Introduction The National Basketball Association (NBA) first introduced the idea of a salary cap, or referred to as ceiling in economic terms, during the early 1940s and officially became effective for the 1946-47 season. The salary cap was developed to create a competitive balance amongst teams in the league, by restricting the amount each teams can allocate towards their roster. However, the ruling was withdrawn from the league after the season, allowing large market teams to spend unlimited amount of resources to attract talent. Small market teams were unable to compete with the capital disbursement used to attract talent, creating a competitive imbalance across the league. The idea of the salary cap was reintroduced as a Collective Bargaining …show more content…
Only a few athletes in NBA history have been known for their stardom, therefore; their presence on another team’s home court created a significant shift on their organization’s revenue for that particular game. Games that include stardom players are generally more expensive than regular season games, because the franchise understands that demand will still exist even with an increase in pricing. Hausman and Leonard (1997) used data analysis to conclude that 200,000 dollars generated by New Jersey Nets’ was due to the presence of Michael Jordon on the Chicago Bulls, in which he only played twice on their home court during that season. This introduced the study that NBA teams were focusing on forming a “super-team,” which constitutes of three or more all-star players to drive the team’s revenue rather than focusing on the number of wins their team can accrue. For instance, Golden State Warriors were already a NBA championship team that included three NBA all stars. However, their addition of Kevin Durant to a one-year contract worth $26.6 million at the start of the 2016 season, generated $304 million dollars in revenue for the 2016-17 season; a 51% increase from their previous season. Although they had the ability to contend for the championship title for consecutives years prior to the addition of Kevin Durant, the Warriors’ organization understood that signing an additional stardom …show more content…
However, there if a player only produces statistically, rather than producing wins for a team, an organization will be reluctant to value them. For instance, Carmelo Anthony averaged 22.4 points per page (PPG) with the New York Knicks during the 2016-17 season, however; he ranked 68th in PER. Although he had talent surrounding him, such as Kristaps Prozingis and Derrick Rose, he was only able to win 31 games, placing 12th in the Eastern Conference. Therefore, another measurement used by organizations to determine a player’s value is their Estimated Wins Added (EWA) statistic. The EWA calculates the number of wins a player can contribute towards their respective team. In other words, if the player were to be removed from their team, EWA result would determine the number of additional losses rather than
Anyone who has been involved in an organized sport, whether it is backyard football or a high school sports team, knows that these sports all have organizations that are responsible for setting rules, determining conditions of play, and penalizing individuals who infringe the rules. Some of the organizations like the National Football league and the MLB are familiar to most people, the rules they follow are not generally understood by anyone who is not closely associated with the sport. Most fans and sport critics assume that what is happening inside these organizations are of little concern to them. However, this is not the case. In the MLB, the New York Yankees spend an excessive amount of money every year to obtain big name players. A luxury tax was put into effect for teams that go over the spending limit. However, the Yankees are the only team that pays the tax because they are the only team that exceeds the spending limit. The players, coaches, fans, and I have argued that a salary cap would be the best possible way to allow teams in the Major Leagues an equal opportunity getting to the World Series.
Overall, compelling points exist supporting or not supporting a salary cap in baseball. Teams have the benefit of a salary cap existing, and out of that, a balance in free agency forms and a sense of championship parity develops too. On the other side of the spectrum, teams can use the Moneyball method of recruiting and signing players, along with tax implications and revenue sharing to balance out payrolls. The main factor in deciding if a salary cap is appropriate is the factor of fairness among the teams. Therefore, based off the support the research provides, the implementation of a salary cap is necessary.
