Competitive balance in complex professional sports leagues

Abstract

Competitive balance is seen as crucial to the viability of professional sports leagues, and it has been a central concern of sports economists, industry practitioners and fans. But the concept is complex and ill-defined. The theoretical approach in this thesis is to first analyse competitive balance in a simple league context. It is shown that even in a closed round-robin league with a single prize (i. e. league championship), there are three dimensions of competitive balance: win dispersion, performancc persistence and prize concentration. Further extensions to this three-dimensional approach are required when the analysis moves to complex real-world league structures which are typically multiprize tournaments,with host-season playoffs and often open merit hierarchies with promotion und relegation. A new concept of competitive intensity is introduced. The three-dimensional approach is applied to the empirical analysis of competitive balance in European (association) football and the North American Major Leagues, It is found that cross-league comparisons of competitive balance are dependent on the dimension analysed. Win dispersion is better in the Big Five European domestic football leagues compared to the Major Leagues, but the reverse is found for championship concentration. The Major Leagues are also found to be more competitive in respect of the concentration of post-season playoff qualification. Differences in competitive balance are found between the European domestic football leagues. The causes of these cross-league differences are investigated with regression analysis. Again the results are highly dependent on the specific dimension of competitive balance. Win dispersion is significantly associated with national geographic and economic characteristics as well as league structure. Time-series analysis is undertaken to study changes over time in competitive balance in the top divisions of the Norwegian and English football leagues. The results are most significant for the English league, and run counter to the predictions of the invariance principle