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Bidding Till Bankrupt: Destructive Competition in Professional Team Sports

Author

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  • Whitney, James D

Abstract

The analysis and evidence here suggest that the market for star athletes in professional sports could be subject to "destructive competition"--a competitive process that drives some participants from a market even though it is inefficient for them to leave. When pursuing a league championship, the talent that turns an average team into a contender contributes disproportionately to the team's success. Teams that fail to earn enough on the last stars they sign to offset losses on their inframarginal talent will abandon a competitive market for star athletes. Other situations that involve input rivalry between producers might yield similar results. Copyright 1993 by Oxford University Press.

Suggested Citation

  • 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.
    • Handle: RePEc:oup:ecinqu:v:31:y:1993:i:1:p:100-115
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    Citations

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    Cited by:

    1. 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?," Discussion Paper 2000-110, Tilburg University, Center for Economic Research.
    2. Young Lee & Rodney Fort, 2008. "Attendance and the Uncertainty-of-Outcome Hypothesis in Baseball," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(4), pages 281-295, December.
    3. Lehmann, Erik & Weigand, Jürgen, 1998. "Wieviel Phantasie braucht die Fußballaktie?," Thuenen-Series of Applied Economic Theory 16, University of Rostock, Institute of Economics.
    4. Cyrenne, Philippe, 2001. "A Quality-of-Play Model of a Professional Sports League," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 444-452, July.
    5. Dietl, Helmut M. & Duschl, Tobias & Lang, Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, Cambridge University Press, vol. 13(2), pages 1-30, August.
    6. Egon Franck, 2010. "Private Firm, Public Corporation or Member’s Association Governance Structures in European Football," International Journal of Sport Finance, Fitness Information Technology, vol. 5(2), pages 108-127, May.
    7. Wladimir Andreff & Nicolas Scelles, 2015. "Walter C. Neale 50 Years After," Journal of Sports Economics, , vol. 16(8), pages 819-834, December.
    8. Helmut Dietl, 2010. "Besonderheiten des Sports ‐ Was rechtfertigt eine "eigene Ökonomik"?," Working Papers 0137, University of Zurich, Institute for Strategy and Business Economics (ISU).
    9. Allen R. Sanderson & John J. Siegfried, 2003. "Thinking about Competitive Balance," Journal of Sports Economics, , vol. 4(4), pages 255-279, November.
    10. Martin Grossmann, 2015. "Evolutionarily Stable Strategies in Sports Contests," Journal of Sports Economics, , vol. 16(1), pages 108-121, January.
    11. Roberto Burguet & József Sákovics, 2019. "Bidding For Talent In Sport," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 85-102, January.
    12. Uschi Backes-Gellner & Simone N. Tuor, 2010. "Avoiding Labor Shortages by Employer Signaling: On the Importance of Good Work Climate and Labor Relations," ILR Review, Cornell University, ILR School, vol. 63(2), pages 271-286, January.
    13. Wladimir Andreff, 2009. "Équilibre compétitif et contrainte budgétaire dans une ligue de sport professionnel," Revue économique, Presses de Sciences-Po, vol. 60(3), pages 591-633.
    14. Tommy Quansah & Bernd Frick & Markus Lang & Kieran Maguire, 2021. "The Importance of Club Revenues for Player Salaries and Transfer Expenses—How Does the Coronavirus Outbreak (COVID-19) Impact the English Premier League?," Sustainability, MDPI, vol. 13(9), pages 1-22, May.
    15. Dietl Helmut M & Lang Markus & Rathke Alexander, 2009. "The Effect of Salary Caps in Professional Team Sports on Social Welfare," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-23, April.
    16. Frank A. Gamrat & Raymond D. Sauer, 2000. "The Utility of Sport and Returns to Ownership," Journal of Sports Economics, , vol. 1(3), pages 219-235, August.
    17. Hausman, Jerry A & Leonard, Gregory K, 1997. "Superstars in the National Basketball Association: Economic Value and Policy," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 586-624, October.
    18. Sherstyuk, Katerina, 1998. "Efficiency in partnership structures," Journal of Economic Behavior & Organization, Elsevier, vol. 36(3), pages 331-346, August.
    19. Palomino, Frederic & Sakovics, Jozsef, 2004. "Inter-league competition for talent vs. competitive balance," International Journal of Industrial Organization, Elsevier, vol. 22(6), pages 783-797, June.
    20. Lehmann, Erik & Weigand, Jürgen, 1997. "Fußball als ökonomisches Phänomen: Money Makes the Ball Go Round," Thuenen-Series of Applied Economic Theory 08, University of Rostock, Institute of Economics.
    21. Budzinski, Oliver, 2014. "The competition economics of financial fair play," Ilmenau Economics Discussion Papers 85, Ilmenau University of Technology, Institute of Economics.
    22. Craig A. Depken II, 2000. "Fan Loyalty and Stadium Funding in Professional Baseball," Journal of Sports Economics, , vol. 1(2), pages 124-138, May.
    23. Aloys Prinz & Stefan Thiem, 2021. "Value‐maximizing football clubs," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(5), pages 605-622, November.
    24. Ramon P. DeGennaro, 2003. "The Utility of Sport and Returns to Ownership," Journal of Sports Economics, , vol. 4(2), pages 145-153, May.

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