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The Impact of Salary Caps in Professional Team Sports

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  • Kesenne, Stefan

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. Copyright 2000 by Scottish Economic Society.

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  • Kesenne, Stefan, 2000. "The Impact of Salary Caps in Professional Team Sports," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 422-430, September.
  • Handle: RePEc:bla:scotjp:v:47:y:2000:i:4:p:422-30
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    Cited by:

    1. Helmut M. Dietl & Markus Lang & Alexander Rathke, 2011. "The Combined Effect Of Salary Restrictions And Revenue Sharing In Sports Leagues," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 447-463, April.
    2. Helmut M. Dietl & Markus Lang & Stephan Werner, 2010. "The Effect of Luxury Taxes on Competitive Balance, Club Profits, and Social Welfare in Sports Leagues," International Journal of Sport Finance, Fitness Information Technology, vol. 5(1), pages 41-51, February.
    3. Dietl Helmut M & Duschl Tobias & Lang Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, De Gruyter, vol. 13(2), pages 1-32, August.
    4. Oliver Guertler & Markus Lang & Tim Pawlowski, 2011. "On the Release of Players to National Teams," Working Papers 0046, University of Zurich, Center for Research in Sports Administration (CRSA).
    5. Helmut Dietl, 2010. "Besonderheiten des Sports ‐ Was rechtfertigt eine "eigene Ökonomik"?," Working Papers 0137, University of Zurich, Institute for Strategy and Business Economics (ISU).
    6. Dietl Helmut M & Lang Markus & Rathke Alexander, 2009. "The Effect of Salary Caps in Professional Team Sports on Social Welfare," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-23, April.
    7. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2010. "Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps," Working Papers 0035, University of Zurich, Center for Research in Sports Administration (CRSA).
    8. Uschi Backes-Gellner & Simone N. Tuor, 2010. "Avoiding Labor Shortages by Employer Signaling: On the Importance of Good Work Climate and Labor Relations," ILR Review, Cornell University, ILR School, vol. 63(2), pages 271-286, January.
    9. Biner, Burhan, 2009. "Equal Strength or Dominant Teams: Policy Analysis of NFL," MPRA Paper 17920, University Library of Munich, Germany.
    10. Johannes Fedderke, 2013. "Promotion and Relegation between Country Risk Classes as Maintained by Country Risk Rating Agencies," Working Papers 376, Economic Research Southern Africa.
    11. Helmut M. Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2012. "Salary Cap Regulation In Professional Team Sports," Contemporary Economic Policy, Western Economic Association International, vol. 30(3), pages 307-319, July.
    12. Dietl Helmut & Duschl Tobias & Franck Egon & Lang Markus, 2012. "A Contest Model of a Professional Sports League with Two-Sided Markets," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(3), pages 336-359, June.
    13. 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.
    14. Philippe Cyrenne, 2009. "Modelling Professional Sports Leagues: An Industrial Organization Approach," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(3), pages 193-215, May.
    15. Dietl, Helmut & Duschl, Tobias, 2012. "The organization of professional sports leagues: A comparison of European and North-American leagues from the perspective of platform organization," Edition HWWI: Chapters,in: Sport und Sportgroßveranstaltungen in Europa - zwischen Zentralstaat und Regionen, pages 111-126 Hamburg Institute of International Economics (HWWI).
    16. John Vrooman, 2009. "Theory of the Perfect Game: Competitive Balance in Monopoly Sports Leagues," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(1), pages 5-44, February.
    17. Rodríguez Guerrero, Plácido, 2012. "La economía del deporte/The Economics of Sport," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 30, pages 387-418, Agosto.
    18. V. Masson & N. Sim & L. Wedding, 2014. "Did the AFL equalization policy achieve the evenness of the league?," Applied Economics, Taylor & Francis Journals, vol. 46(35), pages 4334-4344, December.
    19. Helmut Dietl & Tobias Duschl & Markus Lang, 2010. "Gehaltsobergrenzen und Luxussteuern: Erkenntnisse aus dem professionellen Mannschaftssport," Working Papers 0136, University of Zurich, Institute for Strategy and Business Economics (ISU).
    20. Martin Grossmann & Helmut Dietl, 2012. "Asymmetric contests with liquidity constraints," Public Choice, Springer, vol. 150(3), pages 691-713, March.
    21. Sébastien Avanzo & Robert Plasman, 2013. "Le mouvement syndical dans le sport professionnel," DULBEA Working Papers 13-02, ULB -- Universite Libre de Bruxelles.
    22. 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;North American Association of Sports Economists.
    23. Martin Grossmann & Andreas Hefti & Markus Lang, 2012. "Aggregative Contests and Ex-post Heterogeneity: the Case of the UEFA Champions League," Working Papers 0161, University of Zurich, Institute for Strategy and Business Economics (ISU).

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