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Owner Objectives and Competitive Balance

Author

Listed:
  • Rodney Fort
  • James Quirk

Abstract

A growing literature on leagues composed of owners maximizing winning percentage shows that particular league rules have different impacts compared with leagues composed of profit-maximizing owners. But the underlying question of how to distinguish between the two types of leagues has received no treatment. In this article, we show that the two types of leagues can be distinguished in the talent market. A league of winning-percentage-maximizing owners will have higher talent costs and greater demand for talent. But, and perhaps more important, the level of competitive balance between the two types of leagues is indeterminate. In addition, a new policy instrument is suggested, namely, nudging owners toward one or the other objective, depending upon the particular locations of the demand for talent if owners pursue profits or winning percentage.

Suggested Citation

  • Rodney Fort & James Quirk, 2004. "Owner Objectives and Competitive Balance," Journal of Sports Economics, , vol. 5(1), pages 20-32, February.
    • Handle: RePEc:sae:jospec:v:5:y:2004:i:1:p:20-32
    DOI: 10.1177/1527002503261275
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    References listed on IDEAS

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    1. 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.
    2. Fort, Rodney, 2000. "European and North American Sports Differences(?)," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 431-455, September.
    3. Rodney Fort, 2000. "European and North American Sports Differences(?)," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 431-455, September.
    4. Stefan Szymanski & Ron Smith, 2010. "The English Football Industry: Profit, Performance and Industrial Structure," Palgrave Macmillan Books, in: Football Economics and Policy, chapter 1, pages 1-26, Palgrave Macmillan.
    5. Stefan Kesenne, 2000. "Revenue Sharing and Competitive Balance in Professional Team Sports," Journal of Sports Economics, , vol. 1(1), pages 56-65, February.
    6. Wladimir Andreff & Paul Staudohar, 2000. "The Evolving European Model of Professional Sports Finance," Post-Print halshs-00274661, HAL.
    7. Daniel R. Marburger, 1997. "Gate Revenue Sharing And Luxury Taxes In Professional Sports," Contemporary Economic Policy, Western Economic Association International, vol. 15(2), pages 114-123, April.
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