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Spring 2009

ISSN 0890-913X

Volume 24, Number 2

Categories: Education | Spring 2009

Teaching How Private Enterprise Works Using Professional Sports: A Brief Note on the Case of Individual NHL Players' Salaries

Richard J. Cebula, Jacksonville University

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TheJournalofPrivateEnterprise24(2),2009,165-174TeachingHowPrivateEnterpriseWorksUsingProfessionalSports:ABriefNoteontheCaseofIndividualNHLPlayers’SalariesRichardJ.CebulaArmstrongAtlanticStateUniversityAbstractAsprivateenterprisesintheU.S.andCanada,franchisesintheNationalHockeyLeague(NHL)canbepresumedtobefirmspursuingmaximumprofits.PartofthispursuitinvolvesthenegotiationbetweenNHLplayersandmanagementofplayersalaries,which(amongotherthings)mustbeconsistentwiththeproductivitylevelofeachplayer.Thiseducationalnoteendeavorstoempiricallyidentifykey,quantifiablefactorsthatreflectindividualNHLplayerproductivityandasaresulthelptodeterminetheregularseasonsalarystructureforindividualNHLplayers,whethertheybegoalies,centers,wingmen,ordefense-men.Ideally,suchinformationcanbeusefulforthestudentofprivateenterpriseinsofarasitprovidesinsightsrelevanttofreemarketdecisionsandoutcomesinvolvingmarginalrevenueproduct.Thus,thiseducationalnotedemonstratestothestudentofprivateenterprisehowsystematicmeasuresofplayerproductivityhelptoexplainNHLplayersalaries.JELCodes:A11,J31,L22Keywords:Salarydetermination;Marginalrevenueproduct;ProductivitymeasuresI.IntroductionInthefreeenterprisesystem,profitmaximizationforthefirminvolvesacomplexsetofconsiderations.Someofthesearerathereasilyobtained(forexample,demographicinformationonone’spotentialcustomerbase),whereasotherconsiderations(suchasthecomplexnatureofmarketdemandanditsshiftsovertimeandspace)aremoreelusive.Furthermore,fromtheproduction/costsideoftheprofit-maximizationendeavor,issuessuchaslaborproductivitymeasurementarenotalwaysimmediatelyobviousandeasilyquantifiable.Yet,efficientoperationoffirmsinaprivateenterprisesystemrequiressomeformofsystematicmeasureofproductivityto165

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Title	Teaching How Private Enterprise Works Using Professional Sports: A Brief Note on the Case of Individual NHL Players' Salaries
Authors/Creators:	Richard J. Cebula, Jacksonville University
Year:	2009
Volume:	24
Number:	2
Pages:	165 - 174
Publisher:	The Association for Private Enterprise Education
ISSN:	0890-913X
Document Type:	Educational Notes
Keywords:	Economic aspects, Salary Determination, Private enterprises, Productivity, Profit, Labour

Citation:
Cebula, Richard J. / 2009. "Teaching How Private Enterprise Works Using Professional Sports: A Brief Note on the Case of Individual NHL Players' Salaries." The Journal of Private Enterprise, 24(2): 165-174.