Pay Differential in Sports Based on Performance

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The salary gap between genders has been a predominant issue in the sports arena. Women are continually paid less than their male counterparts, but men experience pay differentials between each other in some sports. In male dominated sports, such as hockey, baseball, and basketball, there is a variation in an individual’s salary that adversely affects the team’s performance and vice versa. In a capitalist society, everybody is paid what their work is worth. Sports such as hockey, basketball, and baseball are pay-for performance sports, in that the players are paid what their skills are worth to the team. The less common a desired talent is, the more money an athlete will make because of it. There has been a continuous debate about how athletes should be paid. Is a defensemen in hockey who can score as valuable as a forward or more so? Is a catcher in baseball who can hit multiple homeruns in a season as valuable as a star pitcher?

Many researchers use economic theories to analyze “Pay-For-Play” or the idea that athletes are paid better for a better performance. In order to examine athlete’s salaries certain definitions need to be established beforehand. Overpaid athletes are not athletes are not players who are paid more than what they are worth, but rather are the top earners in their sport. Underpaid athletes are athletes who are paid less than the average player. It needs to be acknowledged that the success of a team is not just dependent on salary, but also coach and managerial input that are often omitted from research papers.

The following examines the idea of pay-for-performance in hockey, baseball, and basketball. The correlation between a team’s performance and the individual salaries of the players are examined. Whether or not being a free agent or having a signed contract and the influences these may have on an athlete’s effort exerted are also looked at. Hockey, baseball, and basketball are all pay-for-performance sports where the best performing players are paid top salaries. Idson & Kahane (2000) used the National Hockey League (NHL) to examine coworker productivity and its influence on salary. Because the statistics of a team’s performance and the salary of each player are publicly recorded and readily available, the information was considered accurate and ideal to use in the investigation. Idson & Kahane (2000) asked the question as to whether an individual’s special attributes were rewarded/valued differently (in the form of a higher salary) in a variety of environments or in special cases. The investigators got the statistical data from Hockey News [February 8, 1991 and November 15, 1991] and the Hockey News Complete Hockey Book that compiled data from various years. The final data set of Idson and Kahane (2000) contained data on 930 players from the 1991-92 and 1992-93 seasons. The points and plus/minus interaction were statistically significant at the 10% level indicating that an individual player performed at a higher level when playing with a team that contained better players. One of the main problems with studying athletes is that players can be traded midyear and essentially play on multiple teams in a given season. To counter this, the researchers placed an athlete on the team that reported the athlete’s total salary for the year.

There is no one way to examine a player’s skill in hockey. Idson & Kahane (2000) placed players as either a “forward” or “other”, such as defenseman or goalie. The strict dichotomy of this category might have had an adverse influence on their results because defenseman and goalies are not known for scoring points. Jones & Walsh (1988) made two categories for position in their data by labeling forwards and defensemen as forwards that would be examined by the points they scored. Goalies were the other category and were analyzed using goals allowed on average. Because defensemen do not score as many points as forwards, the researchers pointed out that...
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