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Thinking About Competitive Balance

Author

Listed:
  • Allen R. Sanderson

    (University of Chicago)

  • John J. Siegfried

    () (Department of Economics, Vanderbilt University)

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 among team expenditures and the growing concentrations of postseason contenders and championships. In this article we 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 impact of several popular proposals ‚ payroll and salary caps, luxury taxes, and increased revenue sharing ‚ on competitive balance. Although the focus is on baseball, we make frequent comparisons to other sports leagues, including collegiate athletics and individual sports.

Suggested Citation

  • Allen R. Sanderson & John J. Siegfried, 2003. "Thinking About Competitive Balance," Vanderbilt University Department of Economics Working Papers 0318, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:0318
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    References listed on IDEAS

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    Cited by:

    1. Boris Helleu, 2011. ""Be ready to be excited" - Stratégie marketing et modèle économique de la WWE," Post-Print hal-01715953, HAL.
    2. repec:rfa:afajnl:v:3:y:2017:i:2:p:49-60 is not listed on IDEAS
    3. 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.
    4. Lenten, Liam J.A., 2011. "The extent to which unbalanced schedules cause distortions in sports league tables," Economic Modelling, Elsevier, vol. 28(1), pages 451-458.
    5. Jaret Treber & Rachel Levy & Victor A. Matheson, 2013. "Gender differences in competitive balance in intercollegiate basketball," Chapters,in: Handbook on the Economics of Women in Sports, chapter 12, pages 251-268 Edward Elgar Publishing.
    6. 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.
    7. 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.
    8. 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.
    9. Jean-François Bourg & Jean-Jacques Gouguet, 2010. "The Political Economy of Professional Sport," Books, Edward Elgar Publishing, number 13177.
    10. 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.
    11. 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.
    12. 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.
    13. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.

    More about this item

    Keywords

    baseball; competitive balance; sports leagues;

    JEL classification:

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

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