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The impact of salary caps in professional team sports

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Author Info
Késenne S.

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Abstract

In this paper we analyse the impact of a salary cap on a professional team sports league. We concentrate on the competitive balance, on the level and the distribution of player salaries, on owner profits and total league revenue. A simple model shows that a salary cap can improve the competitive balance among clubs as well as the salary distribution among players. We also investigate how the recent individual salary cap in NBA might affect the competitive balance.

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File URL: http://www.ua.ac.be/download.aspx?c=*TEWHI&n=14363&ct=009829&e=21317
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Publisher Info
Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 1999026.

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Length: 13 pages
Date of creation: Oct 1999
Date of revision:
Handle: RePEc:ant:wpaper:1999026

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Postal: Prinsstraat 13, B-2000 Antwerpen
Web page: http://www.ua.ac.be/tew
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  1. Uschi Backes-Gellner & Simone Tuor, 2007. "Avoiding Labor Shortages by Employer Signaling - On the Importance of Good Work Climate and Labor Relations," Working Papers 0067, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
    Other versions:
  2. Helmut Dietl & Markus Lang & Alexander Rathke, 2009. "The Combined Effect of Salary Restrictions and Revenue Sharing on Club Profits, Player Salaries, and Competitive Balance," Working Papers 0102, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Jul 2009. [Downloadable!]
    Other versions:
  3. Philippe Cyrenne, 2009. "Modelling Professional Sports Leagues: An Industrial Organization Approach," Review of Industrial Organization, Springer, vol. 34(3), pages 193-215, May. [Downloadable!] (restricted)
  4. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2008. "Revenue Sharing, Reserve Clause and Salary Caps in Professional Team Sports Leagues," Working Papers 0100, University of Zurich, Institute for Strategy and Business Economics (ISU), revised 2009. [Downloadable!]
  5. John Vrooman, 2009. "Theory of the Perfect Game: Competitive Balance in Monopoly Sports Leagues," Review of Industrial Organization, Springer, vol. 34(1), pages 5-44, February. [Downloadable!] (restricted)
  6. Helmut Dietl & Markus Lang & Alexander Rathke, 2007. "The Effect of Salary Caps in Professional Team Sports on Social Welfare," Working Papers 0072, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
    Other versions:
  7. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2008. "Welfare Effects of Salary Caps in Sports Leagues with Win-Maximizing Clubs," Working Papers 0086, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Oct 2009. [Downloadable!]
    Other versions:
  8. Yvan J. Kelly, 2008. "Cost Reduction, Competitive Balance, and the Scheduling of Back-to-Back Games in the NBA," Working Papers 0810, International Association of Sports Economists. [Downloadable!]
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This page was last updated on 2009-11-5.

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