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Comparing Competitive Balance in Australian Sports Leagues: Does a Salary Cap and Player Draft Measure Up?

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  • Booth, Ross

Abstract

In the period following the introduction by the Australian Football League (AFL) of the team salary cap in 1985 and the player draft at the end of 1986, within-season competitive balance (measured by the seasonal distribution of team win percentages) has increased. This paper continues the investigation into whether the improvement in competitive balance in the AFL can be attributed to these labour market changes by examining competitive balance outcomes and labour market changes in two other Australian sports leagues, the National Basketball League (NBL) and the National Rugby League (NRL). The measurement of competitive balance in this paper is extended to include a simple measure of between-season competitive balance, namely the distribution of championships/ premierships amongst teams/clubs. The evidence suggests that since 1985 within-season competitive balance, as measured by actual standard deviation/idealised standard deviation (ASD/ISD) ratios, has increased slightly in all three leagues. The NRL has been the most balanced and the NBL the least balanced, both pre- and post-1985. The distribution of championships/premierships is, in general, also more even in the post-1985 period in all three leagues. The most significant labour market change in both the NBL and the NRL post-1985 is their adoption of a team salary cap. Thus, the evidence on competitive balance is consistent with the view that the introduction of a team salary cap in all three leagues has improved competitive balance since 1985. However, since 1985 there has also been net expansion in the number of clubs/teams in all three leagues, and a considerable turnover in both the NBL and the NRL, but not the AFL. The expansion and contraction of the leagues is compared with changes in their competitive balance, leading to the conclusion that the number and, in particular, the location of teams/clubs also affects competitive balance.

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Bibliographic Info

Article provided by Elsevier in its journal Sport Management Review.

Volume (Year): 8 (2005)
Issue (Month): 2 (September)
Pages: 119-143

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Handle: RePEc:eee:spomar:v:8:y:2005:i:2:p:119-143

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  1. E. Woodrow Eckard, 2001. "Baseball’s Blue Ribbon Economic Report," Journal of Sports Economics, , vol. 2(3), pages 213-227, August.
  2. Andrew S. Zimbalist, 2002. "Competitive Balance in Sports Leagues: An Introduction," Journal of Sports Economics, , vol. 3(2), pages 111-121, May.
  3. Allen R. Sanderson, 2002. "The Many Dimensions of Competitive Balance," Journal of Sports Economics, , vol. 3(2), pages 204-228, May.
  4. Ross Booth, 2004. "The Economics Of Achieving Competitive Balance In The Australian Football League, 1897–2004," Economic Papers, The Economic Society of Australia, vol. 23(4), pages 325-344, December.
  5. E. Woodrow Eckard, 2003. "The Anova-Based Competitive Balance Measure: A Defense," Journal of Sports Economics, , vol. 4(1), pages 74-80, February.
  6. Brad R. Humphreys, 2002. "Alternative Measures of Competitive Balance in Sports Leagues," Journal of Sports Economics, , vol. 3(2), pages 133-148, May.
  7. Brad R. Humphreys, 2003. "The Anova-Based Competitive Balance Measure: A Reply," Journal of Sports Economics, , vol. 4(1), pages 81-82, February.
  8. Joshua Utt & Rodney Fort, 2002. "Pitfalls to Measuring Competitive Balance With Gini Coefficients," Journal of Sports Economics, , vol. 3(4), pages 367-373, November.
  9. E. Eckard, 1998. "The NCAA Cartel and Competitive Balance in College Football," Review of Industrial Organization, Springer, vol. 13(3), pages 347-369, June.
  10. Allen R. Sanderson & John J. Siegfried, 2003. "Thinking About Competitive Balance," Vanderbilt University Department of Economics Working Papers 0318, Vanderbilt University Department of Economics.
  11. Eckard, E Woodrow, 2001. "Free Agency, Competitive Balance, and Diminishing Returns to Pennant Contention," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 430-43, July.
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Cited by:
  1. Jakee, Keith & Kenneally, Martin & Mitchell, Hamish, 2010. "Asymmetries in scheduling slots and game-day revenues: An example from the Australian Football League," Sport Management Review, Elsevier, vol. 13(1), pages 50-64, February.

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