nep-spo New Economics Papers
on Sports and Economics
Issue of 2014‒09‒25
one paper chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Competitive Balance: Results of Two Natural Experiments from Rugby Union By Vincent Hogan; Patrick Massey; Shane Massey

  1. By: Vincent Hogan (University College Dublin); Patrick Massey (Compecon Ltd); Shane Massey (Trinity College Dublin)
    Abstract: The paper presents results from two natural experiments on the impact of revenue sharing and salary caps on competitive balance in sports leagues arising from the introduction of professionalism in Rugby Union in 1995. The first involves the English Premiership, which traditionally applied a binding salary cap, and the French Top 14, which only introduced a (non-binding) salary cap relatively recently, while the Premiership also has a higher level of revenue sharing than its French counterpart. The second involves French rugby and soccer as the French soccer league is generally recognised as having a more even distribution of revenue and greater competitive balance than other major European soccer leagues. We find short- and long-run competitive balance is higher in the Premiership, than in the Top 14, while French soccer appears more evenly balanced than rugby. Unlike soccer, balance within and between leagues in rugby has not been negatively affected by European competitions. This could change as the Anglo-French teams’ share of European competition revenues is set to increase from 2014/15 while broadcast revenues for both leagues are also set to increase substantially.
    Keywords: Professional team sports, competitive balance, salary caps
    JEL: D12 D21 L22 L23 L83
    Date: 2014–09–08

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