Graduation Year
2025
Date of Submission
4-2025
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics-Accounting
Reader 1
Gary Birkenbeuel
Terms of Use & License Information
Abstract
This thesis investigates the relationship between salary concentration and winning in the NBA, primarily focusing on how the concentration of payroll among top-earning players influences success. Several concentration metrics were constructed and employed including the use of a Herfindahl-Hirschman Index (HHI) to measure the share of payroll each player receives across a team. I used fixed effects regressions and clustered standard errors at a team level to control for unobserved factors that remain the same over time. The results revealed a consistent inverted U-shape curve, signaling that an optimal concentration of capital exists for the highest paid player, two highest paid players, and the whole team. The study shows that overconcentration of salaries to top players and over-smoothing of rosters can lead to winning detriments, while strategic capital investment can lead to competitive advantages.
Recommended Citation
Cynkar, Anderson, "Optimal Capital Allocation Decisions and Investments in the NBA" (2025). CMC Senior Theses. 3943.
https://scholarship.claremont.edu/cmc_theses/3943
