Has the NBA Salary Cap resulted in greater competitive balance?

A few posts back I discussed the NBA’s standing argument that a salary cap structure is necessary to the Association’s “competitive balance”. But is there evidence that the NBA’s salary cap produces or even tends to promote competitive balance among NBA franchises? I don’t see any.

Using a crude “competitive parity” metric, which evaluates a sports leagues’ competitive balance according to the percentage of teams who finish a given season with a win total that is at least equal to half the games played plus/minus the square root of the total number of games played, it appears the NBA’s salary cap era has not resulted in increased competitive balance among NBA teams.

Here is the “Parity Percentage” for the NBA seasons preceding the Salary Cap Era, starting with the 1960-61 season:

Season Parity%
61 62.5
62 44.4
63 55.5
64 55.5
65 77.7
66 55.5
67 60.1
68 41.6
69 50.1
70 64.2
71 52.9
72 35.3
73 41.1
74 52.9
75 77.7
76 77.7
77 72.7
78 72.7
79 68.2
80 50.1
81 47.8
82 56.5
83 43.5
84 60.8
Pre Cap 57.41

The NBA “Parity Percentage” average prior to the cap was 57.41%. In other words, the NBA was not that competitively balanced prior to the institution of the salary cap. But did the salary cap improve the situation? The evidence says absolutely not.

Season Parity%
85 65.2
86 52.3
87 52.3
88 43.5
89 44.1
90 40.7
91 37.1
92 48.1
93 51.8
94 33.3
95 44.4
96 48.3
97 34.5
98 41.4
2000 48.3
2001 41.4
2002 51.7
2003 51.7
2004 51.7
2005 53.3
2006 63.3
2007 63.3
2008 40.1
2009 46.6
2010 30.1
Post Cap 47.14

As you can see, the salary cap does not appear to have produced any noticeable improvement in the Association’s “competitive balance”. If anything, the scales appear to have tipped slightly in the opposite direction.

Thus I think the whole “competitive balance” argument is largely bogus. I think, and I have stated this before, that the NBA owners have no clue how to properly price players, and that is why they demand the institution of a cap. They are trying to save themselves from themselves.

So far, it hasn’t worked.

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One Response to “Has the NBA Salary Cap resulted in greater competitive balance?”

  1. steve eichenbaum Says:

    this is not a good comparison, because the NBA really has NO salary cap–certainly not a hard one like the NFL. Until thery do, you won’t know for sure if there’s any correlation.

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