| 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. |