Wages and player performance in the Philippine basketball association
Date
2009-11
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Abstract
In this thesis paper, we attempt to measure the economic loss to the players of teams participating in the Philippine Basketball Association (PBA). The study employed a mode of research in which estimates of players' marginal revenue products were compared to salaries, and subsequently approximating the presence, if any, and degree of monopsonistic exploitation in this particular labor market. The two-step process, which was derived from a similar study performed by Scully [1974] on Major League Baseball (MLB), involved estimating how various measures of team performance affect winning percentage. The effect of winning percentage on team revenue is estimated afterwards. Then, a player's MRP is estimated by multiplying his contribution to winning by its impact on revenue. The subsequent comparison between the players' MRP figures and actual salaries showed that players are actually overpaid, especially as we go down the hierarchy of talent.
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Keywords
Philippine basketball association, Philippine basketball, Player wages, Player performance, Basketball association