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Teaching How Private Enterprise Works Using Professional Sports: A Brief Note on the Case of Individual NHL Players' Salaries

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  • Cebula, Richard

Abstract

As private enterprises in the U.S. and Canada, franchises in the National Hockey League (NHL) can be presumed to be firms pursuing maximum profits. Part of this pursuit involves the negotiation between NHL players and management of player salaries, which (among other things) must be consistent with the productivity level of each player. This educational note endeavors to empirically identify key, quantifiable factors that reflect individual NHL player productivity and as a result help to determine the regular season salary structure for individual NHL players, whether they be goalies, centers, wingmen, or defense-men. Ideally, such information can be useful for the student of private enterprise insofar as it provides insights relevant to free market decisions and outcomes involving marginal revenue product. Thus, this educational note demonstrates to the student of private enterprise how systematic measures of player productivity help to explain NHL player salaries.

Suggested Citation

  • Cebula, Richard, 2009. "Teaching How Private Enterprise Works Using Professional Sports: A Brief Note on the Case of Individual NHL Players' Salaries," MPRA Paper 50978, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:50978
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    File URL: https://mpra.ub.uni-muenchen.de/50978/1/MPRA_paper_50978.pdf
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    References listed on IDEAS

    as
    1. Ferguson, D G, , et al, 1991. "The Pricing of Sports Events: Do Teams Maximize Profit?," Journal of Industrial Economics, Wiley Blackwell, vol. 39(3), pages 297-310, March.
    2. Leo Kahane, 2001. "Team and player effects on NHL player salaries: a hierarchical linear model approach," Applied Economics Letters, Taylor & Francis Journals, vol. 8(9), pages 629-632.
    3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    4. Idson, Todd L & Kahane, Leo H, 2000. "Team Effects on Compensation: An Application to Salary Determination in the National Hockey League," Economic Inquiry, Western Economic Association International, vol. 38(2), pages 345-357, April.
    5. David H. Richardson, 2000. "Pay, Performance, and Competitive Balance in the National Hockey League," Eastern Economic Journal, Eastern Economic Association, vol. 26(4), pages 393-417, Fall.
    6. Marc Lavoie, 2000. "The Location of Pay Discrimination in the National Hockey League," Journal of Sports Economics, , vol. 1(4), pages 401-411, November.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    salary determination; marginal revenue product; productivity measures;

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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