Perception Versus Reality - Competitive Balance In Major League Soccer From 1996 – 2016

For different sports leagues, studies show the positive effect of competitive balance on fan interest and consequently revenues. Particularly for Northern American leagues, competitive balance is a core concept in the construction of such, also to ensure financial stability of teams. Nevertheless, most studies in the literature concentrate on measuring competitive balance in European football leagues. To enhance the existing literature, our paper analyzes competitive balance in Major League Soccer (MLS), a comparatively young and therefore still developing league. To encompass ex-post results, as well as the ex-ante perception of fans if a league or match is uncertain in its outcome, we distinguish between ´actual´ and ´perceived´ competitive balance. Based on compiled data for MLS from 1996 until 2016 we measure the ´actual´ level of competitive balance in MLS with several commonly used competitive balance measures. Considering the corresponding decimal odds predictions and team wage bill information from 2006 until 2016, the ´perceived´ competitive balance is measured using a seemingly unrelated regression and further explanatory statistics. While the results of the ´actual´ competitive balance measurements indicate a league that becomes more balanced over time, the perception points towards an imbalanced league with clear favorites and reduced uncertainty of outcome.