The Impact of Free Agency on Competitive Balance in North American Professional Team Sports Leagues

2006 ◽  
Vol 20 (3) ◽  
pp. 345-365 ◽  
Author(s):  
Joel Maxcy ◽  
Michael Mondello
Keyword(s):  
National Football League ◽  
Team Sports ◽  
National Hockey League ◽  
Competitive Balance ◽  
Free Agency ◽  
Free Agent ◽  
Professional Team Sports ◽  
Dependent Variables ◽  
Sports Leagues ◽  
The Impact

Free agency was reintroduced to professional team sport leagues in the 1970s. Sport enthusiasts expressed concern that competitive balance would diminish as star players congregated to large market cities. However, the economic invariance principle rejects this notion, indicating that balance should remain unchanged. This article empirically examines the effects of changes in free agent rules on competitive balance over time in the National Basketball Association (NBA), National Football League (NFL), and National Hockey League (NHL). Regression analysis using within-season and between-season measures of competitive balance as dependent variables provides mixed results. The NFL and NHL provide evidence that an aspect of competitive balance has improved, but results from the NBA indicate that balance has worsened since the introduction of free agency. We conclude that the ambiguous results suggest that the effects are not independent, but instead depend on the interaction of free agent rights with other labor market and league rules.

A Brief History of Professional Team Sports

2017 ◽  
Author(s):  
David George Surdam
Keyword(s):  
World War Ii ◽  
National Football League ◽  
Team Sports ◽  
Court Case ◽  
Free Agency ◽  
Congressional Hearings ◽  
Professional Team Sports ◽  
Supreme Court Case ◽  
History Of ◽  
National League

This chapter traces the history of professional team sports in order to place the issues covered in the Congressional hearings in the proper context. It first considers the rise of baseball as America's national pastime and Major League Baseball (MLB)'s decision to maintain two separate leagues, the American League and the National League. It then discusses the dispute between MLB and the rival Federal League, along with the emergence of other sports that achieved Big League status, namely, football and basketball. It also examines the prosperity of the National Football League (NFL) and the National Basketball Association (NBA) as well as the appearance of new challengers to their dominance after World War II. Finally, it looks at the Flood v. Kuhn, a Supreme Court case that challenged baseball's reserve clause, along with the rise of free agency.

Professional Team Sports in the United States

2017 ◽  
Author(s):  
Steven A. Riess
Keyword(s):  
World War Ii ◽  
National Football League ◽  
Team Sports ◽  
The United States ◽  
Employee Relations ◽  
Free Agency ◽  
Successful Operation ◽  
Sports Teams ◽  
Professional Team Sports ◽  
Set Up

Professional sports teams are athletic organizations comprising talented, expert players hired by club owners whose revenues originally derived from admission fees charged to spectators seeing games in enclosed ballparks or indoor arenas. Teams are usually members of a league that schedules a championship season, although independent teams also can arrange their own contests. The first professional baseball teams emerged in the east and Midwest in 1860s, most notably the all-salaried undefeated Cincinnati Red Stockings of 1869. The first league was the haphazardly organized National Association of Professional Base Ball Players (1871), supplanted five years later by the more profit-oriented National League (NL) that set up strict rules for franchise locations, financing, and management–employee relations (including a reserve clause in 1879, which bound players to their original employer), and barred African Americans after 1884. Once the NL prospered, rival major leagues also sprang up, notably the American Association in 1882 and the American League in 1901. Major League Baseball (MLB) became a model for the professionalization of football, basketball, and hockey, which all had short-lived professional leagues around the turn of the century. The National Football League and the National Hockey League of the 1920s were underfinanced regional operations, and their teams often went out of business, while the National Basketball Association was not even organized until 1949. Professional team sports gained considerable popularity after World War II. The leagues dealt with such problems as franchise relocations and nationwide expansion, conflicts with interlopers, limiting player salaries, and racial integration. The NFL became the most successful operation by securing rich national television contracts, supplanting baseball as the national pastime in the 1970s. All these leagues became lucrative investments. With the rise of “free agency,” professional team athletes became extremely well paid, currently averaging more than $2 million a year.

