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Int. J. Financial Stud. 2015, 3(2), 75-83; doi:10.3390/ijfs3020075

The NBA’s Maximum Player Salary and the Distribution of Player Rents

Department of Economics, Berry College, Box 5024, Mount Berry, GA 30149, USA
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Author to whom correspondence should be addressed.
Academic Editor: Brian Soebbing
Received: 10 December 2014 / Revised: 10 March 2015 / Accepted: 12 March 2015 / Published: 25 March 2015
(This article belongs to the Special Issue Sports Finance)
View Full-Text   |   Download PDF [123 KB, uploaded 25 March 2015]

Abstract

The NBA’s 1999 Collective Bargaining Agreement (CBA) included provisions capping individual player pay in addition to team payrolls. This study examines the effect the NBA’s maximum player salary on player rents by comparing player pay from the 1997–1998 and 2003–2004 seasons while controlling for player productivity and other factors related to player pay. The results indicate a large increase in the pay received by teams’ second highest and, to a lesser extent, third highest paid players. We interpret this result as evidence that the adoption of the maximum player salary shifted rents from stars to complementary players. We also show that the 1999 CBA’s rookie contract provisions reduced salaries of early career players. View Full-Text
Keywords: NBA; maximum player salary; 1999 collective bargaining agreement; rookie contract NBA; maximum player salary; 1999 collective bargaining agreement; rookie contract
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Hastings, K.M.; Stephenson, F. The NBA’s Maximum Player Salary and the Distribution of Player Rents. Int. J. Financial Stud. 2015, 3, 75-83.

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