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Labor Markets in Professional Sports

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1 Labor Markets in Professional Sports

2 An Overview Labor Markets Human Capital Monopsony and Free Agency
Salary Arbitration Superstars and Winner-take-all When to turn pro?

3 What would Babe Ruth earn today?
Ruth earned $80,000 for the 1930 New York Yankees 1930 CPI = 16.7 2011 CPI = Ruth’s 1930 salary in 2012 dollars is: (80,000)( /16.7) = $1,077,552 “I know, but I had a better year than Hoover.” Reported reply when a reporter objected that the salary Ruth was demanding ($80,000) was more than that of President Herbert Hoover's ($75,000)

4 Average Salaries in Pro Sports (Nominal $)
MLB NFL NHL NBA 1970 29,303 41,000 25,000 1972 34,092 45,000 1974 40,839 56,000 65,000 1976 51,501 78,000 86,000 1978 99,876 100,000 92,000 139,000 1980 143,756 117,000 108,000 170,000 1982 241,497 157,000 120,000 212,000 1984 329,408 279,000 118,000 275,000 1986 412,520 288,000 144,000 375,000 1988 438,729 307,000 172,000 510,000 1990 597,537 430,000 211,000 750,000 1992 1,082,667 551,000 368,000 1,100,000 1994 1,168,263 674,000 562,000 1,441,000 1996 1,119,981 807,000 892,000 1,979,000 1998 1,398,831 1,000,000 1,167,713 2,818,000 2000 1,895,630 1,116,100 1,642,590 2,901,595 2002 2,295,694 1,300,000 1,790,000 3,893,801 2004 2,486,609 1,333,333 1,830,000 3,748,659 2006 2,866,544 1,947,898 1,751,845 4,176,241 2008 3,154,845 2,205,792 2,234,225 5,365,000


6 Labor Market: Competitive Model
$ S1 w1 D1 Labor L1

7 Labor Supply Income-leisure tradeoff Wage increase causes:
Substitution Effect Income Effect (work effort rises) (work effort falls) $ S IE > SE w* Backward-bending labor supply curve SE > IE Labor

8 Labor Demand Profit-max decision by employers
Hiring Rule: hire until MRP = w Reflects DMR MRP = MP* MR MP = ∆Q/ ∆L MR = ∆TR/ ∆Q = P $ w1 w2 MRP L1 L2 Labor

9 Estimating a Player’s MRP
Scully (1974): two-step model using data PCTWIN = f(PRODUCTIVITY) REV = g(PCTWIN)

10 TSA = Team Slugging Average
TSW = Team Strikeout – Walk Ratio NL = National League CONT = Contender OUT = Out of contention SMSA = Market Population MARGA = Differences in Fan Interest STD = Stadium Age BBPCT = % Black Players Scully’s Results PCTWIN = TSA TSW – NL CONT – OUT REV = -1,735, ,330 PCTWIN + 494,585 SMSA MARGA + 580,913 NL - 762,248 STD – 58,523 BBPCT 1 point increase in TSA raises PCTWIN by 0.92 1 point increase in PCTWIN raises REV by $10,330 MRP per point = MP x MR = (0.92)(10,300) = $9,504 Avg Hitter: .340 1/12 of team’s offense MRP = ($9,504)(340)(1/12) = $270,000

11 Results Scully (1974): Players paid 10-20% of MRP Krautman (1999)
Apprentice: 27% of MRP Journeyman: 85% of MRP Free agents Alternative Explanation: Low salaries of younger players may reflect general training

12 Example: The Mark McGwire Show
During McGwire’s record-breaking run at the home run record in 1998, attendance in St. Louis increased by 1.5 million. Even if McGwire was only half of the reason, just the gate portion of his MRP that year was around $15 million! McGwire earned $8.9 million that year. Wins Score Approach: #2 and #3

13 Applications Decrease in television revenues due to fan preference for drama shows Increase in the number of players available A minimum salary set above the equilibrium wage

14 Human Capital Theory General Training Specific Training
Productivity Earnings General Training Increases MP to all employers Specific Training Increases MP to specific firm

15 Who Pays for Training? Hiring Rule: MRP = w $ MRP1 = untrained worker
MRP1 – T = trainee’s net productivity MRP2 MRP2 = trained worker Benefit MRP1 Cost MRP1 - T Training period Hiring Rule: MRP = w t1 time GT: worker pays in form of lower training wage ST: worker and firm share costs

