Salary Determinants and Equality in the NHL Chris Gant

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Salary Determinants and Equality in the NHLChris
Gant
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The Problem

• Are players being paid fairly or is there a
  degree of monopsonistic exploitation in the NHL?
  
• Salary equality w/ and w/out a salary cap Are
  unions looking out for all or just the highest
  paid players?

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Literature Review

• Bradt (1991)
• Harder (1989)
• Marchand, Smeeding, and Torrey (2006)
• Scully (1974)

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Theory
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Data

• NHL Centers playing in 2003-04 pre-lockout season
  and 2005-06 post-lockout season. (n 124)
  
• Data found from online databases
• USA Today salary database
• Yahoo.com statistical database

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Empirical Model

• Income Determinates
• Y a B1 A B2 SOG B3 GP
• L (F) Salary Equality
• Fi i / n
• Li Si / Sn

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Dependent Variable

• The dependent variable (Y) in this study is
  salary.
  
• Mean salary increases from 2003-04 to 2005-06
• Standard deviation lowers over 2 seasons

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Independent Variables

• Various performance statistics were selected to
  be tested for correlation to salary
  
• Goals, assists, points, SOG, PIM, etc.
• Only three had positive multivariate correlation
• Assists, Shots on Goal, Games Played

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Salary Determinants

• The following values were statistically
  significant with R2 .332
  
• B(Assists) 67,519.27
• B(Games Played) -43,870.33
• B(Shots on Goal) 9,323.08

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Predicted vs. Actual Salary
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Summary

• Salary equality has improved slightly from the
  pre-lockout season to the post lockout season
  
• Monopsonistic power of team owners is present
• Highest paid players are highly overpaid as an
  affect of the winners curse and adverse
  selection
  

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Future Research

• More data is needed to show effects of salary cap
  over time
  
• Missing variables player experience, all star
  appearances, playoff appearances
  
• Future consideration on the affect the salary cap
  has on increased competition

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Questions?