Can wages in the English Premier League Continue to grow?

By

TABLE OF CONTENTS

LITERATURE REVIEW1

Introduction1

English Premier League1

Determination of Salaries2

Salaries of English Premier League4

REFERENCES9

LITERATURE REVIEW

Introduction

The literature review takes into account the salary trends of the English Premier League. It focuses on the previous researches that have already been carried out this subject. The literature review provides the reasons based on which the salary is determined in the English Premier League.

The strong feelings about wages are not confined to the case of professional athletes. The salaries of executives, politicians, civil servants, co-workers, and ourselves are scrutinized for fairness and the impact on productivity. Therefore, examining the role of institutional structure and social factors on labour productivity and salary determination is important for other labour markets besides the one for professional sports. However, this dissertation will focus on the case of professional sports in the United Kingdom with an emphasis on professional football. Sports is a particularly useful case to examine because of the clearly delineated roles of individuals, the availability of salary information, and the availability of performance measures for the individual and for the team (Dickens and Lang, 1993, pp. 141).

English Premier League

The English Premier League is the world's strongest league. Many world class players kick on the island. This is made possible for investors an attractive sports law. The structure of English Premier League is built upon public policy that allows a group of teams to form a league and act as a cartel. The self-governing cartels create regulations that control league size, team location, player mobility, and distribution of revenues, among other things. Primarily through the regulations on player mobility, the teams and leagues gain monopolistic power, which can keep a player's salary lower than his value to his team. The leagues claim that these regulations are necessary in order to maintain stability in the league and foster consumer interest by having equal contests between the teams in a league. Players' associations have sought unrestricted player mobility among the teams in a league in order to increase salaries. Each player's association has collectively bargained for, and sued in court to gain, unrestricted free agency for all or a subset of players. Unrestricted free agency gives a player at the end of his contract the right to negotiate with any team without his present team having to be paid compensation (Canes, 1974b, pp. 81).

Determination of Salaries

Economists and other social scientists have examined the effect on salaries of the restrictions on player mobility and the relaxation of these restrictions over the past twenty years. If a labor market is perfectly competitive, economic theory predicts that a profit-maximizing firm will expand employment to the point where the marginal revenue product (MRP) of the last unit of labor equals its wage. Thus, many of the studies- on salary determination in professional sports assume that in the absence of restrictions on player mobility, i.e., in an intra-league competitive labor market, players will be paid their MRP. In the presence of restrictions on player mobility, the studies point ...