The Correlation between Salary Cap and Team Performance

Abstract

There has been increasing research regarding the salary cap for professional sports in recent years as the cap is getting higher each year, burdening the management team to allocate the cap wisely. This paper investigates whether the salary cap relates to team performance and if its allocation makes a difference. Our findings indicate a moderate correlation between the salary cap and the game won in the regular season. In contrast, the salary efficiency number correlates more with the game won, meaning the roaster strategy is a more crucial component of team performance.