CBA Salary Cap

One of the biggest basketball developments during this year’s offseason that largely went unreported in the Western media was the CBA’s introduction of a salary cap. The Chinese Basketball Association has been under large scrutiny recently for A) failing to produce top quality Chinese players B) not creating an exciting or marketable product in a country where basketball is loved and C) failing to generate sustainable revenue leading to many teams facing near bankruptcy.

The CBA in turn has introduced a salary cap that it hopes will alleviate some of these problems. Foreign players in the CBA are looked upon negatively by many in the Chinese basketball community. Foreign players tend to not only dominate the ball and the scoring (resulting in 19 of the top 20 scorers last year being foreign players), but also the teams’ payrolls. Many of the larger teams this year where rumored to be looking to spend in the vicinity of 1 million dollars to recruit some top level foreigners for their teams.

The new salary cap will limit foreign players to make no more than 30,000 dollars per month, and the total that teams may spend on foreigners per month will be limited to 60,000 dollars per month. There is already a quota of two players that CBA teams are facing on the number of foreign players allowed.

The cap doesn’t stop there, Chinese club players will have their yearly income cap set at no more than 300,000 yuan ($44,000).  Chinese media Xinhua reports that the average annual income of the CBA players and coaches is 500,000 RMB. The new cap is also applicable to the national team where the players and coaches can’t earn more than 1 million yuan ($146,000) per annum. Players who have played in the NBA will be exempt from this rule, but they will still count towards the total cap of a team that is 55 per cent of the total annual income of the club, which is no less than 5.5 million RMB (about 820,000 U.S. dollars).

That’s definitely some interesting and at the same time controversial rules that the CBA has developed for its league in turmoil. There are already many critics of the new cap, claiming that this will not grow the popularity’s sport but instead limit it and the amount of Chinese players who aim to play professionally. The 700,000 RMB per year cap gap on club players and national team players is also expected to create problems within teams and between players.

CBA’s Strategy

If we’re to analyze what the CBA has achieved to do and dissect their strategy we can come to the following conclusions:

1. Foreign players should not have a big effect on the league in anyway.
2. Chinese players shouldn’t be content in mediocrity and should be motivated to be permanent contributors to the National Team
3. Teams should be governed more tightly and not promise to hand out salaries higher than they are capable of paying

Analysis of the New CBA Salary Cap

Given the problems that the league has been facing in recent years, they needed to do something drastic to change the course of Chinese Basketball that has been on a downward trajectory ever since the 2008 Beijing Olympics. Some of the new rules they have set forward were indeed necessary.

Cap Being set at 55% of Annual Income Rule

The cap per team being set at 55% of the annual income of a club is certainly an innovative rule and will see different teams have different caps. Some will think this rule as being totally unfair – teams in wealthier areas will have naturally more income and be allowed a higher cap. Teams that are struggling will see a lower cap, able to recruit a lower level of talent, and it would seem they might be stuck in that downward cycle.

At the same time, the CBA and Chinese sports in general has always been criticized of being too passive, not creative, not innovative, and largely blind to the potential that basketball as entertaintment can provide. Perhaps this new drastic approach will motivate teams to create more sources of revenue and increase their income levels, which will guarantee the long term safety of the league to stay above troubling financial waters.

Players Cap Rules

It was only last season when the CBA had increased the quote of foreign players per team from 1 to 2. So now introducing a rule to limit foreign players will be somewhat of a flipflop. But if anything, the league tried to find a solution last year to increase level of competition, saw that it led to negative consequences, and now is rectifying its mistakes. While foreign players did bring an extra level of competition and excitement to the CBA, it prevented any Chinese stars from emerging. When a league is still at its relative infancy, and players are still trying to develop, it is wise to develop a system where local players can develop the best.

Local players on the other hand will see huge boosts to their salaries, if they are able to make the national team. This kind of rule might encourage a level of selfishness and more of star system instead of team system, but perhaps this is exactly what the CBA wants. The NBA has become so successful through largely creating teams revolved around star players, rather than players revolved around a team. It is certainly easier to market players than teams, and this hopefully should help team’s branding, marketing, promotions, sponsorships, and help raise the interest of local fans. If it can result in players making the jump to the NBA, the CBA will not mind that either

Conclusions

With foreign player influence on teams down, and a clear incentive to be a star and make the national team, this will set the stage for a truely competitive level of play from the Chinese players. In essence, the league is using  protectionist measures to protect the domestic industry from foreign domination, while setting a capitalist system for its local businesses to compete and the most succesful being rewarded heftily. Does this sound familiar? It’s actual the same rules and principles that the Chinese government has used on its businesses. Whether it will work as well with basketball, is something that we will just have to wait and see.