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NFL Salary Cap Allocation: Matching Theory with Observed Behavior

Author

Listed:
  • Chris Jeffords

    (IUP)

  • Todd Potts

    (IUP)

Abstract

Using a representative agent optimization model, we assess the degree to which average team salary cap shares devoted to offense and defense in the National Football League (NFL) are consistent with the shares predicted by a constrained optimization model. Results from a balanced fixed-effects panel for all thirty-two NFL teams over a 13-year period (2002-2009 and 2012-2016) indicate that the model is effective at matching the salary cap allocation between offense and defense, and closely matches the ratio of offensive to defensive cap shares that we see in practice. Overall, the model fits well with observed NFL managerial oversight in this respect.

Suggested Citation

  • Chris Jeffords & Todd Potts, 2019. "NFL Salary Cap Allocation: Matching Theory with Observed Behavior," Economics Bulletin, AccessEcon, vol. 39(1), pages 270-279.
    • Handle: RePEc:ebl:ecbull:eb-18-00915
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    File URL: http://www.accessecon.com/Pubs/EB/2019/Volume39/EB-19-V39-I1-P29.pdf
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    References listed on IDEAS

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    5. Borghesi, Richard, 2008. "Allocation of scarce resources: Insight from the NFL salary cap," Journal of Economics and Business, Elsevier, vol. 60(6), pages 536-550.
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    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • Z1 - Other Special Topics - - Cultural Economics

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