Management Reference Points for Sporting Leagues : Simulating League Expansion and the Effect of Alternative Player Drafting Regulations

Effective resource management requires measures of performance, often in relation to targets, that attempt to balance conflicting management objectives. In financial situations conflicts can occur when balancing the need to save and spend, for biological resources it occurs between conservation and utilisation, and in sporting leagues it occurs through the desire for competitive balance. Recognising these conflicts, management must make decisions regarding the optimal state of a resource, and set target reference points accordingly. Dramatic and economically costly steps may be required when a resource is in a poor state, or when it moves beyond a limit reference point: a decision to declare bankruptcy, to close a fishery or forestry, or to provide financial support or other incentives to poor performing sporting clubs. In this chapter we define management reference points for a win-maximising sporting league through the use of a non-equilibrium simulation model. We show how management objectives can include reference points, time frames and probabilities, and how simulation models can assist decision makers to achieve such objectives. We then provide an example for a league that wishes to establish a new team, and demonstrate how models can guide choices among alternative strategies in relation to management reference points