Abstract
Szymanski [1] and Szymanski and Kesenne [2] showed that, in the standard model of a sports league, gate revenue sharing will tend to increase competitive imbalance between weak and strong teams, a seemingly perverse result. Dobson and Goddard [3] claim that “this analysis is flawed. If the revenue function is specified appropriately, gate revenue sharing always reduces competitive inequality.” This comment points out the analytical error in their paper which leads to their erroneous conclusion. Once their error is corrected, it is shown that the earlier results stand.
Highlights
Szymanski [1] and Szymanski and Késenne [2] showed that, in the standard model of a sports league, gate revenue sharing will tend to increase competitive imbalance between weak and strong teams, a seemingly perverse result
If the revenue function is specified appropriately, gate revenue sharing always reduces competitive inequality.”. This comment points out the analytical error in their paper which leads to their erroneous conclusion
DG assume in addition that revenues are increasing in the absolute quantity of talent in the league, and they claim that adding this to model reverses the SK result
Summary
Competitive balance is considered an important issue in sports league. Many people believe that in the absence of a sufficient degree of competitive balance among teams the outcome of league competition will become too predictable; fans will lose interest; and the league will collapse. In a series of papers Szymanski [1], Szymanski and Késenne [2] and Szymanski [4] ( “SK”) showed that in the standard theoretical model of sports league competition, gate revenue sharing (allocating a fixed percentage of ticket revenue to the visiting team) has the perverse effect of increasing competitive imbalance (I refer to this as the SK result). DG assume in addition that revenues are increasing in the absolute quantity of talent in the league, and they claim that adding this to model reverses the SK result. This comment shows that their results are a consequence of an analytical error, and once the error is corrected, the SK result holds
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