Work Incentives and Salary Distributions in Major League Soccer

By Sonntag, Schooner J.; Sommers, Paul M. | Atlantic Economic Journal, December 2014 | Go to article overview

Work Incentives and Salary Distributions in Major League Soccer


Sonntag, Schooner J., Sommers, Paul M., Atlantic Economic Journal


JEL J41

Economists have argued that the size of superstar contracts in professional team sports may not only anger veterans on the team, but also adversely affect overall team performance (see, for examples, Wiseman, F., and Chatteijee, S. (2003). Team Payroll and Team Performance in Major League Baseball: 1985-2002. Economics Bulletin, 1(2), 1-10 and Sommers, P. (1998). Work incentives and Salary Distributions in the National Flockey League. Atlantic Economic Journal, 26(1), 119). Where team performance requires considerable cooperation among players, pay tends to be compressed relative to individual marginal products. In contrast, where team performance relies heavily on individual stars, pay among players may be more widely dispersed. (A standard reference on optimal pay structure is E. Lazear, Personnel Economics, 1995.) In professional soccer, cooperation and teamwork are essential. But, is pay relatively more dispersed among players on the more successful teams? This note examines the relationship between payroll and performance in Major League Soccer in 2011 and 2012.

Beginning in 2007, Major League Soccer (MLS) adopted the "Designated Player Rule." The rule initially allowed each MLS team to sign one player, with only $400,000 of the player's salary (however large) counted against the team's salary cap. The rule was dubbed the "Beckham Rule," after Los Angeles Galaxy soccer star David Beckham, who was the first player signed under this rule. Beckham's base salary in 2007 was $5.5 million (at a time when the team salary cap was $2.1 million). In 2010, each MLS team was allowed two designated players; teams could even sign a third designated player, if they paid a $250,000 luxury tax. The rule has thus enabled well-heeled MLS teams to sign lucrative deals with international stars, while dramatically changing how some team payrolls are distributed among team members.

To determine whether or not greater income disparity among players resulting from the "Beckham Rule" has had any effect on overall team performance, Gini coefficients were calculated for all MLS teams in 2011 (18 teams) and 2012 (19 teams). Player salary data are from www.mlsplayers.org/salary_info.html. The larger a team's Gini coefficient, the more unequal is the salary distribution. A Gini coefficient of 1 would represent complete inequality (one player earns all of the team's payroll) and a Gini coefficient of 0 would represent complete equality of the salary distribution. The means (standard deviations) of the GINI coefficient for all MLS teams in 2011 and 2012 were. 460 and .470 (.141 and .140), respectively.

Each MLS team plays 34 regular season games. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Work Incentives and Salary Distributions in Major League Soccer
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.