16 Minor Leagues Baseball First Contract Season:
Single A: $1100/month AAA: $2500/month Open to negotiation after that Meal money: $20 per day

17 Economics of Superstars
Forbes Top 100 Celebrities and CEOs

18 Economics of Superstars
Rank order tournaments: golf, tennis, auto racing difficult to measure absolute effort (MRP) when many factors are involved relative productivity matters rather than absolute $ MC MR1 Increasing MC of effort requires large difference between first and second place for optimal effort. MC′ MR1′ MR2 E2 E1 Effort

19 Which of the following achievements would please you more?
You win fortune without fame: you make enough money through successful business dealings so that you can live very comfortably for the rest of your life. You win fame without fortune: for example you win a medal at the Olympics or you become a respected journalist or scholar.

20 You are offered a banned performance-enhancing substance that comes with two guarantees: 1. You will not be caught You will win every competition you enter for the next five years, and then you will die from the side effects of the substances. Would you take it? Yes No Prisoner’s Dilemma?

21 When to Turn Pro? 1 million high-school football players - roughly 150 will make it to the NFL Odds of a high-school player going professional in football - approximately 1 in 6,000 About 500,000 high-school basketball players - roughly 50 to the NBA Less than 3% of all college seniors will play one year in professional basketball Odds of a high-school player going professional in basketball - approximately 1 in 10,000

22 When to Turn Pro? Why would a player choose to leave early?
Must compare the marginal cost and marginal benefit of staying in school versus leaving. Marginal Benefit of waiting the extra year is: MB = (1 + g)S0 [where S0 is the pro salary and g is the growth rate in the salary] Marginal Cost of waiting is the foregone salary plus the sacrifice on the use of that salary: MC = (1 + r)S0 [where r is the interest rate]

23 When to Turn Pro? As usual, the player is best off when MB = MC
Player should stay in school as long as g > r Player should turn pro when r > g (1 + g)S0 = (1 + r)S0

24 Sample Problem Suppose a junior could earn a salary of $750,000 by declaring himself eligible for the draft. If he waits until his senior year he can make $900,000. If the interest rate is 4% should he stay the extra year? g = (900,000 – 750,000)/750,000 = 0.20 or 20% Assume the pro league plans to institute a rookie salary cap of $750,000 at the end of the player’s senior year. Should the player play his senior year? g = (750,000 – 750,000)/750,000 = 0.00 or 0% Now consider that the player has a 12% chance of having a career ending injury in his senior year and thus having a median income of $40,000 per year. Would he consider going pro or not? g = (796,800 – 750,000)/750,000 = or 6.2%

25 Labor Market Imperfections
Monopsony Reserve Clause Salary Caps Player Draft Arbitration Unions

26 Reserve Clause & Free Agency
MLB: 1976 After 6 years of service NBA: 1983 After 5 years of service NHL: 1993 After 4 years of service NFL: 1994 Restrictions: Right of First Refusal Compensation requirements Salary caps

27 Coase Theorem Revisited
Reserve Clause vs. Free Agency Initial assignment of property rights does not affect efficiency of resource allocation Only difference is who gets larger share of pie

28 Final Offer Arbitration
MLB 1972 Arbitrator must select either team’s or player’s final offer—No compromise! must base decisions on info regarding player performance and salaries of comparable players can not consider financial condition of team Overpaying a player leads to further overpaying down the road : Owners-291, Players-214 Wage WT WA WP


30 Salary Caps NBA NFL “soft cap” Percentage of league revenues (51%)
$58.68m in NFL Hard cap Percentage of league revenues (65%) $116m for 2008 $127m for 2009 No cap for 2010 Maximum Player Salaries Minimum Player Salaries Minimum Team Salaries = 86% of cap

31 Monoposony Worksheet Example Sole buyer of labor
Enables employer to exert market power by paying lower wages Monopsonist hires until MRP = ME and sets wage off S curve Lm < Lc wm < wc < MRPm $ ME S MRPm wc wm D = MRP Lm Lc Labor

32 Player Drafts Allocation of new players by reverse order finish
NBA: 7  2 rounds NFL: 12  7 rounds Coase Theorem applies

33 Labor Unions and Labor Relations

34 Economics of Labor Unions
SU $ Free Market: wN, LN Union Outcome: wU, LU Unemployment Inefficiency (DWL) unemployment SN wU wN DWL D LU LN Labor

35 Bilateral Monopoly Union behaves as monopolist:
Sets employment where MR = S Sets wage off D curve WU, LU Employer behaves as monopsonist: Sets employment where D = ME Sets wage off S curve WM, LM $ ME S wU wM MR D LU LM Labor WU – WM = Range of Indeterminacy

36 Bargaining and Strikes
Each of major sports had a work stoppage during 1990s (when overall labor strife was pretty tame) Why resort to a strike/lockout? Irrational behavior? Excessive optimism? Excessive uncertainty? Political gamesmanship?

