Edited by John Goddard and Peter Sloane
Chapter 3: Measurement of competitive balance and uncertainty of outcome
Competitive balance (CB) and uncertainty of outcome (UO) are central concepts in the economic analysis of sports leagues worldwide. As well as featuring prominently in the academic literature, CB provokes strongly held opinions among media commentators, sports administrators and fans. The aims of this chapter are to examine how these concepts have been measured in practice, to review recent attempts to address some of the problems with commonly used measures, and to consider some of the factors involved in selecting useful measures. CB relates to how evenly teams are matched. A league in which teams display a high degree of variation in their playing strengths is considered to have a lower degree of CB (or, equivalently, a higher degree of ‘imbalance’) than a league in which teams’ strengths are closer to equality. CB is considered important because it affects the degree of uncertainty surrounding the outcomes of individual matches and overall championships. A match involving teams with significant differences in their strengths is more likely, other things equal, to result in a win for the significantly stronger team. Similarly, the identity of the overall championship-winning team is more predictable if one or a small number of teams is significantly stronger than the rest of the teams in a league. The most contentious step in the justification for the importance of CB is embodied in Rottenberg’s (1956) ‘uncertainty of outcome’ hypothesis (UOH).
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