Ch8 - Chapter 8 The History of Player Pay To Accompany...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 8 Chapter 8 The History of Player Pay The History of Player Pay To Accompany Sports Economics, 2ED Rodney Fort (PrenticeHall, 2006) No one foresaw what was coming in salaries. Not the players. Not the management. I always had thought I’d be an Oakland A for my whole career, that I’d end like Al Kaline or Brooks Robinson. That just isn’t going to happen anymore. It’s sad, bad for baseball, but it is the truth. -Reggie Jackson, the highest paid of the original 1976 MLB free agents.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Overview Overview Graphically demonstrate the value to owners of reducing competition over talent. Theoretically and practically drafts have reduced competition over talent and survived. Theoretically and practically the reserve clause reduced competition over talent but has not survived. The data show that the actual value to owners of reducing competition over talent has been large, indeed. The invariance principle suggests that the distribution of talent (and, hence, competitive balance) doesn’t change under the draft or reserve clause.
Background image of page 2
Introduction Introduction “Players have been bought and sold as though they were sheep instead of American citizens. ‘Reservation’ for them became for them another name for property right in the player.” - -John Montgomery Ward, 1890. “Total free agency would destroy the National Football League.” - NFL Commissioner Paul Tagliabue, 1990.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Restricting Competition- Graphical Analysis Restricting Competition- Graphical Analysis Restricting competition over talent reduces their next best alternative to,say, N, rather than the competitive equilibrium value, P. Owners save the difference on all units of talent purchased. $ $ W * L =1–W * S W S =1 W L =0 W S =0 W L =1 (W) P P N N
Background image of page 4
A Two-Step Plan A Two-Step Plan From the owners’ perspective, it would be valuable to reduce competition at both the entry level and after players are in the league. The tools used presently and in the past… The draft for entering talent. The reserve clause for existing talent.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The Draft The Draft With Competition: All teams scout out entering talent driving the price of talent up to the value of that talent in its most valuable use to the league.
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/23/2010 for the course FINANCE 08FB40447 taught by Professor Raymond during the Spring '10 term at University of Manchester.

Page1 / 19

Ch8 - Chapter 8 The History of Player Pay To Accompany...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online