37 Contract Zone Strike fund Alternative jobs Union threat point = WU
Acceptable to Union Contract Low Wages High Wages Zone Acceptable to Employer WE = employer threat point Strike insurance Replacement workers

38 Baseball’s First Strike
1912 Detroit Tigers Ty Cobb vs Ban Johnson

39 1972 Baseball Strike Main issue was player pension and health benefits
Uncertainty Owners were over-optimistic (believed players' threat point was lower than it was) MLBPA was optimistic due to Commissioner’s behavior Strike lasted 13 days (including 9 days at the start of the season) Owners lost $5m in revenues Players lost salaries but won on pension demands Arbitration was added to CBA : a strike/lockout preceded every CBA

40 1987 NFL Strike Main issue: free agency
Uncertainty: Gene Upshaw and demise of USFL Strike lasted 4 weeks (weeks 3 – 6) Replacement players cost $1000 per game; teams profits rose by more than $100k per game Players lost $80m in salary 1988 NFLPA Decertification

41 Hockey: The Lost Season
Lockout Whole season canceled Main issues: cost certainty (linking salaries to league revenues) Uncertainty: league losses Outcome: $39m salary cap; salaries at no less than 54% league revenues; maximum player salary at 20% of cap; salaries rolled back by 24% Bob Goodenow Gary Bettman Revenue sharing; luxury tax; 5% pay cut Revenue sharing; luxury tax; 24% pay cut $40m salary cap linked to league revenues $52m salary cap linked to league revenues $42.5m salary cap linked to league revenues $49m salary cap linked to league revenues Season Canceled!

42 1998-99 NBA Lockout Main issue: hard salary cap; revenue sharing
Uncertainties: lackluster attendance; turmoil within NBPA; rising power of agents (stars vs benchers) 191 day lockout Outcome: Individual player salary cap; players guaranteed 55% of BRI; limit on raises for “Larry Bird” free agents  50 game season NBA would be paid TV contract money even though games weren’t played. Arbitrator ruled NBA did not have to pay Players with guaranteed contracts

43 Discrimination in Sports

44 Jackie Robinson 1947 Brooklyn Dodgers Larry Doby 1947 Cleveland Indians Kenny Washington and Woody Strode 1946 Los Angeles Rams Willie O’Ree 1958 Boston Bruins Earl Lloyd 1950 Washington Nationals

45 Labor Market Discrimination
Becker “rational choice” model Source of prejudice: Employers Employees Customers Gary Becker Nobel Prize (1992)

46 Employer Discrimination
Hiring Rule: w = MRP Workers with same MRP will be paid same wage Assume: MRPB = MRPW d = discrimination coefficient Perceived wage of black player: w*B = (1+d)w “Psychic cost” Example: w = $20 d = 0.20 w*B = (1.20)(20) = $24

47 In a picture… $ LB LW Note:
Black wage as perceived by discriminating firm w*B = $24 w = $20 wB = $16.67 MRPB = MRPW Black wage if firm hires same number of black works as white workers LB LW Players Note: > Owners must pay for the right to discriminate in the form of lower profits. > Competitive markets force discriminators out of the market. Employment if blacks are paid same wage as whites: w = $20

48 Monopoly Power Baseball has legal cartel
Jackie Robinson and Branch Rickey 1947 contract signing Monopoly Power Baseball has legal cartel Bill Veeck foiled in 1943 Dodgers/Indians reintegrated in 1947 Integrated teams tended to dominate Dodgers, Giants, Indians, & Braves Red Sox & Phillies last to integrate Great Celtic teams built on integration Moses “Fleetwood” Walker 1880s A.A. Bill Veeck and Larry Doby 1947 contract signing

49 Employee Discrimination
Early whites didn’t want to work with blacks Feel psychic cost Demand higher pay to work with blacks What would employer do? Segregation vs Discrimination Dodgers protested Robinson’s presence Bud Fowler 1885 Read unexpurgated text of Durocher’s speech

50 Customer Discrimination
Employer punished for tolerance Celtics of the 1980s? George Preston Marshall & NFL’s Redskins Last NFL team to integrate: 1962 “Burgundy, Gold, and Caucasian” Southern focus Forced by U.S. government Facility on government land Nardinelli and Simon (1990) Examined baseball card prices for black and white players PB < PW by about 10% "We'll start signing Negroes when the Harlem Globetrotters start signing whites."

