Player Remuneration in Professional Team Sports Leagues: Is there a Trade-off between Pay and Contract Length? Empirical Evidence from the NBA

Until recently, the transfer of professional teamplayers between European clubs placed limits on the operations of a free market in that there were rules restricting the terms placed on such transfers. However, the ruling of the European Court of Justice in December 1995 in the “Bosman case” declared that such arrangements were contrary to the provisions of article 48 of the EEC treaty. The effects of the ruling –a redistribution of property rights from the clubs to the playersinduced an increase of average player salaries and longer contract duration. Using data from the National Basketball Association (NBA) the paper discusses a highly similar reallocation of property rights in North America and tests empirically the -so farinconclusive question, if remuneration and contract-length are complementary or substitutes. Is there a Trade-off between Pay and Contract Length in Professional Team Sports? 1