The implications of athlete freedom to contract: Lessons from North America

Economic Affairs

Volumn 17, Issue 3, 1997, Pages 7-12

  Sanderson, Allen R ^a,b   Siegfried, John J ^c,d  

^a UNIVERSITY OF CHICAGO   (United States)

^b National Opinion Research Center   (United States)

^c VANDERBILT UNIVERSITY   (United States)

^d American Economic Association   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0005891046     PISSN: 02650665     EISSN: None     Source Type: Journal    
DOI: 10.1111/1468-0270.00035     Document Type: Article

References (10)

1. In a reverse-order draft the team that finishes last during the prior season has first choice from newly available players; the team with the second poorest record selects second, and so on until the championship team of the prior season chooses last. Reverse-order draft schemes are frequently justified by appealing to the importance of competitive team balance among a league's members. Most economists find this argument unpersuasive, however, because of the Coase Theorem, which recognises that if property rights are well-defined and transactions costs are modest, resources will gravitate to their most valuable use no matter who is given the initial rights. Thus, more highly skilled players will move to the team located where fans are willing and able to pay the most for winning. A reverse-order draft may affect the distribution of wealth among teams in a league, but it is unlikely to have much effect on competitive balance if player contracts can be transferred.
2. Since 1960 there have been rival leagues in football in 1960-69, 1974-75 and 1983-85, in basketball in 1960-61 and 1967-76, and in hockey in 1972-79.
3. Veteran players are defined as those with at least six years' experience in baseball, one year in basketball, four years in football, and age 31 or more in ice hockey
4. The pre-1990 salary data reported in this article are from Paul D. Staudohar (1989) The Sports Industry and Collective Bargaining, 2nd edn., Ithaca, New York: Cornell University Press.
5. See J. R. Hill (1985) 'The Threat of Free Agency and Exploitation in Professional Baseball: 1976-1979', Quarterly Review of Economics and Business, 25, Winter, 68-82.
6. See J. Cassing and R. W. Douglas (1980) 'Implications of the Auction Mechanism in Baseball's Free Agent Draft', Southern Economic Journal, 47, July, 110-121.
7. See J. Quirk and R. Fort (1992) Pay Dirt, Princeton, NJ: Princeton University Press, pp. 219-222.
8. See, for example, M. El-Hodiri and J. Quirk (1971) 'An Economic Model of a Professional Sports League', Journal of Political Economy, 1302-19;
9. or Quirk and Fort, Journal of Political Economy, op. cit., chapter 8.
10. For more reasons for increased dispersion of players' earnings see G. W. Scully (1995) The Market Structure of Sports, Chicago: University of Chicago Press, chapter 3.