Staggered contracts and profitable entry deterrence: an application to professional sports

Frascatore, Mark R.

doi:10.1007/bf01231468

Cited by 6 publications

(3 citation statements)

References 9 publications

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“…The cost of replacements (transfer fees, wages and search costs) would be too great to bear. Thus, staggered contracts reduce the hold‐up risks that clubs are confronted with (Frascatore, ). It is notable that Frick's study pre‐dates the growth of rolling, conditional contracts that we now observe in European football leagues.…”

Section: Shirking In Sportsmentioning

confidence: 99%

The Economics of Long‐term Contracts in the Footballers' Labour Market

Buraimo

Frick

Hickfang

et al. 2015

Scottish J Political Eco

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Peter Sloane's seminal article in this journal on the objectives of football clubs argued that utility maximising clubs would seek out player talent more aggressively than profit maximising clubs and that this accumulation of player talent by larger teams might need to be checked by redistribution of revenues. We suggest in this article that, in a context of rising revenues and high rewards, the pressures to acquire more and better talent so as to out‐perform other teams on the football pitch leads to a requirement for teams to practise effective contract management. Using a large dataset from the German Bundesliga, we find that players with longer term contracts perform better, ceteris paribus. Hence, selection effects in the award of long‐term contracts dominate moral hazard (shirking) effects in the Bundesliga.

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Section: Shirking In Sportsmentioning

confidence: 99%

The Economics of Long‐term Contracts in the Footballers' Labour Market

Buraimo

Frick

Hickfang

et al. 2015

Scottish J Political Eco

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“…The study concluded that moral hazard is a widespread phenomenon, even in professional football, and that player wage differences can be explained to a large extent by differences in individual performance, with differences in player performance significantly reduced in the final year of the contract. Mark R. Frascatore [4]analyzes and proves that the strategy of offering amazing long-term contracts to star players can reduce the wage bill of existing leagues.…”

Section: Literature Reviewmentioning

confidence: 99%

Model Prediction of Factors Influencing NBA Players’ Salaries Based on Multiple Linear Regression

Zhao¹

2022

Advances in Economics, Business and Management Research

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With the commercialization of sports, the main concern of the various leagues is how much to pay a player, especially a star player or superstar. This paper uses the NBA league as an example to investigate the main factors affecting players' salary levels. 14 indicators such as height, weight and Win Share of players who played more than or equal to 10 times in the NBA league in the 2017-2018 season were selected. The aim is to build a regression model to select the independent variables that have a significant effect on the salary level. The result shows that NBA players' individual abilities have a strong positive relationship with their salaries and their team-related indicators do not have a significant impact on their salaries. Finally, based on the NBA players' salary model, some suggestions on salary management were provided to the Chinese Basketball Association.

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“…To overcome the hold-up problem, a number of solutions has been proposed in the literature, including, among others, the assignment of property rights and changes in the structure of governance to allow for the incentives of the partners involved in a transaction to be aligned (Grossman and Hart 1986, Aghion and Tirole 1997, Frascatore 1997. Alternatively, Aghion et al (1994) or Wait (2005) suggest a contract design that can guide the ex-post renegotiation process, while Felli and Roberts (2015) and MacLeod and Malcomson (1993) discuss improving market contracts, and Baker et al (2002) emphasize the value of future relationships (relational contracts).…”

Section: Literaturementioning

confidence: 99%

The dynamics of productive assets, contract duration and holdup

Goetz

Yatsenko

Hritonenko

et al. 2019

Mathematical Social Sciences

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The owner of an asset often transfers the right to use or exploit that asset to an agent in exchange for a rent. A limited time of the license and the failure of the owner's commitment to compensate the agent for any asset improvement are likely to lead to underinvestment (holdup). In this study, we analyze the optimal length a contract would need to have to maximize the owner's income in the short-and long-run. We determine the design of a sequence of renegotiation-proof, overlapping, fixed time contracts that allows eliminating the holdup problem. The obtained outcomes are tested and illustrated on a specific problem (land lease and soil quality). Numeric simulation demonstrates that the most severe version of the holdup problem arises when the lease contract is not long enough for farmers to make any investment in the soil quality (less than 3 years on calibrated data).

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Staggered contracts and profitable entry deterrence: an application to professional sports

Abstract: long-term contracts, entry deterrence, professional sports, JEL classification, L14, J23,

Cited by 6 publications

References 9 publications

The Economics of Long‐term Contracts in the Footballers' Labour Market

The Economics of Long‐term Contracts in the Footballers' Labour Market

Model Prediction of Factors Influencing NBA Players’ Salaries Based on Multiple Linear Regression

The dynamics of productive assets, contract duration and holdup

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