In theory, there are two main benefits derived from salary caps - promotion of parity between teams, and control of costs.[4][5][6]
Primarily, an effective salary cap prevents wealthy teams from certain destructive behaviours, such as signing a multitude of high-paid star players to prevent their rivals from accessing talented players and ensuring victory through superior economic power. With a salary cap, each club has roughly the same economic power to attract players, which contributes to parity by producing roughly equal playing talent in each team in the league, and in turn brings economic benefits, both to the league and to its individual teams.
A salary cap can also help to control the costs of teams and prevent situations in which a club will sign high-cost contracts for star players in order to reap the benefits of immediate popularity and success, only to later find themselves in financial difficulty because of these costs. Without caps, there is a risk that teams will overspend in order to win now at the expense of long term stability, and team owners who use the same risk-benefit analysis used in business may risk not just the fortunes of their own team but the reputation and viability of the whole league.
Sports fans are generally looking to support a team for life, not just a product to purchase for the short term. If teams regularly go bankrupt or change markets the same way businesses do, then the whole sport looks unstable to the fans, who may lose interest and switch their support to a more stable sport where their team and their rivals are more likely to be playing in the long term.