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Superstars in the National Basketball Association: Economic Value and Policy

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  • Hausman, Jerry A
  • Leonard, Gregory K

Abstract

An econometric analysis demonstrates that television ratings for NBA games are substantially higher when certain players ('superstars') are involved. Thus, these superstars are quite important for generating revenue, not only for their own teams but for other teams as well. Using the econometric analysis and additional information on attendance and paraphernalia sales, the authors estimate the value of Michael Jordan to the other NBA teams to be approximately $53 million. The positive externality superstars have on other teams can lead to an inefficient distribution of player talent. The authors examine several league policies that might be used to address the externality. Copyright 1997 by University of Chicago Press.

Suggested Citation

  • Hausman, Jerry A & Leonard, Gregory K, 1997. "Superstars in the National Basketball Association: Economic Value and Policy," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 586-624, October.
    • Handle: RePEc:ucp:jlabec:v:15:y:1997:i:4:p:586-624
    DOI: 10.1086/209839
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    References listed on IDEAS

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    1. Scott E. Atkinson & Linda R. Stanley & John Tschirhart, 1988. "Revenue Sharing as an Incentive in an Agency Problem: An example from the National Football League," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 27-43, Spring.
    2. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
    3. El-Hodiri, Mohamed & Quirk, James, 1971. "An Economic Model of a Professional Sports League," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1302-1319, Nov.-Dec..
    4. Whitney, James D, 1993. "Bidding Till Bankrupt: Destructive Competition in Professional Team Sports," Economic Inquiry, Western Economic Association International, vol. 31(1), pages 100-115, January.
    5. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
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