Salary Increase May Push NBA Rookies to Finish College on Time
A new study by the University of Vermont researchers proposed increasing the NBA rookies’ salaries that could potentially push athletes to finish college on time.
Michael J. Tomas III, a finance professor, and accounting professor Barbara Arel co-authored the study that was published in the “International Journal of Sport Finance.”
The study proposes a new pay scale that is quite lucrative for student-athletes who are considering the NBA to graduate before trying their hands at going pro.
The new model inspired by the ratchet option or cliquet option in the finance industry proposes a salary structure that locks in salary gains as athletes advance toward graduation and incorporates yearly bonuses into their salaries determined by class year.
According to the authors, the new plan would offer drafted freshmen 60 percent of the current NBA rookie salary base and ratchets up to 120 percent for drafted graduates in that same position.
The researchers believe that it would, “provide the incentive for players to delay entering the draft until they are ready to contribute to the NBA, but still allows an early exercise decision to remain rational for the very top prospects.”
“This is our attempt to show that you could alter the NBA draft schedule to try to incentivize students to stay,” Tomas said.
“There’s been a big discussion about people leaving early to go to the NBA draft and I think that revolves around the idea of wanting to see them get an education,” he added.
The study anticipates an improvement in NBA’s labor market as drafted college athletes would enter the NBA more prepared for the professional league.