Modeling Competitive Imbalance and Self-Regulation in College Sports

Rodney Fort ()
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Rodney Fort: University of Michigan

Review of Industrial Organization, 2018, vol. 52, issue 2, No 4, 251 pages

Abstract: Abstract The principal-agent relationship between athletic directors and their university administration suggests a conference equilibrium of revenue-maximizing athletic directors. With smaller- and larger-revenue departments, revenue maximization predicts conference competitive imbalance. The larger the revenue dispersion, the greater the imbalance. Pooled revenue sharing increases the absolute level of talent and reduces competitive imbalance. That national championships are determined across conferences may explain the widespread adoption of nearly complete revenue sharing. The model also explains the form of the amateur requirement and predicts that competitive imbalance is invariant with respect to that amateur specification. This has obvious implications for balance-based arguments for or against increasing compensation to athletes.

Keywords: College sports; Revenue maximization; Competitive imbalance (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11151-017-9591-y

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