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practices and wage scales, Holzer and Ihlanfeldt’s (1998) survey evidence from four major metropolitan areas suggested that customer discrimination remains quite pervasive—with strong discrimination effects emerging when employees have significant contact with customers.

It is hard to imagine a business where employees are more “visible” to custom- ers than professional basketball. Consistent with the customer-discrimination hypothesis, a number of studies, using data from the 1980s, found that National Basketball Association (NBA) teams located in more White-dominated market areas consistently had a disproportionately large share of White players (Bodvarsson & Partridge, 2001; Brown, Spiro, & Keenan, 1991; Burdekin & Idson, 1991; Hoang & Rascher, 1999; Koch & Vander Hill, 1988).1 The decline in the number of White players in the NBA since the 1980s raises the possibility that professional basketball teams may have become more “color-blind” in their hiring practices throughout the years. Evidence on whether or not customer-based dis- crimination has, in fact, declined in the NBA could offer a valuable litmus test of the relevance of customer discrimination in today’s economy—given the unusual visi- bility of not only the players themselves but also NBA teams’ hiring decisions by race.

In addition to using NBA team data from the 1990s to reexamine the relationship between the racial composition of teams and the racial composition of their market areas, we address the question of whether teams have effectively boosted their attendance and revenues by “matching” the racial profile of their players with their market’s racial profile. Prior evidence on this point is mixed. Burdekin and Idson (1991) and Hoang and Rascher (1999) found that a positive match between team racial composition and the racial composition of the SMSA area increases atten- dance. Kahn and Sherer (1988) added that White players increased attendance more than enough to compensate for the White salary premium they identified for the 1980-1986 period. On the other hand, Dey (1997), using data from 1987 to 1993, and McCormick and Tollison (2001), using data from 1980 to 1988, saw no relationship between the racial match and NBA attendance.2

Our approach has three parts. We first analyze trends in the racial composition of NBA teams and document the distribution of players, classified by race, among teams. Differences in the performance of Black and White players can shed light on whether teams in the league engage in “window dressing” by adding White players to their rosters who are not as strong as Black players. We next examine what deter- mines the racial composition of NBA teams and assess whether a team can increase its attendance by matching its racial composition with the racial composition of the metropolitan area where the team is located. This is based on the premise that not just Whites but also Blacks prefer to watch athletes of their own race—and that sat- isfying these preferences leads to attendance gains. Finally, we look at the role of racial factors in the trading of NBA players and identify a tendency for the most skilled White players to stay in whiter cities.

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