David J. Berri

The NBA and its players union reached a new collective bargaining agreement in 2011. As a result of this agreement, the players will now be receiving less money. The NBA argued that a pay cut for the players was necessary to make the league better. More specifically, the NBA argued that if the players accepted less money, more teams could afford to field competitive teams. Therefore, competitive balance would improve, demand for the sport would increase, and ultimately the players would be better off. Although the NBA did get the players to accept less money, the empirical evidence—from...Read more

Alan Kaplan
John Nadeau
Norm O’Reilly

We examine the need for and the presence of competitive balance in professional sports leagues. We argue that competitive balance helps to further fan welfare and we propose a new measure of competitive balance that hopefully better reflects the needs of fans—that is, compared with measures used both currently and in the past. More specifically, we model the hope of postseason play in a new way as a proxy for competitive balance, and, using a database from Major League Baseball, we provide descriptive statistics for our measure alongside a number of other measures currently extant in the...Read more

Thomas Peeters

Monopolization of broadcast rights for collective sales is a widespread practice in sports leagues. Proponents of this system claim that it is a necessary tool for the maintenance of competitive balance (tension) in sports. In this empirical paper, I argue that, in European soccer, collective sales do not increase competitive balance as compared to individual sales. Further, I demonstrate the negative effect of the UEFA Champions League and the beneficial effect of a more equal distribution of drawing power and a larger domestic market size on competitive balance. These results shed new...Read more

Wen-Jhan Jane
Nai-Fong Kuo
Jyun-Yi Wu
Sheng-Tung Chen

This paper investigates the determinants of game-day attendance in the Chinese Professional Baseball League (CPBL) from 2001 to 2007. We include measures of league-level uncertainty and game uncertainty for two rivals at the same time in a quantile regression model. The results support the hypothesis of outcome uncertainties. Closer wins by the competing teams within a league and a smaller gap in terms of the winning percentage between two teams induces more outcome uncertainty, and consequently leads to higher attendance. Moreover, the results of the quantile regression show that these...Read more

Dennis Coates
Brad R. Humphreys

We examine the relationship between game day attendance, uncertainty of outcome, and team and facility quality in the National Football League. Based on results from a reduced form model of game day attendance at 5,495 regular season NFL games from the 1985-2008 seasons, we find weak evidence that attendance increases when fans expect the home team to win by a large margin, and strong evidence that attendance decreases when the home team is expected to lose, contrary to the predictions of the Uncertainty of Outcome Hypothesis.Read more

Kevin Alavy
Alison Gaskell
Stephanie Leach
Stefan Szymanski

This paper examines the relationship between the demand for English football on television and outcome uncertainty. It tests the uncertainty of outcome hypothesis by using minute-by-minute television viewership figures which avoids the problems encountered when estimating demand using match attendance. We find that although uncertainty matters, it is the progression of the match which drives viewership and as a draw looks increasingly likely, viewers are likely to switch channels. Games that end in victories have a higher average viewership than games that end in stalemates.Read more

Helmut M. Dietl
Markus Lang
Stephan Werner

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 rate increases the profits of large-market clubs, whereas the profits of small-market clubs only increase if the tax rate is not set inadequately high. Finally, we show that social welfare increases with a luxury tax.Read more

Brian P. Soebbing

Competitive balance research partitions into two areas: analyzing sports policy and its effect on competitive balance and the uncertainty of outcome hypothesis. This paper examines the latter section. No formal analysis of the relationship between competitive balance and regular season average attendance in Major League Baseball (MLB) using the actual to idealized standard deviation ratio exits. This paper examines the effect that competitive balance has on MLB attendance between the seasons 1920 and 2006. Additionally, this paper incorporates a games-behind variable to examine if fans are...Read more