Activision Blizzard’s Overwatch and Call of Duty Leagues are reportedly abolishing its maximum salary cap and competitive balance (luxury) tax. This is believed to be the result of a federal antitrust investigation.
In July 2021, it was revealed that the Overwatch League and Call of Duty League were both being investigated by the US Department of Justice over antitrust laws. These stemmed from concerns that the leagues’ “soft caps” violated rules pertaining to players’ unions and worker bargaining power.
About three months later, Sports Business Journal’s Kevin Hitt reports that both the OWL and CDL plan to eliminate those cap and tax systems.
As such, both leagues may head into their 2022 seasons without a maximum salary cap or a tax applied to teams who go above the “soft” salary cap. This is yet to be confirmed by Activision Blizzard.
OWL and CDL eliminate salary cap & luxury tax after player’s union investigation?
Back in 2020, CDL players were fairly active in efforts to create a player’s union. Ian ‘Crimsix’ Porter claimed it was “in the works” and Seth ‘Scump’ Abner appeared ready to sign on. But, despite two of CoD’s biggest figures pushing for it, those talks seemingly died down.
But, as Hitt reports, the DOJ’s investigation may have forced Activision’s hand.
Salary caps are theoretically instituted to ensure competitive integrity and parity by restricting teams from outspending others. The only North American sport without one is the MLB, where there’s still a luxury cap that punishes teams who go above a certain payment threshold.
What is a salary cap or a competitive balance tax?
Notably, sports like the MLB and international soccer have some of the highest-paid athletes in the world because they don’t have salary caps. Players are subjected to bigger bidding wars without those limits and, thereby, bigger contracts.
In leagues without salary caps, like the NBA and NFL, player’s unions are considered critical. These unions negotiate with the leagues to maintain minimum salaries and similar conditions.
The timing of the CDL and OWL’s decision is interesting. The DOJ investigated the salary cap and luxury tax in the absence of a player’s union and, within months, the former systems are reportedly being abolished.
This is a developing story and we will update with more details as they become available.