Revenue Sharing, Conjectures, and Scarce Talent in a Sports League Model

Stephen Easton and Duane Rockerbie

Journal of Sports Economics, 2005, vol. 6, issue 4, 359-378

Abstract: This article develops a model of a representative professional sports club operating in a league that has the option of adopting one of two different forms of revenue sharing: traditional revenue sharing or central-pool-type revenue sharing. To adopt either form of revenue sharing, the league requires tehat a majority of clubs increase their profit with adoption of the plan. We derive necessary conditions for either plan to garner enough support for a majority vote. The likelihood of forming a majority depends on the distribution of team revenues and the conjectures on acquiring talent that clubs possess. Competitive conjectures make the adoption of revenue sharing more likely, whereas cartel conjectures make its adoption less likely. This may partly explain why salary caps and revenue sharing tend to be used together in some leagues.

Keywords: revenue sharing; talent conjectures; voting (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1527002504267520 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:6:y:2005:i:4:p:359-378

DOI: 10.1177/1527002504267520

Access Statistics for this article

More articles in Journal of Sports Economics
Bibliographic data for series maintained by SAGE Publications ().