Contest Theory and its Applications in Sports

Abstract

This paper outlines how the theory of contests is applied to professional team sports leagues. In the first part, we present the traditional Tullock contest and explain some basic properties of the equilibrium. We will then extend this static contest to a two-period model in order to analyze dynamic aspects of contests. In the second part, we will present applications of contest theory in sports. In particular, we will show how the Tullock framework is applied to models of team sports leagues. For this purpose, we will first explain the value creation process in team sports leagues and show how club revenues are related to the contest success function. Then, we present some basic modeling issues; for instance, we show how the assumption of flexible vs. fixed talent supply depends on the league under consideration and how it influences the equilibria. Furthermore, we explicate the effect of revenue sharing on competitive balance in the different models. Then we address the relationship between competitive balance and social welfare. Finally, we illustrate why many clubs tend to "overinvest" in playing talent in many team sports leagues.

An Economic Approach to Sports Injury Policies

“…We add to this the stipulation that effort also includes the athlete's willingness to take risks. The next section adopts the standard Tullock contest model to analyze the impact of an injury intervention on athletes’ risk-taking (see also Szymanski, 2003 and Dietl et al, 2009 for sports applications of Tullock models, and Ryvkin (2013) and Mohan and Hazari (2016) for a recent application of a Tullock model with doping).…”