Incentive Contracts in Team Sports - Theory and Practice
AbstractA comparison of incentive clauses of players’ contracts in German soccer and clauses used in the NFL and NBA shows considerable differences. Against the background of principle-agent theory we have a closer look at these incentive systems. In contrast to other industries it is easy to observe the employees’ effort in team sports. Therefore, it would be desirable to set incentives for players based on their individual effort. We show that there are reasons why incentive clauses in professional German soccer, the NBA and the NFL are not directly based on effort. We argue that there are two main reasons: Firstly, efficient incentives are complementarily provided by subjective and objective performance measures. Secondly, cooperation amongst team members is essential in team sports.
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Bibliographic InfoPaper provided by Berkeley Electronic Press in its series German Working Papers in Law and Economics with number 2002-1-1042.
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sports; labor contracts; agency theory; incentives;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
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