Well, I'm biased, but I think it all started to go downhill when it went from 14 to 12 teams, losing the Bradford support & media interest & Leeds derby and losing the London presence at the same time. Not a good day for media sales.
With hindsight, they should have tied the salary cap into the TV rights - if TV rights go up by 20% then the cap should go up by the same. It means the cap would only change every 5 years or so, allows forward planning.
More divisive I think, would have been bringing in a cap floor - whereby every club commits to paying 90% of the cap space.