A Dynamic Analysis of Equal Revenue Sharing and Endogenous Salary Caps in the N-Team Leagues

Masaki Fujimoto

Journal of Sports Economics, 2023, vol. 24, issue 5, 624-638

Abstract: This article studies the combined effect of equal revenue sharing and endogenous salary caps in a dynamical setting. It is shown that (i) a combination of equal revenue sharing and salary caps cannot eliminate competitive imbalance in the league; (ii) the share of player salaries has no impact on the distribution of talent among teams; (iii) under equal revenue sharing, the introduction of salary restrictions is not meant to prevent player salaries from rising, but to prevent them from falling; and (iv) under equal revenue sharing and salary caps, the reverse-order draft is incompatible with talent investment incentives of teams.

Keywords: sports leagues; competitive balance; talent investment; revenue sharing; salary caps (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:24:y:2023:i:5:p:624-638

DOI: 10.1177/15270025221143983

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