FiT Publishing

We present evidence on the impact of revenue sharing and salary caps on both short- and long-run competitive balance based on a form of unique natural experiment—the abolition of Rugby Union’s ban on professionalism and the different responses of the English (EPR) and French (T14) leagues to its removal. The EPR has operated revenue sharing and a binding salary cap for most of the professional era, but the T14 only introduced a non-binding salary cap much more recently. We use a dataset of net winning margins from 9,438 matches in both leagues over 27 seasons from 1987/88 to 2015/16 to...Read more

This paper analyzes the impact of the French 75% income tax rate on the attractiveness of the French soccer league. The concerns are less about its financial implications for clubs than about the possible decrease in its attractiveness. A classical model of professional team sport leagues is employed to measure the Nash equilibrium competitive balance and the stock of talent to assess the effect of the new taxation. We then propose two hypotheses corresponding to specific situations in the French soccer league: “social and fiscal disparities between clubs” and “sugar daddy” behavior. The...Read more

In a sports league, team owners can expect to increase player performance, and the team’s winning percentage or profits, by providing a win bonus on top of the players’ fixed salary level. In some clubs, the guaranteed player salary is relatively low and the premium, in case of a winning game, relatively high, whereas in other clubs, hardly any win bonus is paid. In this theoretical paper, we investigate what the impact of a win bonus is on the winning percentage, the competitive balance, the owner profits, and the overall quality in a professional sports league. The model we start from is...Read more