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The Underpayment of Restricted Players in North American Sports Leagues

Author

Listed:
  • Anthony C. Krautmann

    () (DePaul University)

  • Peter von Allmen

    () (Moravian College)

  • David Berri

    () (Southern Utah University)

Abstract

In this paper,we consider whether underpaying players restricted by the reserve clause is a common practice in the three largest sports leagues in North America—the NFL, NBA, and MLB. Our results are consistent with the hypothesis that owners of professional sports teams do exercise monopsony power whenever and wherever they can. Although differences exist across the three sports, our results indicate that in general: restricted players are underpaid; when the negotiating power of players rises, owners are less able to extract a surplus; and, the greatest surplus tends to be extracted from those who create the greatest amount of value.

Suggested Citation

  • Anthony C. Krautmann & Peter von Allmen & David Berri, 2009. "The Underpayment of Restricted Players in North American Sports Leagues," International Journal of Sport Finance, Fitness Information Technology, vol. 4(3), pages 161-175, August.
  • Handle: RePEc:jsf:intjsf:v:4:y:2009:i:3:p:161-175
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. IJSF 4.3 Available
      by brhumphreys in International Journal of Sport Finance Blog on 2009-08-18 02:34:10

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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    Cited by:

    1. R Simmons & D Berri, 2007. "Does it pay to specialize? The story from the Gridiron," Working Papers 591134, Lancaster University Management School, Economics Department.
    2. Rob Simmons & David Berri, 2009. "Gains from Specialization and Free Agency: The Story from the Gridiron," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(1), pages 81-98, February.
    3. David J. Berri & Brad R. Humphreys & Robert Simmons, 2013. "Valuing the blind side: pay and performance of offensive linemen in the National Football League," Chapters,in: The Econometrics of Sport, chapter 6, pages 99-114 Edward Elgar Publishing.
    4. Peter von Allmen & Michael A . Leeds & Brad R. Humphreys, 2011. "Sports Economics as Applied Microeconomics," Chapters,in: International Handbook on Teaching and Learning Economics, chapter 64 Edward Elgar Publishing.
    5. R Simmons & D J Berri, 2010. "Mixing the princes and the paupers: Pay and performance in the National Basketball Association," Working Papers 611523, Lancaster University Management School, Economics Department.
    6. Quinn Keefer, 2015. "Performance Feedback Does Not Eliminate the Sunk-Cost Fallacy: Evidence From Professional Football," Journal of Labor Research, Springer, vol. 36(4), pages 409-426, December.
    7. repec:lan:wpaper:3659 is not listed on IDEAS
    8. David Berri & Rob Simmons, 2011. "Catching a draft: on the process of selecting quarterbacks in the National Football League amateur draft," Journal of Productivity Analysis, Springer, vol. 35(1), pages 37-49, February.
    9. David Berri & Stacey Brook & Aju Fenn, 2011. "From college to the pros: predicting the NBA amateur player draft," Journal of Productivity Analysis, Springer, vol. 35(1), pages 25-35, February.
    10. Simmons, Rob & Berri, David J., 2011. "Mixing the princes and the paupers: Pay and performance in the National Basketball Association," Labour Economics, Elsevier, vol. 18(3), pages 381-388, June.
    11. repec:lan:wpaper:3944 is not listed on IDEAS
    12. repec:lan:wpaper:3551 is not listed on IDEAS
    13. repec:kap:atlecj:v:45:y:2017:i:3:d:10.1007_s11293-017-9545-7 is not listed on IDEAS

    More about this item

    Keywords

    underpayment; reserve clause; surplus; free agent;

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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