Abstract: As a powerful tool for preventing the disorderly expansion of "sugar daddy's game", controlling the operating costs of clubs, and promoting competitive balance in leagues, the salary cap policy has gradually been applied to China's professional sports leagues in recent years. This paper first provides comparative analysis of the institutional evolution and differentiation of salary cap policies in major domestic and international leagues. We then focus on analyzing the conditions under which the two types of hard and soft salary caps are applied and their impact on the optimal investment and competitive balance of clubs with different target orientations, using both game-theoretic and static optimization methods. The findings indicate that: ① The equilibrium investment of clubs is negatively correlated with the weight of profits and positively correlated with the difference in club endowments (profitability). However, the competitive balance is negatively correlated with both the profit weighting and the difference in club profitability. ② Regardless of whether a club values winning or profit, a hard salary cap can reduce investment by clubs with strong profitability in large city markets and promote competitive balance. However, its impact on investment by clubs in small city markets, where profitability is poor, is less clear. ③ A soft salary cap can only promote competition and limit investment at a less strict critical value, but its effectiveness is inferior to that of a hard salary cap policy. Based on the above, the following suggestions are proposed: ① Further improve the formulation and implementation of hard salary cap policies and make them the main regulatory scheme, while selecting soft salary cap policies carefully; ② Promote structural reform of club equity diversification, reasonably control the proportion of shareholders seeking to maximize win rate and profit, and seek a balance between restricting excessive investment and promoting league recovery; ③ Reasonably control the strength of salary cap policy regulation and proactively respond to issues such as player arrears and team bankruptcies under the impact of the COVID-19 pandemic.