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).
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 22 (2004)
Issue (Month): 6 (June)
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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; Restaurants; Recreation; Tourism
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