We analyze the distribution of broadcasting revenues by sports leagues. We show that when the teams engage in competitive bidding to attract talent in an isolated league, the league’s optimal choice is full revenue sharing (resulting in full competitive balance). In contrast, when the teams of...

This paper presents a model of a professional sports league and analyzes the effect of luxury taxes on competitive balance, club profits, and social welfare. It shows that a luxury tax increases aggregate salary payments in the league and produces a more balanced league. Moreover, a higher tax...

The paper analyses the impact of the relatively belated move to professionalism in Rugby Union. We use data on match attendance for 3,667 fixtures in European club Rugby over 15 seasons to estimate the effect of competitive balance on attendance. We find that (short- and medium-term) competitive...

The paper analyses the impact of the relatively belated move to professionalism in Rugby Union. We use data on match attendance for 3,667 fixtures in European club Rugby over 15 seasons to estimate the effect of competitive balance on attendance. We find that (short- and medium-term) competitive...

Many major sports leagues are characterized by a combination of cross-subsidization mechanisms like revenue-sharing arrangements and payroll restrictions. Up to now, the effects of these policy tools have only been analyzed separately. This article provides a theoretical model of a team sports...

In many countries, the collective sale of TV rights by sports leagues has been challenged by the antitrust authorities. In several cases, however, leagues won in court, on the ground that sport cannot be considered a standard good. In this paper, we investigate the conditions under which the...

This paper outlines how the theory of contests is applied to professional team sports leagues. In the first part, we present the traditional Tullock contest and explain some basic properties of the equilibrium. We will then extend this static contest to a two-period model in order to analyze...

This article provides a standard "Fort and Quirk"-style model of a professional team sports league and analyzes the combined effect of salary restrictions (caps and floors) and revenue-sharing arrangements. It shows that the invariance proposition does not hold even under Walrasian conjectures...

This paper provides a theoretical model of a team sports league based on contest theory and studies the welfare effect of gate revenue-sharing. It derives two counter-intuitive results. First, it challenges the "invariance proposition" by showing that revenue-sharing reduces competitive balance...

This paper uses a three-stage model of non-cooperative and cooperative bargaining in a free agent market to analyze the effect of revenue sharing on the decision of teams to sign a free agent. We argue that in all subgame perfect Nash equilibria, the team with the highest reservation price will...