SBD/2/Leagues Governing Bodies

AFL DROPS SALARY CAP IN FAVOR OF PAYROLL TAX

     The Arena Football League announced yesterday it will
eliminate its salary cap and replace it with "the first player
'payroll tax' in American sports history."  AFL Commissioner
James Drucker:  "The payroll tax helps solve the dilemma faced by
all leagues -- how to dramatically increase player salaries
without forcing teams in small markets out of business because
teams in large cities can generate more revenue -- from
sponsorships and ticket sales -- than teams in smaller cities."
A.C. Nielsen ranks the 13 AFL markets between No. 5 (San Jose)
and 73 (Des Moines) in terms of TV homes.  The tax is funded by
teams, not players.  The program requires teams to pay a 40% tax
on player salaries over $240,000 with funds divided among teams
below the $240,000 level.  Drucker maintains the tax will benefit
AFL players, fans and teams:  "The tax eliminated the salary cap
so large market teams can sign better players by increasing their
salaries and the tax redistributes money within the league to
strengthen small market teams" (AFL).
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