By taking the labor market theory and MRP of players and analyzing how they interact with wage determination and competitive balance mechanisms we can make an economic analysis of the labor market inefficiencies. Giving us the ability to make some determinations on why labor market inefficiencies exist in professional sports and how/if there are any ways to correct for
A salary cap gives all the teams an equal chance to sign players. It also keeps teams with a lot of money not able to acquire every all-star they want , or any player who is a free agent. Some Major League Baseball teams like the Anahiem Angels and the Atlanta Braves are owned by very wealthy people and companies. The Anaheim Angels are owned by Disney.(Worisnop, 128) So with no surprise the Angels can produce a team which can be very competitive, and have several all-star players. Just recently they exercised this advantage by signing Mo Vaughn for ninety million dollars over seven years.(Antonen, 2) There were at least four other teams that wanted to sign this all-star, but the Angels easily had the money, and outbid everyone who wanted to sign him. If there was a salary cap in Major League Baseball then the Angels would have thought twice about giving that much money to one player. With the its roster for one year. So giving one player 12.8 million dollars for one year does not really make sense if the salary cap is fifty million dollars a year. That would leave only 37.2 million dollars for the twenty-four other players, which equals each player getting on average a little less than one and a half million dollars a year.
The National Basketball Association no longer holds the prominence that it once had. In the aftermath of the lockout that took away half of the 1998-99 season, the National Basketball Association finds itself looking into an uncertain future. Appearing similar to the state of the league during the mid 1980's, the NBA finds itself with a tarnished image and no icon's to build the league around. With the retirement of Michael Jordan and the number of superstars in which the league built its popularity on during the 1990's getting smaller, the National Basketball Association sits in limbo while it searches for its new identity.
Although many youngsters fail in the NBA, there are a few high school players who have had, or do have a successful career in the NBA. Some of these are, Moses Malone, Kobe Bryant, Tracey McGrady, and this year’s most valu...
Several foreign basketball players have individually left their marks on NBA courts, in NBA record books, and in their fans’ hearts. Different ethnic groups, races, and sports fans in general have united, cheering on heroic efforts from players from overseas. These international players amped up the level of competition in basketball and found themselves at home in the NBA. Four international players have been honored with the most prestigious award a player can receive in professional basketball, NBA MVP. These same four players are undoubtedly future Hall of Famers and were listed in the top 30 international players of all time in a 2013 “Dime Magazine” article (Daruaku). These four players, Steve Nash, Tim Duncan,...
...salary cap will provide an answer for some of the most serious problems facing the NBA. It will lower ticket prices, allow more teams to be more competitive and eliminate the any future lockouts. If these problems can be fixed by enforcing a hard salary cap, I don't see why it shouldn't be done. The NBA should enforce a hard salary cap.
...e players from making the mistakes of players that were not successful after completing just only one year.
Sports teams play to win so they will play their best players. The better players on that sports team will usually produce better results than the worst players on that same
High school and college basketball players have started to enter the NBA earlier and earlier as the year's progress. In general, this is resulting in a negative effect to the college programs, the NBA, and the players themselves. Before 1994 there were usually only eight to ten early entries into the NBA. The number grew to 18 in 1995, and an astonishing 40 players in 1996, and 47 in 1997. The number of early entries in the NBA grows to the point where it is a problem that needs to be dealt with by the NBA players association. College basketball is in serious trouble. Of course, any sport would be when it's marquee s...
The following case is a review of Juwan Howard, a star basketball player playing for the Washington Bullets. The case study details the ins and outs of the high stakes world of professional basketball and the deals and huge money that is the main focus of owners, agents, players, the players union, managers, and the NBA league every year during draft and free agency.
effect by the NBA to put a limit on beginning salaries, so some measures are
Second, market growth, which is measured by attendance at NBA games, has leveled recently, so increasing competition among teams for a fixed number of fans.
...sponsible for assisting thousands of players reach different levels of basketball that has helped build the game of basketball. This in turn has spurred an economic impact in the sense that it has led to the construction of infrastructure like stadiums and eventually other amenities like hotels, roads, and security. In addition, it generates revenue through ticket sales, and advertising. It has also helped in providing employment opportunities (Impact Basketball Camp Programs).