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- Title
Should NBA Teams Sell the Farm for Superstars? Distribution of Player Investment and its Impact on Competitive Outcomes.
- Authors
Dsouza, Brent A.
- Abstract
Teams need more ability to invest due to luxury taxes and revenue sharing. Recruiting a star player involves a high opportunity cost to the franchise in the form of diminished cap space or sacrificing future assets like draft picks and possible role players. Therefore, resources must be allocated in a way that would maximize their competitive performance and intern revenue. This research collects archival data from twenty-four teams over thirty-two seasons (1990-2022) and utilizes it to estimate how the allocation of player investment affects a team's competitive outcome. The research uses a panel data regression to analyze the relationship between specific control variables and the outcome variable of interest. The findings of this paper show that marginally increasing the share of salary allocated to the top player increases the regular season winning percentage by 24.35. However, the study finds a weak correlation between paying higher for star-caliber players and a team's postseason performance/ likelihood of winning a championship.
- Subjects
NATIONAL Basketball Association; REVENUE sharing in sports; OPPORTUNITY costs; BASKETBALL players; SOCIAL sciences
- Publication
International Journal of High School Research, 2023, Vol 5, Issue 7, p22
- ISSN
2642-1046
- Publication type
Article
- DOI
10.36838/v5i6.5