know almost all SLAMonline readers understand the basic concept of a salary cap and the role it plays in the NBA, but allow me to set the table.
In the NBA, the salary cap refers to the limit of the total amount of money that teams are allowed to pay players. This number varies year to year, based upon the overall revenue from the League. The NBA’s salary cap, unlike the NFL and NHL, is a “soft cap,” which means that teams are allowed to go over the threshold for various reasons, although sometimes they are required to pay penalty fees.
The main objective of this rule is to level the playing field, so that one team cannot buy all the best players and create an unfair advantage. Most rational basketball fans would consider the impact of a salary cap on the NBA as positive. It has proven to increase competitive balance and salary distribution, and has helped owners make money by holding down excessive player salaries while increasing revenues. The top players in the game might not like it because there is a ceiling on the amount they can make, but a salary cap is a necessary cog in the NBA’s business machine.
In European basketball, there is no salary cap. This means that the owners who are able/willing to spend the most money get the best players. Period. Unfortunately, the lack of salary cap in Europe makes most of the leagues predictable. It’s unfair, but there isn’t much that can be done because the financial differences between European clubs are just too great.
While NBA teams like the Heat, Lakers and Celtics still have payrolls that significantly exceed those of their competitors, this difference is nothing compared to what you see in most European countries. For example, in the Spanish League, there are four clubs whose budgets regularly exceed $25 million (US): Real Madrid, FC Barcelona, TAU Vitoria (now known as Caja Laboral), and Unicaja Malaga. The budget for the bottom teams in this league is around $5 million.
At the end of the year, with a few exceptions, the championship of Spanish basketball is fought over by those top-four teams. In fact, in a league that consists of 18 total teams, one of these four big-money organizations has won the championship every year for the past 13 years. During the entire 56-year history of basketball in Spain, Real Madrid and FC Barcelona have combined to win 46 titles.
In many other countries, the budget differences (and the titles that come as a result) are even greater. In Greece, the top two teams, Panathinaikos and Olympiacos, have combined to win 18 of the last 19 Greek basketball titles. In Israel, the top team with a budget 10-times greater than some of their peers, Maccabi Tel Aviv, has 49 titles. The rest of the teams in Israel combine for eight. There are more examples, but I think you get the point.
The results of this kind of economic system makes it tough to be a fan or manager of a small-market team in Europe. The way the current system is set up, small teams unintentionally serve as farm systems for the big-money organizations. Teams spend years developing a talented young player in the hope that he can improve their standing, only to see that player plucked from their grasp when he enters the prime of his career. It’s terribly sad, but you can’t put the blame on the players or the big organizations. There are no rules against what they are doing, so they will continue to spend their large amounts of capital to win championships. We’d all likely do the same.
The problem is that very few basketball leagues in Europe have balance from top to bottom, which makes for a weak overall product for the fans to consume. It’s not a good model for the success of basketball in these respective countries long-term. The European game continues to grow year after year, but without some financial regulations to help encourage balance, who will be in the stands to watch the games?
(Important note: Unlike the NBA, European basketball organizations do not disclose their finances. The budgets that I write about are unofficial. The numbers I reported were researched by a combination of my own personal experience as well as conversations with basketball agents and other people connected to the business side of European basketball.)
Casey Jacobsen is a former SLAM High School First-Team All-American and NCAA First-Team All-American. He currently plays for Brose Baskets in Bamberg, Germany.
Read the SLAMonline Discussion Rules before posting.