Date of Award

12-2015

Document Type

Thesis

Degree Name

Master of Arts (MA)

Legacy Department

Economics

Committee Chair/Advisor

Sauer, Raymond

Committee Member

Makowsky, Mike

Committee Member

Baier, Scott

Abstract

Major League Soccer is in a transitional state which may see it projected into the realm of international relevancy, competing with European soccer. This transition is fueled by contracting renowned superstars from Europe via the designated player (DP) rule. This study examines implications of the DP rule on competitive balance (CB) of the league and wage dispersion among teams. The effect of the rule on CB is inconclusive in the model constructed, but propositions of a more appropriate CB measure are presented for future research. The DP rule has caused higher levels of salary dispersion within the league and this dispersion is found to be negatively related to team performance which is supportive of the wage compression hypothesis.

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