This article describes a model of final offer arbitration, like that used in major league baseball, in which two stages of wage bargaining exist between a risk-averse firm and a risk-averse employee. In the first stage, the negotiators set final offers. In the second stage, the negotiators...

This paper examines the franchise values of American professional sports teams in the NBA, the NFL, and the NHL. It is argued that team franchise values depend on the ownership status of the facility in which the team plays. If a team owns its playing facility, it capitalizes the value of the...

According to baseball’s collective bargaining agreement, arbitrators may not consider team finances when rendering a decision. The author develops two theories to examine the setting of final offers. In the first theory, final offers are simply functions of the arbitral criteria and are,...

This paper presents a theoretical and empirical comparison of determination of negotiated salaries in baseball’s free agent market to that in its final-offer arbitration (FOA) system. The theoretical bargaining model of each system is based on Nash (1950). It is argued that Farber’s (1980)...