Competitive Balance when Teams have Different Goals

27 Pages Posted: 8 Oct 2006  

Nicola Giocoli

University of Pisa - Department of Law

Date Written: October 2, 2006

Abstract

In the standard two-team model of professional league sports it is shown that if teams have different objectives (the maximization of, respectively, wins and profits) the competitive balance conditions get worse with respect to the case when teams share the same goal. A similar, though less clear-cut, result obtains in the three-team setup. These outcomes call for policy measures to restore the balance. Three such measures are examined here: market-size-based revenue sharing, general salary cap and team-specific salary cap. It is shown that, contrary to the same-goal-for-all case, each of them may bring more intra-league competition.

Keywords: Team sports economics, competitive balance, invariance proposition, Italian football

JEL Classification: D29, L21, L83

Suggested Citation

Giocoli, Nicola, Competitive Balance when Teams have Different Goals (October 2, 2006). Available at SSRN: https://ssrn.com/abstract=935336 or http://dx.doi.org/10.2139/ssrn.935336

Nicola Giocoli (Contact Author)

University of Pisa - Department of Law ( email )

via Collegio Ricci 10
Pisa PI, 56126
Italy

HOME PAGE: http://https://pisa.academia.edu/NicolaGiocoli

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