51 Measuring Discrimination
White Wage Function Ww = $500 $ WB = $200 $500 = Ww How much of the wage gap, if any, is due to discrimination? Black Wage Function $260 = W*B $200 = WB SAB SAw Slugging Average Ww – WB = observed wage gap = 500 – 200 = 300 W*B – WB = explained wage gap = 260 – 200 = 60 Ww – W*B = unexplained wage gap = 500 – 260 = 240

52 Statistical Discrimination
The use of group averages to judge individual productivity levels Profit-maximizing strategy to reduce cost of hiring French-speaking Canadian players English-speaking Canadian players F E MRPE MRPF productivity

53 Economic Findings on Pay Discrimination
There is evidence that pay discrimination existed in pro team sports in the past. But by the mid-1990s, pay discrimination is pretty much gone. Only a negligible premium for the very best white players in the NBA appears to remain. Interestingly, in the NHL, there appears to be pay discrimination against French-speaking players.

54 Role Discrimination? NFL 2009 Position White Black Quarterback 81% 16%
Wide Receiver 11% 87% Source: 2010 Racial and Gender Report Card

55 Racial Composition of Athletes, 2010
Race MLB NFL NBA White 60% 30% 18% African American 9% 67% 75% Latino 28% 1% 3% Asian 2% Other 0% <1% Source: 2010 Racial and Gender Report Card

56 Racial Composition of Head Coaches, 2010
Race MLB NFL NBA White 68% 81% 70% African American 14% 19% 27% Latino 17% 0% 3% Asian <1% Source: 2010 Racial and Gender Report Card

57 Racial Composition of Division I Head Coaches (men’s teams), 2007-08
Race Basketball Football White 76% 94% African American 23% 5% Latino 0.7% 0.5% Asian 0.0% Native American 0.3% Source: 2009 Racial and Gender Report Card

58 Gender Discrimination
Harder to measure Men & Women seldom in same sport/venue Even same sport may vary Tennis, figure skating, & basketball

59 Top Money Winners: ATP vs WTA
ATP Money Leaders WTA Money Leaders Rank Player Country Earnings 1 Novak Djokovic Serbia $ 3,323,881 Victoria Azarenka Belarus $ 4,008,080 2 Roger Federer Switzerland $ 2,316,585 Maria Sharapova Russia $ 2,083,350 3 Rafael Nadal Spain $ 1,725,465 Agnieszka Radwanska Poland $ 1,650,459 4 Andy Murray Scotland $ 1,053,481 Caroline Wozniacki Denmark $ ,188 5 David Ferrer $ ,998 Petra Kvitova Czech Rep $ ,690 6 Juan Martin del Potro Argentina $ ,238 Kim Clijsters Belgium $ ,691 7 John Isner US $ ,701 Sara Errani Italy $ ,265 8 Tomas Berdych $ ,801 Marion Bartoli France $ ,326 9 Jo-Wilfried Tsonga $ ,678 Julia Goerges Germany $ ,670 10 Radek Stepanek $ ,048 Angelique Kerber $ ,207 11 Nicolas Almagro $ ,736 Ana Ivanovic $ ,784 12 Milos Raonic Canada $ ,883 Maria Kirilenko $ ,903 13 Jurgen Melzer Austria $ ,313 Svetlana Kuznetsova $ ,038 14 Leander Paes India $ ,103 Vera Zvonareva $ ,983 15 Kei Nishikori Japan $ ,245 Samantha Stosur Australia $ ,344 Source: As of April 16, 2012.

60 Purses in Golf’s Majors (in millions): 2011 for PGA, 2010 for LPGA
Men Women Masters $7.5 Kraft Nabisco $2.0 US Open 7.5 3.25 British Open 7.3 2.5 PGA LPGA 2.25 Source: and

61 Gender Discrimination
Harder to measure Men & Women seldom in same venue Often don’t play same sport Even same sports may vary Tennis, figure skating, & basketball Direct competition? Jockeys & auto racing & golf Are women always victims?

