Revenue Sharing in Professional Sports Leagues

11 Pages Posted: 27 Apr 2009

See all articles by Eberhard Feess

Eberhard Feess

Frankfurt School of Finance & Management

Frank Stähler

University of Tuebingen - Department of Economics; University of Adelaide - School of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: 2008-10-24

Abstract

We employ a model of n heterogenous profit-maximizing clubs to analyze the impact of revenue sharing in professional sports leagues on competitive balance. Revenues of each club depend on absolute quality, relative quality and on competitive balance itself so that our model captures much of the preceding literature as special cases. We show that revenue sharing always increases competitive balance if clubs differ only with respect to the impact of absolute quality on revenues. On the contrary, revenue sharing reduces competitive balance if only clubs' relative qualities play a role for revenues or if only two teams are considered.

Suggested Citation

Feess, Eberhard and Stähler, Frank, Revenue Sharing in Professional Sports Leagues (2008-10-24). Scottish Journal of Political Economy, Vol. 56, Issue 2, pp. 255-265, May 2009, Available at SSRN: https://ssrn.com/abstract=1381815 or http://dx.doi.org/10.1111/j.1467-9485.2009.00483.x

Eberhard Feess (Contact Author)

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Frank Stähler

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

HOME PAGE: http://www.frank-staehler.de

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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