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Thinking about Competitive Balance

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  • Allen R. Sanderson
  • John J. Siegfried

Abstract

Simon Rottenberg long ago noted that the nature of sports is such that competitors must be of approximately equal ability if any are to be financially successful. In recent years, sports commentators and fans, Major League Baseball itself, and even some economists have expressed growing concern about the widening disparities between team expenditures and the growing concentrations of postseason contenders and championships. In this article, the authors compare different concepts of competitive balance, review the theoretical and empirical scholarship on competitive balance and the relationship between payrolls and performance, describe the natural forces and institutional rules and regulations that contribute to observed distributions of playing performances, and evaluate the likely effect of several popular proposals—payroll and salary caps, luxury taxes, and increased revenue sharing—on competitive balance. Although the focus is on baseball, frequent comparisons are made to other sports leagues including collegiate athletics and individual sports.

Suggested Citation

  • Allen R. Sanderson & John J. Siegfried, 2003. "Thinking about Competitive Balance," Journal of Sports Economics, , vol. 4(4), pages 255-279, November.
  • Handle: RePEc:sae:jospec:v:4:y:2003:i:4:p:255-279
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    1. Dietl, Helmut M. & Franck, Egon & Hasan, Tariq & Lang, Markus, 2009. "Governance of professional sports leagues--Cooperatives versus contracts," International Review of Law and Economics, Elsevier, vol. 29(2), pages 127-137, June.
    2. Jaret Treber & Rachel Levy & Victor A. Matheson, 2013. "Gender differences in competitive balance in intercollegiate basketball," Chapters, in: Eva Marikova Leeds & Michael A. Leeds (ed.), Handbook on the Economics of Women in Sports, chapter 12, pages 251-268, Edward Elgar Publishing.
    3. Nicolas Scelles & Christophe Durand & Thierno Bah & François Rioult, 2011. "Intra-match competitive intensity in French football Ligue 1 and rugby Top 14," Post-Print halshs-02110792, HAL.
    4. Michela Pierini, 2011. "Diritti Tv E Competitive Balance Nel Calcio Professionistico Italiano," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 7(2), pages 87-113, September.
    5. Craig A. Depken, II & Lisa E. Haglund, 2011. "Peer Effects in Team Sports: Empirical Evidence From NCAA Relay Teams," Journal of Sports Economics, , vol. 12(1), pages 3-19, February.
    6. Dominik Schreyer & Sascha L. Schmidt & Benno Torgler, 2018. "Game Outcome Uncertainty and Television Audience Demand: New Evidence from German Football," German Economic Review, Verein für Socialpolitik, vol. 19(2), pages 140-161, May.
    7. Ira Horowitz, 2018. "Competitive Balance in the NBA Playoffs," The American Economist, Sage Publications, vol. 63(2), pages 215-227, October.
    8. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    9. Jan Šíma & Jan Procházka, 2011. "Compared Competitive Balance Evolution in the Dutch and the Czech Football Leagues between 1970 and 2010," Ekonomika a Management, Prague University of Economics and Business, vol. 2011(2).
    10. Bouvet, Patrick, 2011. "Que valent les compétitions sportives? Une nouvelle piste de réflexion," L'Actualité Economique, Société Canadienne de Science Economique, vol. 87(2), pages 205-222, juin.
    11. Jan Šíma, 2013. "Static Competitive Balance of Three Chosen Central European Football Leagues," Ekonomika a Management, Prague University of Economics and Business, vol. 2013(4).
    12. Boris Helleu, 2011. ""Be ready to be excited" - Stratégie marketing et modèle économique de la WWE," Post-Print hal-01715953, HAL.
    13. Raul Caruso & Ilaria Verri, 2009. "Competitive Balance dopo la sentenza Bosman: il caso della pallavolo in Italia," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 5(1), pages 59-79, Maggio.
    14. Jean-François Bourg & Jean-Jacques Gouguet, 2010. "The Political Economy of Professional Sport," Books, Edward Elgar Publishing, number 13177.
    15. Allen R. Sanderson & John J. Siegfried, 2006. "Simon Rottenberg and Baseball, Then and Now: A 50th Anniversary Retrospective," Vanderbilt University Department of Economics Working Papers 0606, Vanderbilt University Department of Economics.
    16. Lenten, Liam J.A., 2011. "The extent to which unbalanced schedules cause distortions in sports league tables," Economic Modelling, Elsevier, vol. 28(1-2), pages 451-458, January.
    17. Trandel Gregory A & Maxcy Joel G, 2011. "Adjusting Winning-Percentage Standard Deviations and a Measure of Competitive Balance for Home Advantage," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 7(1), pages 1-17, January.
    18. Misael Martinez & Jonathan Willner, 2017. "Competitive Balance and Consumer Demand in the English Football League," Applied Finance and Accounting, Redfame publishing, vol. 3(2), pages 49-60, August.
    19. Fabio Fonti & Massimo Maoret, 2016. "The direct and indirect effects of core and peripheral social capital on organizational performance," Strategic Management Journal, Wiley Blackwell, vol. 37(8), pages 1765-1786, August.
    20. Paolo Di Betta & Carlo Amenta, 2010. "A die-hard aristocracy: competitive balance in Italian soccer, 1929-2009," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 6(2), pages 13-40, Settembre.
    21. Boris Helleu & Christophe Durand, 2007. "La métropolisation du sport professionnel en Europe et en Amérique du Nord : une approche comparative," Post-Print hal-02106720, HAL.

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    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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