62 Title IX Part of 1972 Education Amendments to Civil Rights Act
Mandated equal access & opportunities for women in federally funded education programs 3 ways to comply Funding proportional to enrollment Show history of expansion Interests of students accommodated Few programs in compliance But NCAA certifies all Title IX reads: “No Person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any educational program or activity receiving federal financial assistance.” Marietta College Roster Slots Male Enrollment 726 51.2% Male Athletic Participation 298 61.3% Female Enrollment 692 48.8% Female Athletic Participation 188 38.6% Total 1418 100% 486

63 Impacts of Title IX Good Bad Spurred rapid growth in women’s sports
Though most of growth early on Gave grounds to seek remediation Bad What happened to women coaches? Was ~80% of women’s programs - now ~ 44% Women’s programs lose money Can meet in many ways – Cut men’s programs rather than expanding women’s

64 Amateurism and College Sports

65 Overview College sports is similar in many economic ways to pro sports, but the relationship between the athletics department and the university deserves careful attention Conferences and the NCAA play an important role in limiting competition, negotiating TV broadcasts, and managing competitive balance. NCAA player rules have dramatic impacts on the economic welfare of college athletes. Colleges enjoy special tax and antitrust status for much the same reason as pro owners.

66 Amateurism & the Olympic Ideal
Ancient Olympics (776 BC-393 AD) Even central myth hypocritical Winners well rewarded by home cities Modern Olympics (1896-present) “mens sana in corpore sano” Amateurism reflected class snobbery Laborers not considered amateurs

67 American College Sports
Commercialism & Corruption always present 1st competition: 1852 Harvard v. Yale in crew Sponsored at a resort by a railroad company 2nd competition brought first eligibility scandal Harvard’s coxswain had already graduated! Second sport: Football Rutgers v. Princeton (1869): First academic scandal 4 Rutgers players were flunking math University of Michigan (1894) 7 of 11 starters were not registered students

68 NCAA as “Incidental Cartel”
Restricts movement Prevents “tramp athletes” Monopsony power Players have little mobility Drives down pay In the movie Horsefeathers Groucho Marx goes to a speakeasy find football players for Huxley University.

69 NCAA Recruiting Game OSU High Low UM 50 20 90 75 Dominant Strategy?
Competitive Equilibrium? Cooperative Optimum?

70 Athletic Scholarships
Citadel UVA VMI VPI UMD Villanova Boston College NCAA forbade them until 1956 NCAA rules often ignored “Seven Sinners” Bear Bryant evaded scholarship limits by putting recruits on the track team

71 The “Student Athlete” “Student athlete” is a legal term
Disavows desire for pay Colleges do not have to provide workmen’s compensation Stars worth more than tuition (Brown 1993; 1994) In football >$500k/yr In basketball >$800k/yr

72 The Value of an Education
An athlete who…graduates is overpaid” Joe Paterno Do athletes get an education? On average athletes graduate at the same rate as non-athletes Handout Long and Caudill (1991) Male college athletes earn more than non-athletes

73 Why do Some Sports do Worse?
Some athletes less prepared Lower SATs, HS rank, HS GPA True for basketball & football Not so for softball or golf Is dropping out a rational investment? Go to Florida State to get to NFL? Go to Harvard to become a physicist?

74 Academic Standards Preserve academic integrity
Don’t recruit students who cannot read Creates barrier to entry Established powers keep out new entrants Competitors cannot pay athletes more Now cannot take weaker students either

75 History of Standards Nothing uniform until 1965
1.600 Rule To play needed projected GPA 1973: Replaced with 2.00 rule Ostensibly higher standards Actually needed C+ average in high school Could take any courses Worst abuses came under this rule The sad case of Chris Washburn 470 out of 1600 on SAT

76 Proposition 48 (1983) Provisions Was Prop 48 Racist?
Needed SAT=700 & GPA=2.00 in 11 core courses If not: no scholarship in 1st year & cannot play Was Prop 48 Racist? Disproportionately affected black athletes SATs for blacks average 200 points lower Are SATs a valid predictor of college performance? Still – graduation rates rose for whites and blacks A concession: Partial Qualifiers Could receive aid if pass one criterion

77 Proposition 42 (1989) Meant to eliminate partial qualifiers
Loophole restored – and then some Under Prop 48 scholarship “counted” Under 42 doesn’t count against limit

78 Proposition 16 (1992) Created sliding scale
Lower GPA permitted if SATs higher & vice versa Clearinghouse evaluated individual courses Allows partial qualifiers to practice Challenged in court Students claimed disparate racial impact Won initial case Verdict overturned on technicality NCAA does not disburse federal funds

