IDEAS home Printed from https://ideas.repec.org/p/win/winwop/2013-04.html
   My bibliography  Save this paper

Player Salaries, Player Mobility and the Invariance Principle: Evidence from the National Hockey League

Author

Listed:
  • Philippe Cyrenne

Abstract

This paper develops a bargaining model of wages and contract length as applied to a professional sports league. Using data based on the recent Collective Bargaining Agreement between players and owners in the National Hockey League, I examine the effect of restrictions on player contracting on both the mobility and salaries of players over the period 2005-2010. Using a variety of estimators both for player mobility and salary determination, I find some evidence that a player’s free agency status effects both mobility and player salaries, but significantly less than might be expected. A key result is that mobility needs to be taken into account when developing models of wage determination in professional sports.

Suggested Citation

  • Philippe Cyrenne, 2013. "Player Salaries, Player Mobility and the Invariance Principle: Evidence from the National Hockey League," Departmental Working Papers 2013-04, The University of Winnipeg, Department of Economics.
  • Handle: RePEc:win:winwop:2013-04
    as

    Download full text from publisher

    File URL: http://economics.uwinnipeg.ca/RePEc/winwop/2013-04.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Stephen F. Ross, 2003. "Competition Law as a Constraint on Monopolistic Exploitation by Sports Leagues and Clubs," Oxford Review of Economic Policy, Oxford University Press, vol. 19(4), pages 569-584, Winter.
    2. Christopher F Baum, 2006. "An Introduction to Modern Econometrics using Stata," Stata Press books, StataCorp LP, number imeus, August.
    3. Paul D. Staudohar, 2005. "The Hockey Lockout of 2004-05," IASE Conference Papers 0504, International Association of Sports Economists.
    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. Lehn, Kenneth, 1982. "Property Rights, Risk Sharing, and Player Disability in Major League Baseball," Journal of Law and Economics, University of Chicago Press, vol. 25(2), pages 343-366, October.
    6. repec:pri:indrel:dsp016h440s45s is not listed on IDEAS
    7. Hall, Robert & Krueger, Alan B., 2008. "Wage Formation between Newly Hired Workers and Employers: Survey Evidence," IZA Discussion Papers 3775, Institute of Labor Economics (IZA).
    8. 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.
    9. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-930, December.
    10. Gibbons, Robert & Murphy, Kevin J, 1992. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 468-505, June.
    11. Kanazawa, Mark T & Funk, Jonas P, 2001. "Racial Discrimination in Professional Basketball: Evidence from Nielsen Ratings," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 599-608, October.
    12. Stefan Szymanski, 2000. "A Market Test for Discrimination in the English Professional Soccer Leagues," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 590-603, June.
    13. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
    14. Cyrenne, Philippe, 2001. "A Quality-of-Play Model of a Professional Sports League," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 444-452, July.
    15. Marc Lavoie, 2000. "The Location of Pay Discrimination in the National Hockey League," Journal of Sports Economics, , vol. 1(4), pages 401-411, November.
    16. Allen R. Sanderson & John J. Siegfried, 2006. "Simon Rottenberg and Baseball, Then and Now: A Fiftieth Anniversary Retrospective," Journal of Political Economy, University of Chicago Press, vol. 114(3), pages 594-623, June.
    17. Marc Lavoie & Gilles Grenier & Serge Coulombe, 1987. "Discrimination and Performance Differentials in the National Hockey League," Canadian Public Policy, University of Toronto Press, vol. 13(4), pages 407-422, December.
    18. 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.
    19. McCormick, Robert E. & Tollison, Robert D., 2001. "Why do black basketball players work more for less money?," Journal of Economic Behavior & Organization, Elsevier, vol. 44(2), pages 201-219, February.
    20. Joel G. Maxcy, 2002. "Rethinking Restrictions On Player Mobility In Major League Baseball," Contemporary Economic Policy, Western Economic Association International, vol. 20(2), pages 145-159, April.
    21. 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.
    22. Martin Schmidt, 2011. "Institutional Change and Factor Movement in Major League Baseball: An Examination of the Coase Theorem’s Invariance Principle," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(3), pages 187-205, November.
