Revenue sharing and competitive balance: does the invariance proposition hold?
Faculty of Applied Economics
Antwerp :UA, 2003
Research paper / UA, Faculty of Applied Economics UFSIA-RUCA ; 2003:21
University of Antwerp
This short paper, challenging the so-called invariance proposition, argues that, for a general n-team model with profit maximizing clubs and concave revenue functions, there are reasons to believe that revenue sharing can worsen the competitive balance among teams in a professional sports league. If clubs are win maximizers, revenue sharing improves the competitive balance.