The Collective Bargaining Effects of NBA Player Productivity Dynamics

Abstract

We apply quintile regression methodology to player pay and performance data from the 1985-86 to 2005-06 seasons of the National Basketball Association (NBA). In addition to confirming a finding from Hakes and Turner (2007) of systematic bias in pooled OLS regressions of career paths for salary and productivity, the quintile analysis presents two important results regarding NBA salary structure. Unlike Major League Baseball (MLB), the highest ability veteran NBA players suffer salary suppression relative to the lesser-talented players in their debut-year cohort, indicating rents have been transferred from the most able players to players of lesser abilities. Also, while young NBA players in general suffer from salary suppression relative to free agents, as is well-reported in baseball, our regression results show that the highest-ability young players suffer the most salary suppression, and that the effects of the rookie salary cap in the 1995 NBA Collective Bargaining Agreement depressed salaries for young players of all ability levels.

Keywords: career dynamics, pay and productivity, professional basketball

JEL Classification: L83, J5