Overinvestment in Team Sports Leagues: A Contest Theory Model
Egon Franck () and
Markus Lang ()
No 2, Working Papers from University of Zurich, Center for Research in Sports Administration (CRSA)
This paper applies contest theory to provide an integrated framework of a team sports league and analyses the competitive interaction between clubs. We show that dissipation of the league revenue arises from `overinvestment' in playing talent as a direct consequence of the ruinous competitive interaction between clubs. This overinvestment problem increases if the discriminatory power of the contest function increases, revenue-sharing decreases, and the size of an additional exogenous prize increases. We further show that clubs invest more when they play in an open compared to a closed league. Moreover, the overinvestment problem within open leagues increases with the revenue differential between leagues.
Keywords: contests; sports league; overinvestment; revenue-sharing; promotion and relegation (search for similar items in EconPapers)
JEL-codes: C72 L83 M21 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2005, Revised 2007
References: Add references at CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed
Downloads: (external link)
http://repec.business.uzh.ch/RePEc/rsd/CRSA_WPS/02_CRSA_full.pdf First version, 2005 (application/pdf)
Journal Article: OVERINVESTMENT IN TEAM SPORTS LEAGUES: A CONTEST THEORY MODEL (2008)
Working Paper: Overinvestment in Team Sports Leagues: A Contest Theory Model (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:rsd:wpaper:0002
Access Statistics for this paper
More papers in Working Papers from University of Zurich, Center for Research in Sports Administration (CRSA) Contact information at EDIRC.
Bibliographic data for series maintained by IBW IT Support ().