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Hamilton Tiger-Cats exceed CFL salary cap, which is really more of a luxury tax

Hamilton Tiger Cats' head coach Kent Austin (L) talks to his quarterback Zach Collaros during the second half of the CFL's 102nd Grey Cup football championship against the Calgary Stampeders in Vancouver, British Columbia, November 30, 2014. REUTERS/Todd Korol (CANADA - Tags: SPORT FOOTBALL) (REUTERS)

There's an annual cycle in the CFL: at least one team exceeds the salary cap, fans of other teams start yelling about them "cheating," it blows over and we have peace until someone else exceeds the salary cap. The cap ceiling has been breached again this year, for the sixth time in nine seasons under the salary management system brought in in 2006 (and there have actually been seven violations, as Montreal and Saskatchewan both exceeded the cap in 2007), this time by the Hamilton Tiger-Cats to the tune of $8,939. We see so many violations because the penalties for breaching the cap are exceptionally lenient and solely financial until the $100,000 mark. Thus, violating the cap by less than $100,000 and paying the fine is far from cheating, and it carries no on-field repercussions whatsoever; it's smart business for teams that can afford to do so. That makes the first portion of the cap more of a luxury tax than a cap, and it bolsters the case for hardening the salary cap.

Why did this happen? Well, here's the Ticats' statement on why they went over the cap:

"Unfortunately in 2014 we had some challenges to the (salary management system) that were injury related, including several to high profile players," the club said in a statement. "We worked to our best ability to mitigate that to get under the SMS, but with the record number of injuries, coupled with the unknown SMS factor of all-star bonuses for our 10 all-stars, we ended up over the cap by less than $10,000. "We look forward to a great 2015 season and once again working within the parameters of the SMS system."

While the Ticats certainly had injuries, that doesn't necessarily have to lead to cap violations. As Mark Fulton points out, they made some decisions that added to their cap hit, particularly not putting Greg Wojt on the six-game injury list (which comes with cap relief) immediately and by pulling Zach Collaros off it early. If they had taken a different tack in either situation, they wouldn't have exceeded the cap. Complaining about their numbers of all-stars is also funny, as this is the team that saw its players complain about their lack of all-star status in 2013. Still, in the end, this is all exceptionally moot. The team isn't cheating; they played under the current rules and paid the appropriate fine (one dollar for every dollar they exceeded the cap by). In fact, what's really surprising is that more teams don't exceed the cap every year, as it's incentivized (from an on-field perspective) up to $100,000.

The whole idea of a salary cap is to provide for a financially-level playing field, and the CFL's cap is actually great on that front, as the floor is much closer to the ceiling (both in absolute terms and percentage wise) than in any other major sport. However, because the penalties are only financial up to the $100,000 mark, the actual cap for 2014 should be regarded as $5.1 million, not $5 million. Teams can spend $5.2 million on player salaries without on-field consequences (if they spent $5.1 million on salaries, they'd then pay $100,000 to the league), and presuming that money is spent wisely, every team that can afford to do so would be wise to do that; that enhances their on-field advantage. Thus, this is a luxury tax system to that point, similar to MLB's or the NBA's; rich teams have to pay more to go to the full edge of the cap, but they aren't stripped of picks or otherwise punished in any non-financial matter until they cross the $100,000 threshold.

The CFL has a couple of options if they want to address this and break the cycle of cap violations and complaints about cap violations. One would be strengthening the penalties. Currently, it's just $1 for every $1 to $100,000, a first-round draft pick and $2 for every dollar from $100,000 on, and first- and second-round picks plus $3 for every dollar from $300,000 on. The penalties for violations of more than $100,000 and $300,000 seem appropriate disincentives; no one has ever violated the cap by more than $300,000, and only one team has ever violated it by over $100,000 (Montreal in 2007). There needs to be an on-field penalty for the first level of violation, though. A first-round pick would be too strong, but what about a later pick, a fifth- or sixth-rounder? That would mean teams have a decision to make; they could walk close to the cap and risk triggering it once injuries and bonuses happen, potentially losing a pick, or they could play it safer and ensure they receive all their draft picks. At least that's a real choice, though. Currently, the only reason not to go $100,000 over the cap is purely financial, and that's not a disincentive for teams that do well (especially considering the incredibly small percentage of their revenues they pay to players in the first place; for example, Winnipeg had almost $26.8 million in revenues and paid less than $5 million to players, or around 18.7 per cent).

If the league doesn't want to stiffen the penalties (and therefore continue to incentivize rich teams to fly close to the sun) , they should rebrand the first part of the cap as the luxury tax it actually is. That would hopefully diminish the yells of "cheating," and it would shift the conversation. Fans of teams that didn't violate the cap should be the ones actually asking questions of their teams here; why were they not willing to spend to the real maximum? Where's that money going, if not towards the maximum allowable player compensation? That's the real conversation that should be taking place under the current system, where teams have strong incentive to spend up to $100,000 more than the cap. If anything, it's remarkable that we don't see the cap violated by more teams.

(Speaking of changing the conversation, the CFL really needs to change the way it sends out releases on the salary cap. Every year, their headline is about how many teams didn't exceed the cap, which is as far from news as you can get. That led to a Twitter conversation this morning about what that approach would look like for other organizations:

So, yeah, CFL, even if you decide to do nothing about fixing the way your luxury tax is labeled as a salary cap, please make the news releases about what is actually news, not what isn't.)