In Pursuit of Competitive Balance or Payroll Relief?
40 Pages Posted: 21 May 2020
Date Written: April 24, 2020
There may be no phrase used more in professional sports than “competitive balance.” League commissioners and commentators alike emphasize the importance to have parity among teams in a sport. They argue that for the long-term health and growth of a sport, fans must have the belief that within a certain period of time, their team will have a winning record and compete for a playoff spot and even a championship. In fact, courts have also noted the importance of team parity in order to operate a successful professional sports league — and have accordingly provided special legal protections for league policies that might otherwise violate antitrust laws. In the name of competitive balance, the National Basketball Association, National Football League, and Major League Baseball have adopted a variety of reforms in hopes of achieving greater parity among their teams: revenue sharing, salary caps, luxury taxes, amateur drafts, rookie contracts, and the like. As these policies were adopted and expanded, advocates claimed that they would facilitate greater competitive balance within the leagues. However, the results have not borne out that prediction. Depending on the lens through which one views the results, one could argue that these leagues are no more competitively balanced than before the implementation of these reforms. But how can this be? This article seeks to sort through the murky competitive balance debate. At the core of this inquiry is whether these competitive balance reforms seek greater league parity or control of team labor costs. A deeper analysis of these league policies suggests that the allure of profit maximization may be superseding the animating values of parity.
Keywords: Sports, Baseball, Collective Bargaining, Collective Bargaining Agreement, Free Agency, Free Agents, Labor Law
JEL Classification: J01, J08, J18, J22, J3, J4, J40, J41, J44, J5, Z2, Z20, Z22, Z28
Suggested Citation: Suggested Citation