Since basketball players are more highly visible (both on the court and on the bench) to fans than players in other sports, customer discrimination may well be more prevalent in basketball than elsewhere, especially in view of the relative scarcity of white player.
In customer discrimination, the consumer is willing to pay a premium for white workers. Although blacks have made major gains in professional basketball, unexplained racial salary differentials are of a similar order of magnitude as for the rest of the economy.
All else equal, white representation on a team contributes to home attendance, providing evidence consistent with the idea of customer discrimination. On the other hand, we do not find evidence of discrimination in the draft selection process.
By greatly reducing employer monopsony power, the free-agency system appears to have led to a rapid escalation of salaries.
A variety of specifications and statistical techniques indicate that, ceteris paribus, black NBA players earn significantly less than white players by about 20%. In addition, ceteris paribus, home attendance is a positive func- tion of white representation on the team. Such findings are consistent with the notion of customer discrimination. On the other hand, our results for draft position do not indicate discrimination in hiring.
Our results suggest that customer (fan) discrimination may be the ultimate cause of the black shortfall. As long as fans prefer to see white players, profit-oriented teams will make discriminatory salary offers.
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