Inter-league competition for talent vs. competitive balance
AbstractWe analyze the distribution of broadcasting revenues by sports leagues. We show that when the teams engage in competitive bidding to attract talent in an isolated league, the leagueâs optimal choice is full revenue sharing (resulting in full competitive balance). In contrast, when the teams of several leagues bid for talent, in equilibrium the leagues choose a performance-based reward scheme. We thus provide an explanation for the differences in revenue sharing rules for national TV rights used by the U.S. sports leagues (full revenue sharing) and European football leagues (performance-based reward).
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 22 (2004)
Issue (Month): 6 (June)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505551
Other versions of this item:
- Frederic Palomino & Jozsef Sakovics, 2004. "Inter-league competition for talent vs. competitive balance," ESE Discussion Papers 96, Edinburgh School of Economics, University of Edinburgh.
- L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Recreation; Tourism
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Scully, Gerald W., 1995. "The Market Structure of Sports," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226743950, September.
- Scott E. Atkinson & Linda R. Stanley & John Tschirhart, 1988. "Revenue Sharing as an Incentive in an Agency Problem: An example from the National Football League," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 27-43, Spring.
- Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
- Frederic Palomino, 2000. "Competitive Balance vs. Incentives to Win: A Theoretical Analysis of Revenue Sharing," Econometric Society World Congress 2000 Contributed Papers 0930, Econometric Society.
- Philippe Jehiel & Benny Moldovanu, 2000.
"Auctions with Downstream Interaction Among Buyers,"
RAND Journal of Economics,
The RAND Corporation, vol. 31(4), pages 768-791, Winter.
- El-Hodiri, Mohamed & Quirk, James, 1971. "An Economic Model of a Professional Sports League," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1302-19, Nov.-Dec..
- Robin Naylor & Michele Santoni, 1999.
"Foreign direct investment and wage bargaining,"
CSGR Working papers series
41/99, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
- Robin Naylor & Michele Santoni, 2003. "Foreign direct investment and wage bargaining," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 12(1), pages 1-18.
- Jehiel, Philippe & Moldovanu, Benny & Stacchetti, Ennio, 1996.
"How (Not) to Sell Nuclear Weapons,"
American Economic Review,
American Economic Association, vol. 86(4), pages 814-29, September.
- Cave, Martin & Crandall, Robert W, 2001. "Sports Rights and the Broadcast Industry," Economic Journal, Royal Economic Society, vol. 111(469), pages F4-26, February.
- Jehiel, Philippe & Benny Moldovanu, 1994.
Discussion Paper Serie B
287, University of Bonn, Germany.
- Prat, A. & Rustichini, A., 1999.
"Games played through agents,"
1999-68, Tilburg University, Center for Economic Research.
- Whitney, James D, 1993. "Bidding Till Bankrupt: Destructive Competition in Professional Team Sports," Economic Inquiry, Western Economic Association International, vol. 31(1), pages 100-115, January.
- Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February.
- Flynn, Michael A & Gilbert, Richard J, 2001. "The Analysis of Professional Sports Leagues as Joint Ventures," Economic Journal, Royal Economic Society, vol. 111(469), pages F27-46, February.
- Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-58, December.
- Palomino, F.A. & Sakovics, J., 2000.
"Revenue Sharing in Professional Sports Leagues: For the Sake of Competitive Balance or as a Result of Monopsony Power?,"
2000-110, Tilburg University, Center for Economic Research.
- Frederic Palomino & Jozsef Sakovics, 2004. "Revenue sharing in professional sports leagues: for the sake of competitive balance or as a result of monopsony power?," ESE Discussion Papers 59, Edinburgh School of Economics, University of Edinburgh.
- Thomas Hoehn & Stefan Szymanski, 1999. "The Americanization of European football," Economic Policy, CEPR & CES & MSH, vol. 14(28), pages 203-240, 04.
- Paul Madden & Mario Pezzino, 2013. "Sports League Quality, Broadcaster TV Rights Bids and Wholesale Regulation of Sports Channels," The School of Economics Discussion Paper Series 1304, Economics, The University of Manchester.
- Palomino, F.A. & Renneboog, L.D.R. & Zhang, C., 2005.
"Stock Price Reactions to Short-Lived Public Information: The Case of Betting Odds,"
2005-62, Tilburg University, Center for Economic Research.
- Palomino, F.A. & Renneboog, L.D.R. & Zhang, C., 2005. "Stock Price Reactions to Short-Lived Public Information: The Case of Betting Odds," Discussion Paper 2005-016, Tilburg University, Tilburg Law and Economic Center.
- Paul Madden, 2010. "Gametheoretic analysis of basic team sports leagues," The School of Economics Discussion Paper Series 1006, Economics, The University of Manchester.
- Gianni De Fraja, 2011.
"A Theoretical Analysis of Public Funding for Research,"
Discussion Papers in Economics
11/31, Department of Economics, University of Leicester, revised Jun 2011.
- Gianni De Fraja, 2011. "A Theoretical Analysis of Public Funding for Research," CEIS Research Paper 199, Tor Vergata University, CEIS, revised 30 Jun 2011.
- De Fraja, Gianni, 2011. "A Theoretical Analysis of Public Funding for Research," CEPR Discussion Papers 8442, C.E.P.R. Discussion Papers.
- Palomino, F.A. & Renneboog, L.D.R. & Zhang, C., 2008.
"Information Salience, Investor Sentiment, and Stock Returns: The Case of British Soccer Betting,"
2008-044, Tilburg University, Tilburg Law and Economic Center.
- Palomino, Frederic & Renneboog, Luc & Zhang, Chendi, 2009. "Information salience, investor sentiment, and stock returns: The case of British soccer betting," Journal of Corporate Finance, Elsevier, vol. 15(3), pages 368-387, June.
- Palomino, F.A. & Renneboog, L.D.R. & Zhang, C., 2008. "Information Salience, Investor Sentiment, and Stock Returns: The Case of British Soccer Betting," Discussion Paper 2008-99, Tilburg University, Center for Economic Research.
- Sami Dakhlia & Paul Pecorino, 2006.
"Rent-seeking with scarce talent: A model of preemptive hiring,"
Springer, vol. 129(3), pages 475-486, December.
- Sami Dakhlia & Paul Pecorino, 2005. "Rent-seeking with scarce talent: a model of preemptive hiring," Microeconomics 0505002, EconWPA.
- Sonia Falconieri & Frederic Palomino & Jozsef Sakovics, 2004.
"Collective vs. Individual Sale of TV Rights in League Sports,"
ESE Discussion Papers
85, Edinburgh School of Economics, University of Edinburgh.
- Falconieri, S. & Palomino, F.A. & Sakovics, J., 2002. "Collective vs Individual Sale of TV Rights in League Sports," Discussion Paper 2002-106, Tilburg University, Center for Economic Research.
- Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
- Harrie A. A Verbon, 2007. "Migrating Football Players, Transfer Fees and Migration Controls," CESifo Working Paper Series 2004, CESifo Group Munich.
- Jan Šíma & Jan Procházka, 2011. "Compared Competitive Balance Evolution in the Dutch and the Czech Football Leagues between 1970 and 2010," Ekonomika a Management, University of Economics, Prague, vol. 2011(2).
- Vincent Hogan & Patrick Massey & Shane Massey, 2012. "Analysing Determinants of Match Attendance in the European Rugby Cup," Working Papers 201228, School Of Economics, University College Dublin.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.