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Monopsony and Salary Suppression: The Case of Major League Soccer in the United States

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  • John Twomey
  • James Monks

Abstract

Top tier professional soccer in the United States is operated by Major League Soccer (MLS). The MLS was established and operates under a single entity structure, such that all players negotiate and sign contracts with the league rather than with individual teams. This monopsonistic structure was designed to eliminate competition for players across teams within the league and thus allow the league to suppress player salaries. This paper investigates how effective the MLS has been in achieving this goal and finds that the MLS devotes only about 25 percent of its revenues to player salaries, compared to 50 to 60 percent in most other U.S. professional sports and professional soccer leagues abroad.

Suggested Citation

  • John Twomey & James Monks, 2011. "Monopsony and Salary Suppression: The Case of Major League Soccer in the United States," The American Economist, Sage Publications, vol. 56(1), pages 20-28, May.
    • Handle: RePEc:sae:amerec:v:56:y:2011:i:1:p:20-28
    DOI: 10.1177/056943451105600104
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    References listed on IDEAS

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    2. Franziska Prockl & Bernd Frick, 2018. "Wage Determination In A Regulated Labor Market: Empirical Evidence From Major League Soccer," Working Papers Dissertations 39, Paderborn University, Faculty of Business Administration and Economics.
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    4. Hojun Sung & Brian M. Mills & Younghoon Lee, 2022. "Moments of Competitive Balance in Major League Soccer," Journal of Sports Economics, , vol. 23(3), pages 329-354, April.
    5. Franziska Prockl, 2018. "The Superstar Code - Deciphering Key Characteristics And Their Value," Working Papers Dissertations 38, Paderborn University, Faculty of Business Administration and Economics.
    6. Rachel Scarfe & Carl Singleton & Paul Telemo, 2021. "Extreme Wages, Performance, and Superstars in a Market for Footballers," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(1), pages 84-118, January.
    7. Bernd Frick & Franziska Prockl, 2018. "Information Precision In Online Communities: Player Valuations On Www.Transfermarkt.De," Working Papers Dissertations 37, Paderborn University, Faculty of Business Administration and Economics.

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