Social Welfare in Sports Leagues with Profit‐Maximizing and/or Win‐Maximizing Clubs

Helmut Dietl, Markus Lang and Stephan Werner

Southern Economic Journal, 2009, vol. 76, issue 2, 375-396

Abstract: This article develops a contest model to compare social welfare in homogeneous leagues in which all clubs maximize identical objective functions with mixed leagues in which clubs maximize different objective functions. We show that homogeneous leagues in which all clubs are profit maximizers dominate all other leagues. Mixed leagues in which small‐market clubs are profit maximizers and large‐market clubs are win maximizers (type‐I mixed leagues) are dominated by all other leagues. From a welfare perspective, large‐market clubs win too often in (purely) win‐maximizing and type‐I mixed leagues; whereas, small‐market clubs win too many games in (purely) profit‐maximizing leagues and in mixed leagues in which large‐market clubs are profit maximizers and small‐market clubs are win maximizers (type‐II mixed leagues). These results have important policy implications: Social welfare will increase if clubs are reorganized from non‐profit member associations to profit‐maximizing corporations. Moreover, we show that revenue sharing decreases (increases) social welfare in mixed (homogeneous) leagues.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.4284/sej.2009.76.2.375

Related works:
Working Paper: Social Welfare in Sports Leagues with Profit-Maximizing and/or Win-Maximizing Clubs (2009)
Working Paper: Social Welfare in Sports Leagues with Profit-Maximizing and/or Win-Maximizing Clubs (2009)
Working Paper: Social Welfare in Sports Leagues with Profit-Maximizing and/or Win-Maximizing Clubs (2008)
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:wly:soecon:v:76:y:2009:i:2:p:375-396

Access Statistics for this article

More articles in Southern Economic Journal from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().