Revenue Sharing with Heterogeneous Investments in Sports Leagues: Share Media, Not Stadiums

Steven Salaga (), Alan Ostfield () and Jason Winfree

Review of Industrial Organization, 2014, vol. 45, issue 1, 19 pages

Abstract: This study examines revenue sharing in sports leagues where franchises engage in multiple types of investments. Previous literature typically treats revenues and investments as homogeneous, but we add to the literature by differentiating between investment types and revenue sources. This is important because investment in talent leads to winning, which is a zero-sum game for the league and therefore owners have an incentive to limit talent investment. However, other investments, such as stadiums, are not a zero-sum game, and therefore the implications of revenue sharing are different for the league. We provide sufficient conditions under which it is more efficient to share media revenue compared to stadium revenue. We conclude by providing applications of this model. Copyright Springer Science+Business Media New York 2014

Keywords: Sports leagues; Investment; Revenue sharing; L83 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s11151-014-9423-2

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