The effect of the Designated Player

The effect of the Designated Player (DP) rules in the MLS.  Do you think this could affect competitive balance at all?

The Designated Player rule had a significant effect in the MLS. The designated team player rule opened the door for clubs to add extra higher earning players. MLS teams can spend more funds on new players outside their usual salary budget. The extra funds have allowed clubs to add the equivalent of higher-earning players.  These arrangements give teams extra flexibility by enhancing their ability to attract existing designated players. Thus, teams can sign higher priced talents at prevailing wages. The rule also affects the MLS business model. Finances have been a hot button for any sport, particularly soccer. Previously, MLS operated in a unique system in the world of football (Jewell, 2015).

MLS did business with a salary cap that prevents teams from getting caught up in a spiral of overspending. However, the rigid cap prevented teams from bringing in talented individuals into the league. The rule provided the opportunity to increase team’s profile by signing in domestic and international stars. The rigid cap did not allow teams to bring in necessary talents without hitting the ceiling. The rule amounted to a waiver by providing teams with necessary financial backing that allowed them to escape salary cap. Marquee names helped sell tickets as teams were able to sign talented players from other countries. High priced foreign players drove attendance. The international signing of David Beckham put a world-renowned name in the league, consequently increasing the popularity of MLS. I think this affects competitive balance in different ways. The rule sparks the subsequent signing of top talent to bolster squads and attract sponsorship deals (Jewell, 2015).

Do you believe this "superstar effect" will continue to last?

I believe that the “Superstar Effect” will continue to last. The popularity of soccer is a factor in the continued existence of “superstar effect”.  The relationship between players’ productivity and pay often leads to “superstar” effects. In this context, the marginal revenue product of a top player is directly related to the extra amount of money that a fan is willing to pay to see the player in action. This effect attracts a large number of spectators. However, it is also a rare and temporary phenomenon as a superstar may fall from stardom due to injuries or age. The superstar is often replaced by a new player as a matter of course. Because of this, the superstar effect continues as the income between both superstars is relatively low.

The availability of information is also a major factor that contributes to the superstar effect. Individuals can access players’ information on wages and other professional matters. Given that this information is easy to obtain, specifically through the Internet, there is easy access to information and activities in which superstars engage. Media coverage has tremendously increased as well.  With access to this information, the superstar effect will continue to last. The renowned stars have extremely high incomes. Often, their earning capacities continue to grow as well.   This increases the gap between superstars from talented players in other soccer professions. Massive competition may not level out the salaries of superstars to those of colleagues.  Activities such as soccer are more likely to produce superstars compared to other activities such as surgery and plumbing. Such activities are easy to render. Thus, superstar wages are more likely to increase with the extent of markets. 

Discuss the effects on home and away teams

The designated player rule has been comparatively successful in efforts to keep the home league competitive. This did not seem like a likely outcome in the league’s early history. The rule has also fueled the need to generate new revenue by signing new players from the international field. The practice has a positive impact on home teams as they sign world-class superstars who can play at relatively high levels. These players are likely to generate high revenues.  International players are also likely to bring the appeal to home teams attached to MLS. The strongest appeal is often in the form of upgrade to the teams profile in American and abroad.

The rule allows teams to expand with high-profile players. The introduction of the rule also allows home teams with more resources to spend more on designated players. The practice has allowed the league to sign players of higher quality. Previously, this would be possible under a hard cap. As a result, there has been an effective expansion of the pool of potential players and the quality MLS.  Consequently, away teams have also continuously signed in talented players to increase their rating in the international arena. Similar to the DP rule, away teams have implemented measures to increase their competitiveness. These measures particularly favor teams that have higher levels of revenue to afford to sign and retain best players. In an attempt to serve the interests of international fans, international teams make similar efforts. Major Leagues have seen home and away teams projected into the realm of international relevancy.  The transition has been fueled by contracting renowned superstars from different parts of the world causing high levels of salary dispersion within teams. Salary dispersion influences team performance.

Anything else you find interesting

According to the author, the definition of superstar status is somewhat arbitrary in most studies. In soccer, consumer’s demand for excellence has a considerable role in determining the value of products offered by sports personalities. Clearly, superstar status is determined by the reputation effect that an individual has in attracting the audience. The one with high reputation effect should dominate.  Thus, as much as football fans agree that a player has better talent, he should be able to earn the higher salary than those considered to be slightly less talented. However, reputation effects are not the only factors that may be used to explain why particular players earn higher pays compared to others. Technology permits expansion increases consumer demands and facilitates reproduction of a product. Similarly, football matches are observed by spectators. However, a significant coverage by media increases the scope of these events. Today, a league attracts a large audience generated by attendance and television broadcasts.  These factors generate superstar rents.

Other factors such as audience perceptions of different players also determine the superstar effect. Thus, players may receive significant pays above earning levels determined by performance and experience. Other factors such as exposure to the audience also determine superstar effect.  The assumption is that the increased demand for a particular league also increases the exposure of players to a new and existing audience. Hence, as watching soccer will be on the rise, there will be an increase in superstar effect. Evidently, most superstars play mainly in European leagues.  Gamers are more likely to choose to play with top clubs in Europe as European league creates interest in soccer more than MLS. In such a situation, the superstar effect comes into play. The increase in superstars also motivates fans to begin watching the league.

Reference

Jewell, R. T. (2015). The Effect of Marquee Players on Sports Demand The Case of US Major League Soccer. Journal of Sports Economics, 1527002514567922.

Sherry Roberts is the author of this paper. A senior editor at MeldaResearch.Com in non plagiarized research papers if you need a similar paper you can place your order for best custom essay site.