Implementation of Salary Caps in European Soccer Leagues

This paper explores the theoretical implications of introducing a salary cap into a sporting system that traditionally lacks such a restriction: the professional European soccer system. Common themes regarding salary caps evident in the literature include views that deem them ineffective or insufficient in enhancing competitive balance, often suggesting that their implementation primarily benefits team owners financially. Conversely, there are studies demonstrating that salary caps indeed promote competitive balance and are not merely instituted for owners' financial gain. These themes will be analyzed through regression analysis of salaries and win percentages across the top four American professional sports leagues. The American sports league exhibiting the closest correlation to the European soccer system will serve as a benchmark. Subsequently, the legislative frameworks and rulings applied within this chosen American sports league will be theoretically applied to the European soccer league system.