scholarly journals Contest Theory and its Applications in Sports

2012 ◽  
pp. 399-421 ◽  
Author(s):  
Helmut Dietl ◽  
Egon Franck ◽  
Martin Grossmann ◽  
Markus Lang
Keyword(s):  
Team Sports ◽  
Point Of View ◽  
Competitive Balance ◽  
Theoretical Point ◽  
Contest Theory ◽  
Professional Team Sports ◽  
Tullock Contest ◽  
Sports Leagues ◽  
The Relationship ◽  
Exclusive Focus

This article describes how the theory of contests is applied to professional team sports leagues. It presents the traditional Tullock contest and explains some basic properties of the equilibrium. It then addresses the applications of contest theory in sports. It shows how the assumption of flexible vs. fixed talent supply depends on the league under consideration and how it influences the equilibria. The relationship between competitive balance and social welfare is considered. Finally, it illustrates why many clubs tend to “overinvest” in playing talent in many team sports leagues. It is noted that an exclusive focus on competitive balance may result in inefficient policy conclusions. Due to the contest structure, team sports leagues carry the risk of over-investing in playing talent. The contest theory is a suitable instrument to analyze team sports leagues from a theoretical point of view.

The Impact of Free Agency and the Salary Cap on Competitive Balance in the National Football League

2006 ◽  
Vol 7 (4) ◽  
pp. 374-390 ◽  
Author(s):  
Andrew Larsen ◽  
Aju J. Fenn ◽  
Erin Leanne Spenner
Keyword(s):  
National Football League ◽  
Competitive Balance ◽  
Free Agency ◽  
Salary Cap ◽  
The Impact

Economics of Antitrust

2017 ◽  
Author(s):  
David George Surdam
Keyword(s):  
Team Sports ◽  
Professional Sports ◽  
Revenue Sharing ◽  
Antitrust Law ◽  
Competitive Balance ◽  
Sports Teams ◽  
Sherman Act ◽  
Professional Team Sports ◽  
Sports Leagues ◽  
Professional Sports Leagues

This chapter examines the economics of antitrust, with particular emphasis on how antitrust law affects professional team sports. In the late 1800s, Americans worried about the growing concentration of power in the hands of a few producers such as Standard Oil, American Tobacco, and other large firms that consolidated their holds over industries by merging and acquiring other companies. Other industrial leaders sought to fix prices above those obtained under competition. The Sherman Antitrust Act, enacted in 1890, contains provisions addressing “contract,” “conspiracy,” and “trade and commerce.” This chapter first considers how courts applied the Sherman Act to cases involving professional team sports before discussing the characteristics of professional sports leagues, how owners of professional sports teams reported profits and losses, the issue of player salaries and exploitation, and competitive balance and revenue sharing in professional leagues. It also describes franchise relocation and expansion and how television created demand in sports.

Closing the Last Vestige of a “Free Market” In Labor 1964

2017 ◽  
Author(s):  
David George Surdam
Keyword(s):  
High School ◽  
National Football League ◽  
Major League Baseball ◽  
Free Market ◽  
Professional Sports ◽  
National Basketball Association ◽  
Reverse Order ◽  
Sports Leagues ◽  
The Impact ◽  
Professional Sports Leagues

This chapter examines the issues surrounding player draft in professional sports leagues. During the postwar era, baseball officials and players often mentioned free agents. Unlike the free agents of our era, however, these players were talented amateur players. Indeed, high school and college players constituted the remaining vestige of a free market for baseball labor during the postwar era. The owners quickly discovered that this free market for labor was costly and made attempts to curb spending on amateur players, sparking allegations of cheating that led to distrust among them. This chapter first considers the creation of the amateur draft in Major League Baseball (MLB) before discussing the reverse-order draft in the National Football League (NFL) and the player draft in the National Basketball Association (NBA). It concludes with an assessment of the impact of the draft on owners and players.

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