79 Latest Revision (2003) Eases initial restrictions
14 core courses (up from 13) Sliding scale 2.0 core GPA requires 1010 SAT 3.55 core GPA requires 400 SAT No Partial Qualifier status Stiffens progress requirements Need 40% of degree requirement after 2nd year Need 60% of degree requirement after 3rd year Need 80 % of degree requirement after 4th year

80 Academic Progress Rates (APR)
School scored for student progress 1 point if athlete stays enrolled 1 point for staying academically eligible Computes % of total possible points Consider Big State U’s basketball team 52 possible points (13 players *2 points*2 semesters) If one player is ineligible in spring – lose 1 point APR=100*(51/52)=981 If its score falls below 925, BSU could lose scholarships

81 Entry Barrier or Academic Standards?
Small schools May be unable to compete with larger schools Faculty fear Greater pressure to pass Proliferation of garbage classes

82 Profitability of Specific Programs at Division I-A Schools (measured in $1000s)
Sport 1997 1999 2001 2003 All Men’s Sports 3,300 4,000 4,900 6,100 Football 3,200 3,700 4,700 5,920 Men’s Basketball 1,600 2,020 Women’s Basketball - 500 - 600 - 700 - 775 All Women’s Sports -2,300 -2,400 -3,200 -3,600 Source: Table 11.8, Leeds and Von Allmen, 2008 NCAA Financial Database Football Coaches Salary Database

83 March Madness NCAA has 14-year, $10.8 billion contract: CBS & Turner Sports Tourney revenue now $810 million/year $770m in TV rights $40m from ticket sales, etc. ~60% goes to Division I conferences & schools $167m distributed according to program size Number of sports offered Number of athletes on scholarship. $167m distributed according to performance Conference gets 1 "unit" per member game Each unit worth ~$222,000.

84 Non-Profit vs Profit Seeking
Principle-agent problem Growing payroll costs for sports programs

85 Clicker Review

86 A college player should stay in school when:
staying in college another year increases his earnings. staying in college another year increases his earnings above the interest rate. staying in college another year increases his earnings below the interest rate. staying in college another year reduces his earnings.

87 Salaries have risen dramatically in the NBA because of the dramatic rise in
the quality of the players the opportunity cost faced by players the market value of the product the players produce the strength of the Players’ Association

88 According to the Coase Theorem, free agency should leave the distribution of talent
more equal than before less equal than before exactly equal among all teams the same as it always was

89 Free agency came to MLB and the NFL in different ways because
the football owners practiced collusion while the baseball owners did not the MLBPA had to rely on the courts the NFLPA had to rely on the courts the NFL had a limited exemption from antitrust laws, and baseball did not

90 In November 1989, the NFL Players Association, the union for NFL players, disbanded. Why?
The union was bankrupt due to failed strikes in 1982 and 1987. The players were upset with the union’s lack of ability to gain full free agency for its members and wanted to bring in new leadership. The union wanted to remove the NFL’s non-statutory labor exemption and pursue an antitrust claim against the league. This could only be done by decertifying the union. The court had declared in Powell v. NFL (1987) that the union was guilty of conspiring against the NFL in order to raise wages.

91 Most mainstream economists view discrimination as
a taste. overstated. a mistake due to the misperception of people’s true skills. a way for capitalists to keep the working class from uniting.

92 Integration was much faster in football than in baseball because
of the competition provided by a rival league the owners in the NFL were less discriminatory than the owners in MLB football fans are far less discriminatory than baseball fans football had to get the approval of liberal-minded colleges and universities

93 It is difficult to determine whether women are victims of discrimination in professional sports because women have brought far fewer discrimination suits women seldom compete with men in the same event women aren’t as good at sports as men it is difficult to separate out racial effects from gender effects

94 The notion of a “student-athlete” was developed in order to
assert the primacy of education eliminate under-the-table payments to athletes keep athletes from filing for workman’s compensation prevent gambling scandals

95 The University of Michigan’s Athletic Department cannot break even because
it is very poorly run. its costs rise as quickly as its revenues rises. it gives much of what it makes to the academic side of the university. NCAA rules prohibit Athletic Departments from making a profit.

96 The shift to “two-platoon football” was a way for
professional teams to turn profits into losses colleges to exploit “student-athletes” the NFL to exert monopsony power over its players colleges to spend increasing revenues

97 The monopoly power that the NCAA held over TV networks fell apart due to
The prisoner’s dilemma The winner’s curse The outlawing of the reserve clause The entry of new schools into the NCAA

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