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The New NBA Collective Bargaining Agreement, the Median Voter Model, and a Robin Hood Rent Redistribution

Author

Listed:
  • J. Richard Hill

    (Central Michigan University)

  • Peter A. Groothuis

    (Westminster College)

Abstract

In this article, it is suggested that the new collective bargaining agreement (CBA) in the National Basketball Association (NBA) redistributes rents from the superstars back to the median voters. In particular, it is suggested that portions of the new agreement, such as salary caps, are designed to improve the rather skewed distribution of salaries in the NBA. Evidence from a Lorenz curve analysis of the first 2 years under the new contract suggests that all players with salaries below the median wage gain from the new agreement, and those with salaries closest to the median wage gain the most. The analysis suggests that skewed salary distributions may lead to CBAs that redistribute the rents from the rich (superstars) to the poor (median voters).

Suggested Citation

  • J. Richard Hill & Peter A. Groothuis, 2001. "The New NBA Collective Bargaining Agreement, the Median Voter Model, and a Robin Hood Rent Redistribution," Journal of Sports Economics, , vol. 2(2), pages 131-144, May.
    • Handle: RePEc:sae:jospec:v:2:y:2001:i:2:p:131-144
    DOI: 10.1177/152700250100200203
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Aigbe Akhigbe & Melinda Newman & Ann Marie Whyte, 2022. "Localized sentiment trading in heterogeneous labor markets: evidence from free agent signings," Review of Quantitative Finance and Accounting, Springer, vol. 58(3), pages 1249-1276, April.
    2. Mark C. Strazicich & Peter A. Groothuis & Tiberiu S.V. Ungureanu, 2024. "A Rising Tide Raises all Boats: The changing distribution of salaries in the NBA over time," Working Papers 24-20, Department of Economics, Appalachian State University.
    3. James R. Hill & Nicholas A. Jolly, 2012. "Salary Distribution and Collective Bargaining Agreements: A Case Study of the NBA," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 51(2), pages 342-363, April.
    4. David Berri & R. Jewell, 2004. "Wage inequality and firm performance: Professional basketball's natural experiment," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 32(2), pages 130-139, June.
    5. Helmut Dietl & Tobias Duschl & Markus Lang, 2010. "Gehaltsobergrenzen und Luxussteuern: Erkenntnisse aus dem professionellen Mannschaftssport," Working Papers 0039, University of Zurich, Center for Research in Sports Administration (CRSA).
    6. Johnny Ducking & Peter A. Groothuis & James Richard Hill, 2014. "Minimum Pay Scale and Career Length in the NBA," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(4), pages 617-635, October.
    7. Erick Eschker & Stephen Perez & Mark Siegler, 2004. "The NBA and the influx of international basketball players," Applied Economics, Taylor & Francis Journals, vol. 36(10), pages 1009-1020.
    8. Dietl, Helmut M. & Duschl, Tobias & Lang, Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, Cambridge University Press, vol. 13(2), pages 1-30, August.
    9. Richard C. K. Burdekin & Richard T. Hossfeld & Janet Kiholm Smith, 2005. "Are NBA Fans Becoming Indifferent to Race? Evidence From the 1990s," Journal of Sports Economics, , vol. 6(2), pages 144-159, May.
    10. Simmons, Rob & Berri, David J., 2011. "Mixing the princes and the paupers: Pay and performance in the National Basketball Association," Labour Economics, Elsevier, vol. 18(3), pages 381-388, June.
    11. repec:lan:wpaper:3551 is not listed on IDEAS
    12. James Hill & Jason Taylor, 2008. "Do Professional Sports Unions Fit the Standard Model of Traditional Unionism?," Journal of Labor Research, Springer, vol. 29(1), pages 56-67, March.
    13. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    14. Peter Groothuis & Richard Hill & Timothy Perri, 2004. "Early Entry in the NBA Draft: The Influence of Unraveling, Human Capital and Option Value," Working Papers 04-05, Department of Economics, Appalachian State University, revised 2005.
    15. repec:lan:wpaper:3659 is not listed on IDEAS
    16. Peter A. Groothuis & James Richard Hill & Timothy J. Perri, 2007. "Early Entry in the NBA Draft," Journal of Sports Economics, , vol. 8(3), pages 223-243, June.
    17. Shane Sanders & Joel Potter & Justin Ehrlich & Justin Perline & Christopher Boudreaux, 2021. "Informed voters and electoral outcomes: a natural experiment stemming from a fundamental information-technological shift," Public Choice, Springer, vol. 189(1), pages 257-277, October.
    18. Kelly M. Hastings & Frank Stephenson, 2015. "The NBA’s Maximum Player Salary and the Distribution of Player Rents," IJFS, MDPI, vol. 3(2), pages 1-9, March.
    19. Erin Lane & Juan Nagel & Janet S. Netz, 2014. "Alternative Approaches to Measuring MRP," Journal of Sports Economics, , vol. 15(3), pages 237-262, June.
    20. repec:lan:wpaper:3944 is not listed on IDEAS
    21. Frank TENKORANG & Bree L. DORITY & Eddery LAM, 2014. "Nba Endgame: Do Salaries Matter?," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 14, pages 51-62, December.
    22. Mourao, Paulo Reis, 2018. "Surviving in the shadows—An economic and empirical discussion about the survival of the non-winning F1 drivers," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 54-68.

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