The Impact of NFL salary cap concentration on team success

Abstract

The paper empirically tests National League Football (NFL) team data from 2000 through 2009 to ascertain factors of team performance. Of particular interest is the assessment of payroll distribution on team performance. The results indicate that the salary concentration has a non-linear influence on team performance. Success in the NFL can be best achieved at either extreme of low or high salary concentrations. A threshold of team talent must be assembled before on field success is achieved. Acquiring elite talent, especially at the quarterback position, is likely the best alternative to achieve high levels of team performance. It is further shown that larger markets have a positive performance bias which suggests an ability to more easily acquire better player talent. The results indicate that NFL salary distribution has an impact on team success, and that it is preferable to acquire fewer elite players than many good players.