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Revenue Sharing and Competitive Balance

Author

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  • Stefan Késenne

    (University of Antwerp)

Abstract

This short article, challenging the so-called invariance proposition, argues that, for a general n-team model with profit-maximizing clubs and concave revenue functions, there are reasons to believe that revenue sharing can worsen the competitive balance among teams in a professional sports league. If clubs are win maximizers, revenue sharing improves the competitive balance.

Suggested Citation

  • Stefan Késenne, 2005. "Revenue Sharing and Competitive Balance," Journal of Sports Economics, , vol. 6(1), pages 98-106, February.
    • Handle: RePEc:sae:jospec:v:6:y:2005:i:1:p:98-106
    DOI: 10.1177/1527002503259334
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    References listed on IDEAS

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    1. Scott E. Atkinson & Linda R. Stanley & John Tschirhart, 1988. "Revenue Sharing as an Incentive in an Agency Problem: An example from the National Football League," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 27-43, Spring.
    2. 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.
    3. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64(3), pages 242-242.
    4. Stefan Szymanski & Stefan Késenne, 2010. "Competitive Balance and Gate Revenue Sharing in Team Sports," Palgrave Macmillan Books, in: The Comparative Economics of Sport, chapter 7, pages 229-243, Palgrave Macmillan.
    5. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Helmut M. Dietl & Martin Grossmann & Markus Lang, 2011. "Competitive Balance and Revenue Sharing in Sports Leagues With Utility-Maximizing Teams," Journal of Sports Economics, , vol. 12(3), pages 284-308, June.
    2. Masaki Fujimoto, 2020. "Equal Revenue Sharing and the Optimal Distribution of Talent in the N-Team Leagues," Journal of Sports Economics, , vol. 21(2), pages 103-114, February.
    3. Booth, Ross, 2005. "Comparing Competitive Balance in Australian Sports Leagues: Does a Salary Cap and Player Draft Measure Up?," Sport Management Review, Elsevier, vol. 8(2), pages 119-143, September.
    4. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    5. Thadeu Gasparetto & Dmitry Mishchenko & Egor Zaitsev, 2023. "Factors influencing competitive balance across European football top tier leagues," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2068-2078, June.
    6. Stefan Késenne, 2006. "The Win Maximization Model Reconsidered," Journal of Sports Economics, , vol. 7(4), pages 416-427, November.
    7. John Vrooman, 2007. "Theory Of The Beautiful Game: The Unification Of European Football," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(3), pages 314-354, July.
    8. Masaki Fujimoto, 2023. "A Dynamic Analysis of Equal Revenue Sharing and Endogenous Salary Caps in the N-Team Leagues," Journal of Sports Economics, , vol. 24(5), pages 624-638, June.
    9. Matthias Kräkel, 2007. "A Note on Revenue Sharing in Sports Leagues," Journal of Sports Economics, , vol. 8(3), pages 309-316, June.
    10. 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.
    11. Rockerbie, Duane W, 2012. "Exploring inter-league parity in North America: the NBA anomaly," MPRA Paper 43088, University Library of Munich, Germany.
    12. William A. Hamlen Jr., 2007. "Deviations From Equity and Parity in the National Football League," Journal of Sports Economics, , vol. 8(6), pages 596-615, December.
    13. Andrews, Matt & Harrington, Peter, 2016. "Off Pitch: Football's Financial Integrity Weaknesses, and How to Strengthen Them," Working Paper Series 16-009, Harvard University, John F. Kennedy School of Government.
    14. Kjetil K. Haugen, 2006. "Research Notes: An Economic Model of Player Trade in Professional Sports," Journal of Sports Economics, , vol. 7(3), pages 309-318, August.
    15. Jason Winfree & Rodney Fort, 2012. "Nash Conjectures and Talent Supply in Sports League Modeling," Journal of Sports Economics, , vol. 13(3), pages 306-313, June.
    16. Rodney Fort & James Quirk, 2007. "Rational Expectations And Pro Sports Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(3), pages 374-387, July.
    17. 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.
    18. Ross Booth, 2005. "Some Economic Effects of Changes to Gate-Sharing Arrangements in the Australian Football League," Monash Economics Working Papers 21/05, Monash University, Department of Economics.

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