Competitive Balance and Revenue Sharing in Sports Leagues with Utility-Maximizing Teams
This paper develops a contest model of a professional sports league in which clubs maximize a weighted sum of profits and wins (utility maximization). The model analyzes how more win-orientated behavior of certain clubs affects talent investments, competitive balance and club profits. Moreover, in contrast to traditional models, we show that revenue sharing does not always reduce investment incentives due to the dulling effect. We identify a new effect of revenue sharing called the "sharpening effect". In the presence of the sharpening effect (dulling effect), revenue sharing enhances (reduces) investment incentives and improves (deteriorates) competitive balance in the league.
|Date of creation:||Oct 2010|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.cdes.fr/index.php?id=fr69|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:spe:wpaper:1006. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson)
If references are entirely missing, you can add them using this form.