The NBA and the influx of international basketball players

Abstract

The determinants of salaries for professional athletes in the National Basketball Association (NBA) are examined to investigate how international athletes have fared relative to athletes trained in the United States. It is found that international basketball players were paid a large premium above other players of similar skills and characteristics for the 1996-97 and 1997-98 seasons, after which the premium disappeared. This temporary premium is likely attributable to a 'winner's curse' experienced by NBA teams before investing significant resources in scouting and evaluating international players.

Comparing Gaelic Football to the Determinants of Winning Performance in Australian Rules Football at Unit-Level

“…This trend has been noted within the top soccer leagues of England, Germany, Spain, Italy and France with a pattern of increasing numbers of players from non-indigenous nations was seen [9], and in America's National Basketball Association where a rule change led to an influx of foreign players [10]. Moreover, there was also a change in player recruitment in European football after the introduction of the European Union and their laws on immigration [11].…”

“…As football codes gained popularity and revenues increased the recruitment trends also altered -regardless of whether or not a draft system was in place -as teams could afford to look further afield for talent [9,10]. This trend has been noted within the top soccer leagues of England, Germany, Spain, Italy and France with a pattern of increasing numbers of players from non-indigenous nations was seen [9], and in America's National Basketball Association where a rule change led to an influx of foreign players [10].…”

The Winner’s Curse in Sports Economics

“…Hence the winner"s curse vanished. Eschker et al (2004) also found for any player -not only international players -that changing teams between seasons has a large negative impact on salaries; this suggests that between season player move may represent a market for "lemons" in which there is still a possibility for a team to be cursed. It is in view of alleviating this possible effect that mercato slots 16 have been introduced in European (football) leagues.…”

“…Michael Jordan was one of the most obvious cases in point. Overpayment of NBA rookie salaries is successfully tested in Eschker et al (2004). 13 A major aspect of a superstar player is precisely that its substitution elasticity is zero: it can only be substituted on the pitch by a "superstar proxy" or a second best player having not the same impact on scoring, the sporting outcome, and drawing attendance.…”

“…Econometric results (Burger and Walters, 2007) show that the winner"s curse lasts though in a weak form in MLB while it seems to have disappeared after two years in NBA with regards to international player transfers (Eschker et al, 2004). Mistakes have been made by NBA teams when evaluating foreign players in the first years when such international transfers started after 1989.…”