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The National Football League payroll cost function and labor market institutional changes

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  • Stacey L. Brook

Abstract

Sports club payroll costs typically comprise over 50% of sport clubs' total operating expenses, but little is known empirically about this largest component of club costs. Using data from the National Football League Players Association Salary Cap Information System from 1981 to 2000, a National Football League club payroll cost function is estimated to examine the impact of labor market institutional changes (strikes and collective bargaining) and to test existing theoretical sports club cost functions. As expected, strikes have a negative effect on total payroll, and the two collective bargaining agreements had opposite effects during this time period. Additionally, empirical support is provided for the standard two‐team sport league cost function.

Suggested Citation

  • Stacey L. Brook, 2019. "The National Football League payroll cost function and labor market institutional changes," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 40(8), pages 1016-1022, December.
    • Handle: RePEc:wly:mgtdec:v:40:y:2019:i:8:p:1016-1022
    DOI: 10.1002/mde.3087
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    References listed on IDEAS

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    1. David J. Berri & Martin B. Schmidt & Stacey L. Brook, 2004. "Stars at the Gate," Journal of Sports Economics, , vol. 5(1), pages 33-50, February.
    2. Stefan Késenne, 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.
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    4. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
    5. Gramm, Cynthia L & Schnell, John F, 1994. "Difficult Choices: Crossing the Picket Line during the 1987 National Football League Strike," Journal of Labor Economics, University of Chicago Press, vol. 12(1), pages 41-73, January.
    6. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
    7. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 75-94, Summer.
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    Cited by:

    1. Thieme, Lutz & Falk, Rüdiger, 2021. "Zur Entwicklung von Vergütungssystemen in deutschen Großsportvereinen," Working Papers of the European Institute for Socioeconomics 35, European Institute for Socioeconomics (EIS), Saarbrücken.

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