The notion of competitive balance (CB) is a central issue common to all sports leagues. Economists, fans, players, owners, and even league commissioners are all concerned with competitive balance and its impact on the demand for their sport, league, and team. Economists have noted the importance of team parity on league success for quite some time (Rottenberg 1956). Closer competitions lead to greater excitement, which increases demand for teams and the league. Given its importance, many leagues have implemented policies such as salary caps, luxury taxes, revenue sharing, and drafts in an...Read more
