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The Underpayment of Restricted Players in North American Sports Leagues

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Author Info

  • Anthony C. Krautmann

    () (DePaul University)

  • Peter von Allmen

    () (Moravian College)

  • David Berri

    () (Southern Utah University)

Abstract

In this paper,we consider whether underpaying players restricted by the reserve clause is a common practice in the three largest sports leagues in North America—the NFL, NBA, and MLB. Our results are consistent with the hypothesis that owners of professional sports teams do exercise monopsony power whenever and wherever they can. Although differences exist across the three sports, our results indicate that in general: restricted players are underpaid; when the negotiating power of players rises, owners are less able to extract a surplus; and, the greatest surplus tends to be extracted from those who create the greatest amount of value.

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Bibliographic Info

Article provided by Fitness Information Technology in its journal International Journal of Sport Finance.

Volume (Year): 4 (2009)
Issue (Month): 3 (August)
Pages: 161-175

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Handle: RePEc:jsf:intjsf:v:4:y:2009:i:3:p:161-175

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Related research

Keywords: underpayment; reserve clause; surplus; free agent;

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Blog mentions

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  1. IJSF 4.3 Available
    by brhumphreys in International Journal of Sport Finance Blog on 2009-08-17 21:34:10
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Cited by:
  1. R Simmons & D J Berri, 2010. "Mixing the princes and the paupers: Pay and performance in the National Basketball Association," Working Papers 611523, Lancaster University Management School, Economics Department.
  2. repec:lan:wpaper:3659 is not listed on IDEAS
  3. David Berri & Rob Simmons, 2011. "Catching a draft: on the process of selecting quarterbacks in the National Football League amateur draft," Journal of Productivity Analysis, Springer, vol. 35(1), pages 37-49, February.
  4. Rob Simmons & David Berri, 2009. "Gains from Specialization and Free Agency: The Story from the Gridiron," Review of Industrial Organization, Springer, vol. 34(1), pages 81-98, February.
  5. David Berri & Stacey Brook & Aju Fenn, 2011. "From college to the pros: predicting the NBA amateur player draft," Journal of Productivity Analysis, Springer, vol. 35(1), pages 25-35, February.
  6. Simmons, Rob & Berri, David J., 2011. "Mixing the princes and the paupers: Pay and performance in the National Basketball Association," Labour Economics, Elsevier, vol. 18(3), pages 381-388, June.
  7. repec:lan:wpaper:3944 is not listed on IDEAS
  8. repec:lan:wpaper:3551 is not listed on IDEAS

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