In modern professional sports, athletes receive a salary determined based on their potential economic impact on a team. For example, a team will sign a player to a $10 million contract only if it believes the player will have an economic impact of at least $10 million (Landsburg). Most professional sports leagues employ a free agency system in which players are essentially auctioned off to the highest bidder. Usually, the team that is willing to pay the highest salary will be the one that acquires the player. There are other variables involved in the signing process, including contract length, clauses, incentives and signing bonuses. However, the underlying principle remains that athletes will play where they are offered the most money. Most sports operate under some form of what's called a salary cap, which sets a limit on the total amount of money a team can spend. all the combined salaries of its players. Essentially, it's not so much a cap on salaries as it is a cap on payroll. Payroll is the total amount spent on salary (Keri). Of the four major American sports leagues, three of them use a salary cap: the NFL, NBA and NHL. MLB currently uses a luxury tax system that taxes any team that spends above a set amount. However, most teams never come close to paying this tax, and since its inception in 2003, the New York Yankees have accounted for 92% of these tax payments (Brown). Without a real salary cap, baseball will cease to be America's favorite pastime. Competitive imbalance leads to an imbalance of interests. Since 1995, 22 of 30 MLB teams have reached the playoffs five times or fewer. Eight of those 22 teams have reached the playoffs once or... middle of paper... all economics heading into spring training. " SDNN.com. February 11, 2010. Web. October 15, 2010. Hoynes, Paul. "Hafner to sign four-year, $57 million extension on Thursday." Cleveland.com July 11, 2007. Web October 15, 2010. Keri, Jonah “Does Baseball Need a Salary Cap?” Between the Numbers: Why Everything You Know About the Game is Wrong. Print.Lewis, Michael M. Moneyball: The Art of Winning. an unfair game Norton, 2004. Print.Miles, Bruce "On Soriano: Who Is. Carrying Whom Now?" Blogs.dailyherald.com. Daily Herald, October 13, 2010. Web. October 15, 2010." "Don't Blame the Pirates, Blame MLB's Revenue Sharing System." Sportsillustrated.cnn.com. CNN, August 25, 2010. Web. October 15, 2010. “Sports Industry Overview.” Plunkettresearch.com. 2010. Web. October 15. 2010.