Transatlantic Sport

Transatlantic Sport

The Comparative Economics of North American and European Sports

Edited by Carlos Pestana Barros and Muradali Ibrahímo

This book offers a comparative perspective on the economics of sport and highlights both the similarities and differences in the North American and European models of sport. It tackles policy issues, such as the organising, financing and regulation of team sports alongside theoretical issues regarding income redistribution and competitive balance. It also evaluates the impact of sport and sports events on local communities and the wider economy providing a useful contrast of methods and results on the two continents.

Chapter 5: Equality of opportunity and equality of outcome: static and dynamic competitive balance in European and North American sports leagues

Stefan Szymanski and Ron Smith

Subjects: economics and finance, sports

Extract

5. Equality of opportunity and equality of outcome: static and dynamic competitive balance in European and North American sports leagues Stefan Szymanski and Ron Smith 1. INTRODUCTION Sports leagues in Europe and North America have developed distinctive institutions over their long histories. From a policymaker’s perspective, many of these institutions have evolved to promote a competitive balance among the teams. Moreover, without the justification of competitive balance many of these institutions might be considered to violate the antitrust laws. In North America these include the reserve clause in baseball, draft rules, restrictions on player trades and income sharing. In Europe the chief mechanism for promoting balance, through equality of opportunity, has been the promotion and relegation mechanism. Moreover, the European antitrust authorities have in recent years challenged other agreements between the leagues said to promote competitive balance, most notably in the Bosman case. This chapter evaluates the extent to which the degree of competitive balance found in the more cartelised North American leagues matches that found in the more ‘competitive’ European leagues. Competitive balance is widely perceived as an essential feature of successful professional team sports. Closely contested matches, championship races in which many teams can win and whose outcome is uncertain, are widely thought to add to the attractiveness of a league competition. However, there have been relatively few studies that have set out to examine the extent to which sports leagues are in fact competitively balanced. Most studies have tended to seek out a link between fan...

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