Describe the method for calculating a league's salary cap during collective bargaining.

• A. The salary cap is the total league revenue multiplied by the percentage of revenue shared with players.
• B. A league's salary cap is calculated by determining the amount of revenue a league generates and then multiplying that number by the percentage of revenue it agrees to share with its players.
• C. The salary cap is determined by the league's total profits divided by the number of teams.
• D. The salary cap is set by the players' union based on minimum wage.

Answer: (B)

The main idea is that a league’s salary cap under a collective bargaining agreement is built from a revenue-sharing arrangement between the league and its players. The process starts by calculating the league’s revenue, and then applying the agreed-upon percentage of that revenue that will go to players. The result is the total player-pay pool, which informs the cap—the maximum amount teams can spend on player salaries in a season. This method ties the cap to the league’s financial performance and the negotiated share with players, rather than to profits or to a unilateral decision by any side.

For example, if the league generates $1 billion in revenue and the players’ share is set at 50%, the player-pay pool would be $500 million. That pool is then allocated across teams to determine individual team caps, subject to any other negotiated rules in the CBA (like minimums, exceptions, or luxury tax provisions). This approach contrasts with basing the cap on profits, or having the cap determined solely by the players or by a fixed minimum wage, which do not reflect the revenue-based bargaining framework used in collective bargaining.