Salary Caps and Competitive Balance in Professional Sports Leagues
This paper examines the effects of salary caps on competitive balance in professional sports leagues in the United States. We find no evidence to suggest that salary caps improve competitive balance, as measured by the variation in wins between the best and worst teams in a league in a given year, in any of the major sports leagues. Further, depending on the measure of competitive balance, it appears that salary caps decreased competitive balance in the NBA, which has specific components that differ from those of the NHL and NFL. The results also suggest that revenue sharing arrangements promote competitive balance in a manner that is consistent with economic theory.
Volume (Year): 11 (2011)
Issue (Month): 2 (Fall)
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- Helmut Dietl & Markus Lang & Alexander Rathke, 2007. "The Effect of Salary Caps in Professional Team Sports on Social Welfare," Working Papers 0072, University of Zurich, Institute for Strategy and Business Economics (ISU).
- Martin Schmidt & David Berri, 2002. "Competitive Balance and Market Size in Major League Baseball: A Response to Baseball's Blue Ribbon Panel," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 21(1), pages 41-54, August.
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- Brad R. Humphreys, 2002. "Alternative Measures of Competitive Balance in Sports Leagues," Journal of Sports Economics, , vol. 3(2), pages 133-148, May. Full references (including those not matched with items on IDEAS)
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