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Competitive balance in football leagues when teams have different goals

Authors
  • Giocoli, Nicola
Type
Published Article
Journal
International Review of Economics
Publisher
Springer-Verlag
Publication Date
Sep 18, 2007
Volume
54
Issue
3
Pages
345–370
Identifiers
DOI: 10.1007/s12232-007-0022-5
Source
Springer Nature
Keywords
License
Yellow

Abstract

In the standard two-team model of professional league sports it is shown that if teams have different objectives (the maximization of, respectively, wins and profits) the competitive balance conditions get worse with respect to the case when teams share the same goal. A similar, though less clear-cut, result obtains in the three-team setup. These outcomes call for policy measures to restore the balance. Three such measures are examined here: market-size-based revenue sharing, general salary cap and team-specific salary cap. It is shown that, contrary to the same-goal-for-all case, each of them may bring more intra-league competition. A ranking of the three measures is also suggested.

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