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Activity Number:
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256
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Type:
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Invited
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Date/Time:
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Tuesday, August 10, 2004 : 2:00 PM to 3:50 PM
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Sponsor:
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Section on Statistics in Sports
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| Abstract - #300106 |
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Title:
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Measuring the Impact of Free Agency on Professional Team Sports in North America
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Author(s):
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Michael J. Mondello*+ and Joel Maxcy
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Companies:
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Florida State University and Ithaca College
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Address:
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114 Tully Gym , Tallahassee, FL, 32306,
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Keywords:
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competitive balance ; professional sports ; free agency
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Abstract:
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This paper considers the effects on competitive balance (CB) given institutional changes permitting professional athletes to become free agents. Economists advocate that free agency will not alter distribution of talent because players remain directed to their highest-valued user. Unrestricted free agent rights have been present in Major League Baseball (MLB) and the National Basketball Association (NBA) since the late 1970s, but were unavailable in the National Football League (NFL) and National Hockey League (NHL) until the 1990s. Empirical tests in MLB offer limited evidence that free agency has changed CB. This study develops time-series regression models for other leagues. Alternative measures of CB accounting for seasonal dispersion in team win-percents and outcomes are derived for the 1951-2002 seasons. Results from the NHL provide clear evidence of improved CB since free agency. Evidence of NFL improvement is just short of statistical significance. There is little effect on the NBA, although imposition of a payroll cap in 1984 has adversely affected CB. Changes in CB given alternate free-agent rules varies accross leagues, but in no case is CB critically affected.
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