What Salary Would Entice You to Play with the Miami Heat Now? A Test of Compensating Differentials Theory
LeBron James' decision offers labor economists a very nice test of compensating differentials theory. Sherwin Rosen would predict that the Heat will not have much trouble finding 9 players to sign on for the league minimum. While the pundits worry about this, let's review some basic economics about the Miami Heat as a "bundle of attributes".
1. Miami will be the star team on TV every time they play. If a couple of these "nobody" players have a personality then when they play in the second quarter they can do their "wild" Big Baby thing (like the plump Celtic) and earn valuable National Exposure that will raise their Q rating (see #3 below).
2. Miami is a very desirable city to live in as a young wealthy dude.
3. Young players will learn from the big 3 and this will improve their career development. I remember when a dude named "Judd Buchler" played with the Bulls during the MJ years. He was a minor league Steve Kerr and he would dive on the ground for loose balls. He received a big contract after serving his time with MJ because he was a "winner".
4. The potential to win 5 titles in a row should be worth some salary sacrifice to some hungry players.
Now, Pat Riley will have to pick and choose; he clearly needs a plump center like the Celtics' Perkins to bang with Andrew Bynum. He also needs a sharp shooter or two such as the Duke guy who plays for Orlando or a younger Ray Allen.
But, these guys can be found and economics says that they will be found for very cheap. In fact, LeBron could pick the MVP from his Sports Camp and bring him (or her) along.
1. Miami will be the star team on TV every time they play. If a couple of these "nobody" players have a personality then when they play in the second quarter they can do their "wild" Big Baby thing (like the plump Celtic) and earn valuable National Exposure that will raise their Q rating (see #3 below).
2. Miami is a very desirable city to live in as a young wealthy dude.
3. Young players will learn from the big 3 and this will improve their career development. I remember when a dude named "Judd Buchler" played with the Bulls during the MJ years. He was a minor league Steve Kerr and he would dive on the ground for loose balls. He received a big contract after serving his time with MJ because he was a "winner".
4. The potential to win 5 titles in a row should be worth some salary sacrifice to some hungry players.
Now, Pat Riley will have to pick and choose; he clearly needs a plump center like the Celtics' Perkins to bang with Andrew Bynum. He also needs a sharp shooter or two such as the Duke guy who plays for Orlando or a younger Ray Allen.
But, these guys can be found and economics says that they will be found for very cheap. In fact, LeBron could pick the MVP from his Sports Camp and bring him (or her) along.
posted by Matthew Kahn at 8:24 PM
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