Optimal Competitive Balance in Single-Game Ticket Sports Leagues

Abstract

The authors extend the theory of optimal competitive balance to leagues where single-game ticket sales dominate revenues. Whether a planner that maximizes the sum of fan and owner surpluses prefers more balance or less in such a league depends on the relative magnitude of marginal consumers’ surpluses with respect to talent in larger and smaller revenue markets. This relationship is much more complex than previous cases in the literature. Ultimately, then, the determination of whether more balance is preferred to less in any particular sports league requires careful and thorough empirical investigation.