Revenue Sharing, Competitive Balance and the Contest Success Function

Runkel, Marco

doi:10.1111/j.1468-0475.2011.00530.x

Cited by 8 publications

(5 citation statements)

References 25 publications

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“…Kesenne (Kesenne, 2006) develops models that indicate the effect of revenue sharing on competitive balance depends on the objective -wins or profits. Szymanski and Kesenne (Szymanski and Kesenne, 2004), Grossmann, Dietl and Lang (Grossmann, Dietl and Lang, 2010) and Runkel (Runkel, 2011) all develop models where revenue sharing does not increase competitive balance.…”

Section: Literaturementioning

confidence: 99%

Competitive Balance and Consumer Demand in the English Football League

Martinez

Willner²

2017

AFA

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Competitive balance in sports leagues is often used to justify revenue sharing agreements. The justification is that competitive balance leads to higher attendance and higher attendance generates more revenues. By sharing revenue, small market teams can afford to pay for high quality talent, assuring more equal distribution of that talent. Unlike US professional leagues, English football operates under a system of relegation and promotion so that at the end of each season the worst performing teams are "relegated" and the top performing teams in the next level down are "promoted". This may serve as an alternative to revenue sharing to maintain competitive balance.Using data from the top English football league (currently the Premiership) from 1888-89 through the 2014-15 season we calculate multiple measures of league competitive balance for each year using both 3-1-0 and 2-1-0 point systems. We then use these measures with available macroeconomic control variables to examine the relationship between competitive balance and match attendance.We find that, counter to related work in US sports leagues, competitive balance in English football is negatively associated with attendance. This is particularly true in the case of the Premiership era, wherein only five teams have won the championship and in the past 10 seasons, the top 4 places of the championship has been dominated by 7 clubs, yet attendance has steadily increased. This result raises questions about the utility of revenue sharing in increasing attendance in English football.

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Section: Literaturementioning

confidence: 99%

Competitive Balance and Consumer Demand in the English Football League

Martinez

Willner²

2017

AFA

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“…Here, revenue depends only on the value of the logit contest‐success function (CSF),

\frac{t_{i}}{t_{i} + t_{j}}

, which assigns a winning probability for each team, dependent on the level of talent of both teams (for a sophisticated analysis of the role of the CSF in team sports economics, see Fort & Winfree, 2009, as well as Runkel, 2011), and a scale factor,

m_{i}

. The latter can be interpreted as the market size of Club

i

.…”

Section: The Model Of Value‐maximizing Clubsmentioning

confidence: 99%

Value‐maximizing football clubs

Prinz

Thiem

2021

Scottish J Political Eco

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In this paper, football clubs are modeled as value‐maximizing enterprises. With a long‐term perspective in this framework, players are not only factors of production, but also assets of the club. It is shown that talent investment is higher with value‐maximization than with profit maximization for homogeneous football clubs. Club heterogeneity is then modeled by different time‐horizons regarding future profits, which leads to asymmetric levels of talent investment. Teams with longer time‐horizons demand more talent and tilt the competition to their favor. Increases in transfer prices for players worsen the competitive balance, while higher player wages improve it.

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“…Equation 2is a standard formalization of the revenues (and costs) of a football club (see References [47,48] for a more general formalization). Revenues are supposed to depend linearly on the winning probability of the team, multiplied by the size of the team's market.…”

Section: Talent Investmentmentioning

confidence: 99%

“…with r > 0 as talent productivity with respect to the winning probability (for further interpretations of this parameter see, for example, [48][49][50][51]).…”

Section: Talent Investmentmentioning

confidence: 99%

Indirect Evolution and Aggregate-Taking Behavior in a Football League: Utility Maximization, Profit Maximization, and Success

Prinz

2019

Games

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An evolutionary model of European football was applied to analyze a two-stage indirect evolution game in which teams choose their utility function in the first stage, and their optimal talent investments in the second stage. Given the second-stage optimal aggregate-taking strategy (ATS) of talent investment, it was shown that teams may choose a mix of profit or win maximization as their objective, where the former is of considerably higher relevance with linear weights for profits, and is more successful in the utility function. With linear weights for profit and win maximization, maximizing profits is the only evolutionarily stable strategy (ESS) of teams. The results change if quadratic weights for profits and wins are employed. With increasing talent productivity, win maximization dominates in the static and in the dynamic versions of the model. As a consequence, it is an open question whether the commercialization of football (and other sports) leagues will lead to more profit or win maximization.

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Revenue Sharing, Competitive Balance and the Contest Success Function

Cited by 8 publications

References 25 publications

Competitive Balance and Consumer Demand in the English Football League

Competitive Balance and Consumer Demand in the English Football League

Value‐maximizing football clubs

Indirect Evolution and Aggregate-Taking Behavior in a Football League: Utility Maximization, Profit Maximization, and Success

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