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In professional team sports, team composition is often tightly regulated by the league for several reasons, typically related to the past history of that sport and the wishes of team owners and players. Common elements of the business of a sports team include:

  • Salary Caps - A salary cap is an upper limit on the total amount of money that can be paid to all members of a single team. With all teams having the same cap, the ability to assemble a winning team by simply paying top dollar for the best players at each position is diminished drastically.

    Caps are a source of debate at nearly all levels of league structure; cash-poor teams in more limited markets tend to favor them as allowing a more level playing field, while teams in more successful markets see them as an artificial impediment to their success. Most players do not like salary caps as they limit the portion of the "pie" of total revenues that can be split between the players, often with one or two star players making salaries in the millions of U.S. dollars, while other players, even starters, may make the "league minimum" of just a few hundred thousand (which when considering the relatively short average career lengths of players, the potential for chronic injury, and the portion of players' salaries earmarked for agents' fees, travel and other expenses, is often insufficient to sustain the player in even a modest standard of living after their "retirement").

  • Contracts - Contracts are legally binding agreements between a player and their team, or between other parties in a sport such as between different teams, the team and the league's oversight committee, the independent owner of a sporting venue and the team, etc, stipulating a quid pro quo exchange of benefits between both parties. Between a player or coach and his team, this is typically "pay for performance"; the player or coach agrees to play exclusively for that team to their best ability in exchange for guaranteed compensation and possible bonus pay. Teams may negotiate contracts with other teams for trades or exchange of draft picks, with host cities for tax incentives and land/facilities, and with the league for financial backing, etc.
  • Drafts - To prevent a successful, wealthy team being able to attract the best new talent and self-perpetuate its success, many sports leagues, especially in the U.S., require the use of a "draft" system to recruit new talent. In a draft, one team at a time, typically in the order of the worst record in the previous season to the best, gets to choose a player from the pool of available talent. The worst team, theoretically, gets the best player in each "round" of drafting, although leagues may stipulate a more random structure among the lowest rankings to discourage a team intentionally "throwing" their season to get a favorable pick. Teams may negotiate amongst each other to trade their place in the draft order for one or more rounds, in return for existing players or for money.
  • Free Agency - A player who does not have to be drafted and is not under contract with any team as of the start of a playing season is typically eligible to play for any team that wants him or her. These players are typically known as "free agents", and depending on the player and the sport they can be popular and valuable additions to a team.
  • Player's Unions - As the industry of professional sports as a whole earns revenues in the trillions of dollars worldwide, traditionally flowing into the pockets of wealthy "franchise" owners who then pay their players, disparity between the players' and owner's shares of the revenues is historically common. As with many such scenarios, the players in many sports have responded by forming a collective union that advocates for the players' interests with the team owners and the league. Typically this union advocates for a bigger percentage of revenues paid as player salaries, but players may also want other benefits improvements, or better protection of players from injury during the game, which management or the league may object to for cost or gameplay reasons.
  • Releases - A "release" is equivalent to being fired or laid off in the corporate world; the team announces to the player and then the league (and thus the world) that they are terminating their contract with a particular player, for any of a number of reasons. The exact behavior of such an action depends on whatever contract agreement the player and team may have; a player may be released and the contract nullified for some breach on the part of the player, while on the other hand the player may be entitled to a significant sum of money if they are released through no fault of their own.
  • Trades - A common transaction between teams is the acquisition of players in exchange for other players. The teams are technically trading the rights to enforce the players' current contracts; a player not under contract can't be traded unless he chooses to move to the other team. Players may endorse or oppose trades, but if under contract, the team generally gets the final word unless the player has negotiated some additional bargaining power.

    Trades can sometimes become quite complicated, involving multiple players between more than two teams. Team X, for instance, may want player B from team Y and be willing to trade player A in return. Team Y is uninterested in that trade as-is; however, team Z may want player A, and would be willing to trade player C to team Y. If team Y agrees, they perform a "round robin" trade, where each team trades one player to a second team and receives a player from the third team. Some trades have involved half of the teams of a sports league and dozens of players; however, the atomic nature of these agreements means that the more complex the trade, the less likely it is to be successful, as all individual player transfers must be completed between all teams, or else any team on the short end of a refusal to trade will likely back out, causing the entire transaction to be "rolled back".

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