research
Back to Basics: A New Look at Gate-revenue Sharing and Competitive Balance
- Publication date
- Publisher
Abstract
Most models with profit maximizing teams conclude that competitive balance is unchanged or reduced in response to gate sharing. We critique these models and then develop three alternatives: adding unshared post-season revenue; modelling the largest market team as a dominant firm with a rising marginal cost of talent; and a new general model that incorporates both a consumer demand for athletic talent and close competition. All three approaches can cause gate sharing to increase competitive balance.Sport, Monopsony, Monopoly Power