    23. Joel Maxcy, 2004. "Motivating long-term employment contracts: risk management in major league baseball," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(2), pages 109-120.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Philippe Cyrenne, 2014. "Salary Inequality, Team Success and the Superstar Effect," Departmental Working Papers 2014-02, The University of Winnipeg, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fort, Rodney & Maxcy, Joel & Diehl, Mark, 2016. "Uncertainty by regulation: Rottenberg׳s invariance principle," Research in Economics, Elsevier, vol. 70(3), pages 454-467.
    2. 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.
    3. repec:lan:wpaper:3702 is not listed on IDEAS
    4. David J. Berri & Rob Simmons, 2009. "Race and the Evaluation of Signal Callers in the National Football League," Journal of Sports Economics, , vol. 10(1), pages 23-43, February.
    5. B Frick & R Simmons, 2005. "The impact of managerial quality on organizational performance: evidence from German soccer," Working Papers 566927, Lancaster University Management School, Economics Department.
    6. Carlo Bellavite Pellegrini & Raul Caruso & Marco Di Domizio, 2021. "Relative wages, payroll structure and performance in soccer. Evidence from Italian Serie A (2007-2019)," DISCE - Quaderni del Dipartimento di Politica Economica dipe0015, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    7. Jahn K. Hakes & Chad Turner, 2008. "Long-Term Contracts in Major League Baseball," Working Papers 0831, International Association of Sports Economists;North American Association of Sports Economists.
    8. 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.
    9. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    10. Furmaco, L. & Longley, N. & Palermo, A. & Rossi, G., 2021. "Employees’ Performance Variation over Fixed-Term Contracts - Evidence from the National Hockey League," Working Papers 2107, Tulane University, Department of Economics.
    11. Wen-Jhan Jane, 2021. "The impact of cultural distance on salary: the case of Samurai Japan," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(1), pages 85-123, March.
    12. repec:lan:wpaper:3596 is not listed on IDEAS
    13. repec:lan:wpaper:3594 is not listed on IDEAS
    14. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    15. Hsuan-Yu Lin & Chih-Hai Yang, 2016. "Uncertainty, specific investment, and contract duration: evidence from the MLB player market," Empirical Economics, Springer, vol. 50(3), pages 1009-1028, May.
    16. Kevin Alavy & Alison Gaskell & Stephanie Leach & Stefan Szymanski, 2010. "On the Edge of Your Seat: Demand for Football on Television and the Uncertainty of Outcome Hypothesis," International Journal of Sport Finance, Fitness Information Technology, vol. 5(2), pages 75-95, May.
    17. Egon Franck & Stephan Nüesch, 2005. "Talent, Past Consumption and/or Popularity - Are German Soccer Celebrities Rosen or Adler Stars?," Working Papers 0005, University of Zurich, Center for Research in Sports Administration (CRSA), revised 2006.
    18. Martin Grossmann & Helmut Dietl & Markus Lang, 2010. "Revenue Sharing and Competitive Balance in a Dynamic Contest Model," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(1), pages 17-36, February.
    19. Benno Torgler & Sascha Schmidt, 2007. "What shapes player performance in soccer? Empirical findings from a panel analysis," Applied Economics, Taylor & Francis Journals, vol. 39(18), pages 2355-2369.
    20. Pedro Garcia‐del‐Barrio & Francesc Pujol, 2009. "The Rationality of Under‐employing the Best‐performing Soccer Players," LABOUR, CEIS, vol. 23(3), pages 397-419, September.
    21. Dilger, Alexander, 2002. "Never change a winning team: An analysis of hazard rates in the NBA," Wirtschaftswissenschaftliche Diskussionspapiere 03/2002, University of Greifswald, Faculty of Law and Economics.
    22. 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: Plácido Rodríguez & Stefan Késenne & Jaume García (ed.), The Econometrics of Sport, chapter 6, pages 99-114, Edward Elgar Publishing.
    23. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.

    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:win:winwop:2013-04. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/dwinnca.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Soham Baksi (email available below). General contact details of provider: https://edirc.repec.org/data/dwinnca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.