Revenue Sharing as an Incentive in an Agency Problem: An Example from the National Football League

Atkinson, Scott E.; Stanley, Linda R.; Tschirhart, John

doi:10.2307/2555395

Cited by 150 publications

(98 citation statements)

References 8 publications

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“…Almost all contributions consider static models focusing on one period only (e.g., see Atkinson et al (1988), , Fort and Quirk (1995), Szymanski and Késenne (2004) and Vrooman (1995Vrooman ( , 2008). Static models, however, do not analyze the dynamics leading to convergence or divergence of clubs'playing strengths, and therefore they cannot di¤erentiate between the short and long run e¤ects of revenue sharing on competitive balance.…”

mentioning

confidence: 99%

Revenue Sharing and Competitive Balance in a Dynamic Contest Model

Grossmann¹,

Dietl²,

Lang³

2010

Rev Ind Organ

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This paper presents a dynamic model of talent investments in a team sports league with an infinite time horizon. We show that the clubs' investment decisions and the effects of revenue sharing on competitive balance depend on the following three factors: (i) the cost function of talent investments, (ii) the clubs' market sizes, and (iii) the initial endowments of talent stock. We analyze how these factors interact in the transition to the steady state as well as in the steady state itself. JEL Classification Codes: L83, D92

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confidence: 99%

Revenue Sharing and Competitive Balance in a Dynamic Contest Model

Grossmann¹,

Dietl²,

Lang³

2010

Rev Ind Organ

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“…There, the league internalizes the costs faced by the teams and it represents a cartel as assumed by Atkinson, Stanley and Tschirhart (1988). Unsuprisingly, full revenue sharing is always optimal in that case since incentives to players by teams cancel out with each other and represent a waste of resources from the cartel's point of view.…”

Section: Probability Of Winning the Tournamentmentioning

confidence: 99%

“…In our framework, this assumption is equivalent to maximizing demand for the sport. Second, we also consider the league as a cartel of pro¯t maximizing¯rms and assume it maximizes the teams' joint pro¯t (as assumed by Atkinson, Stanley and Tschirhart (1988)). Thē rst case roughly corresponds to sport leagues more independent from teams, and it matches the European institutional organization of professional sports;…”

Section: Introductionmentioning

confidence: 99%

“…They show that full revenue sharing in US sports may result from monopsony power in the market for talent rather then from competitive balance considerations. Other papers (El Hodiri and Quirk (1971), Atkinson, Stanley and Tschirhart (1988), Quirk (1995), Vrooman (1999)) consider static models and focus on the case of US sport leagues that do not face competition.…”

Section: Introductionmentioning

confidence: 99%

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The Sport League's Dilemma: Competitive Balance Versus Incentives To Win

Palomino

Rigotti

2000

SSRN Journal

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We analyze a dynamic model of strategic interaction between a professional sport league that organizes a tournament, the teams competing to win it, and the broadcasters paying for the rights to televise it. Teams and broadcasters maximize expected pro¯ts, while the league's objective may be either to maximize the demand for the sport or to maximize the teams' joint pro¯ts. Demand depends positively on symmetry among teams (competitive balance) and how aggressively teams try to win (incentives to win). Revenue sharing increases competitive balance but decreases incentives to win. Under demand maximization, a performance-based reward scheme (used by European sport leagues) may be optimal. Under joint pro¯t maximization, full revenue sharing (used by many US leagues) is always optimal. These results re°ect institutional di®erences among European and American sports leagues.

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“…All professional sports leagues have had protracted labour disputes which have been fairly long lived and acrimonious. 1 Many observers of professional sports leagues question whether the actions taken by league owners are consistent with social welfare, or whether league rules are designed solely to promote the interests of owners, at the expense of either consumers, players, or both.…”

Section: Introductionmentioning

confidence: 99%

A Quality‐of‐Play Model of a Professional Sports League

Cyrenne

2001

Economic Inquiry

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Assuming that consumers value both the absolute and relative quality of play, I compare the choice of ticket prices, team qualities, and number of games played in a noncooperative outcome versus that chosen by a social planner. I find that the nature of consumer preferences regarding the quality of play determines whether the demand for talented players are strategic complements or substitutes. A strong preference by fans for a superior team makes players strategic substitutes while a concern for a high quality of play and competitive balance make players strategic complements. Moreover, when fans only value the relative quality of play, there is an overemployment of talented players in the noncooperative outcome versus the socially optimal outcome; when they only value the absolute quality of play then there is an underemployment of talented players in the noncooperative outcome.(JEL L1,L2,L4,L83)

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Revenue Sharing as an Incentive in an Agency Problem: An Example from the National Football League

Cited by 150 publications

References 8 publications

Revenue Sharing and Competitive Balance in a Dynamic Contest Model

Revenue Sharing and Competitive Balance in a Dynamic Contest Model

The Sport League's Dilemma: Competitive Balance Versus Incentives To Win

A Quality‐of‐Play Model of a Professional Sports League

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