A Star-Driven League: Evaluating Factors of Superstardom in the National Basketball Association

This thesis evaluates Sherwin Rosen's Superstar Theory of Economics as it applies to superstardom in the NBA. "The Economics of Superstars" explains how in certain industries, individuals with a marginal difference in talent garner a massive increase in income without an equivalent increase in labor and time, and thus superstars emerge. Scott Kaplan's 2022 paper, "The Economic Value of Popularity: Evidence from Superstars in the National Basketball Association", applies Rosen's theory in the NBA, as the NBA is an organization driven by talent. While Kaplan utilizes price fluctuations in ticket pricing based off of a superstar being in or out of the lineup, this paper takes Kaplan's suggestion of using jersey sales as an alternative metric of player popularity. Utilizing the top 15 NBA players in jersey sales for each year from the 2004-05 season to the 2023-24 season, this paper further examines the superstar phenomenon in the NBA by evaluating factors which affect player compensation and drive fan preferences in jerseys. This paper aims to define NBA players as superstars utilizing three different perspectives; from the player, utilizing Player Efficiency Ranking, from the franchise, utilizing player salary, and from the fan, utilizing annual jersey sale rankings. These results find that certain factors, including previous All-Star Game appearances and changing teams, lead to significant changes in both player salary proportion of the salary cap and in jersey sales. However, the results also indicate that while salary proportion and jersey sales are correlated, some factors only have a significant impact on one of these components, indicating that there are related but separate phenomena driving player compensation and fan jersey preference. These results will contribute to a better understanding of critical factors affecting both NBA fans and players for NBA league officials as they guide league decisions; additionally, it will provide both franchises and players with evidence to better inform decisions on player compensation.