Superstars and Journeymen: An Analysis of National Football Team’s Allocation of the Salary Cap across Rosters, 2000-2005
AbstractThe National Football League constrains teams’ payrolls via a “salary cap.” We analyze how teams allocate cap spending across rosters using a data set of over 10,000 player-season observations during 2000-2005. We find that a few players account for relatively high portions of teams’ caps, and that the players’ “cap values” are consistent with both “superstar” and Yule-Simon income distributions. A theoretical model based on a utility function convex with respect to winning is used to explain this result. We also find that the cap has been substantially effective in reducing teams’ ability to “spend their way to championships.”
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Bibliographic InfoPaper provided by International Association of Sports Economists & North American Association of Sports Economists in its series Working Papers with number 0722.
Length: 29 pages
Date of creation: Jun 2007
Date of revision:
Sports; NFL; Draft; Quarterback; Productivity;
Find related papers by JEL classification:
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-30 (All new papers)
- NEP-CUL-2007-06-30 (Cultural Economics)
- NEP-SPO-2007-06-30 (Sports & Economics)
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