Inter-league competition for talent vs. competitive balance

F  Palomino; J  Sakovics

doi:10.1016/j.ijindorg.2004.03.001

Inter-league competition for talent vs. competitive balance

F Palomino, J Sakovics

School of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

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 several leagues bid for talent, in equilibrium the leagues choose a performance-based reward scheme. We thus provide an explanation for the differences in revenue sharing rules for national TV rights used by the US sports leagues (full revenue sharing) and European football leagues (performance-based reward). (C) 2004 Elsevier B.V. All rights reserved.

Original language	English
Pages (from-to)	783-797
Number of pages	15
Journal	International Journal of Industrial Organization
Volume	22
Issue number	6
DOIs	https://doi.org/10.1016/j.ijindorg.2004.03.001
Publication status	Published - Jun 2004

Keywords / Materials (for Non-textual outputs)

sports league
revenue sharing
competitive balance
PROFESSIONAL SPORTS LEAGUES
AUCTIONS

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10.1016/j.ijindorg.2004.03.001

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abstract = "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 several leagues bid for talent, in equilibrium the leagues choose a performance-based reward scheme. We thus provide an explanation for the differences in revenue sharing rules for national TV rights used by the US sports leagues (full revenue sharing) and European football leagues (performance-based reward). (C) 2004 Elsevier B.V. All rights reserved.",

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AB - 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 several leagues bid for talent, in equilibrium the leagues choose a performance-based reward scheme. We thus provide an explanation for the differences in revenue sharing rules for national TV rights used by the US sports leagues (full revenue sharing) and European football leagues (performance-based reward). (C) 2004 Elsevier B.V. All rights reserved.

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KW - revenue sharing

KW - competitive balance

KW - PROFESSIONAL SPORTS LEAGUES

KW - AUCTIONS

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DO - 10.1016/j.ijindorg.2004.03.001

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Inter-league competition for talent vs. competitive balance

Abstract

Keywords / Materials (for Non-textual outputs)

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